If anyone knows where the money is in the economy, it's the IRS, right? How is it going to be spent? Let's read between the lines in an oddly fascinating data set: the IRS workload projections.
In 2009, the IRS received 241 million W-2 forms. Those forms must be filed for every employee on a company's payroll, including household employees. In 2010, the IRS projects that number will drop 12.2% to just 211 million. The agency projects out to 2018, but even by that point they don't see the number of W-2s recovering -- the 2018 projection is just 235 million. "This [data] is a major reflection of just how bad things are. You would have to go back to the 1930s to see a dip this big," said Senior Economist Cary Leahey of Decision Economics.
These projections are based on a combination of third-party economic data and forecasts, along with the IRS' historical data and trends it has observed, said Michael Sebastiani, chief, forecasting and data analysis at the IRS. A few things could be at play here, and because the IRS uses this data mostly for work-load balancing, it doesn't do a lot of causal analysis.
Here are our theories, and what they could mean for marketers.
- There are fewer people with jobs. No job means no W-2.
- Those with jobs are holding onto them. If you change jobs, you wind up filing a W-2 from each employer you have during the year.
- Fewer people with multiple jobs, who would have to file multiple W-2s.
- A slight increase in "off-the-books" jobs (otherwise known as "tax fraud").
- A move to less permanent forms of employment.
The points marketers should really be looking at are the first and last.
The shift to more independent workforce
While the number of W-2s dipped drastically is slowly rising, the number of 1099-Misc forms is on a steady climb. These are forms used for non-permanent income by freelancers, service workers, etc. By 2018, as far as the IRS projections go, the 6.1 million decrease in W-2s starts to look more and more like the 4.3 million increase in 1099s. And only some independent workers, who aren't eligible for unemployment insurance, get 1099s for what they do. Many just file a tax return and list their income. This would point to a rise in a more temporary workforce, which we've seen other places.
Why should you care?
There are profound implications here for many marketers. People without a fixed income are less likely to commit to long-term payment plans like cars, mortgages, etc. Those in urban areas can substitute Zipcars and other car-sharing services for some of their transportation needs, and public transit for others. Others are out of luck.
At the same time, they're on their own for many things that corporations provide to regular employees like office supplies, computer equipment, telecommunications and health insurance. And they'll likely buy these goods and services online to save time and due to the lack of cars. Networking might take the form of local meet-ups and social media rather than pricey lunches and hotel/airfare/rental-car-heavy conferences.
Fewer jobs in the marketplace
This isn't news. Unemployment is currently 9.7 percent nationwide, which is more than double what it was in 2007 and only a point off the 10.7 percent 30-year high in 4th quarter 1983. Unemployment isn't expected to get back to 2007 levels for at least 5 years. The implications of this are rather obvious. If people have fewer jobs, they spend less money on goods and services across the board, and long-term-financed and luxury goods especially.
According to the Bureau of Labor Statistics (and common sense) people tend to quit their jobs "when there is a perception that another job is available, and [they stay in their jobs] when there is the perception that jobs are scarce." 2009 had a much smaller number of "quits" than any time since at least 2000, including the recession in 2001.
Fewer second jobs
This figure has been steadily declining for a long time. The Bureau of Labor Statistics shows that in 2009 only 5.2 percent of the workforce has more than one job. The majority of those people had a primary full-time job and a secondary part-time job. In 1995, that figure was 6.2 percent, and it has dropped continuously since then. More people might need second jobs to make ends meet, but with so many people out of primary jobs, second jobs are even harder to come by.
"The buying habits of this group include increased money spent on food in-home, transportation and childcare," said Peter Francese, founder of American Demographics and a consultant to Ad Age. "But this is a diminishing demographic even in this economy."
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