??2023 Highlights: This Year in Employment and Wage Verification ??
At Thomas & Company, we see our Employment and Wage Verification service as an employee relations exercise. We work with our client partners to remove administrative burden from both our corporate contacts and their employees as well as provide industry insight into the everchanging verification space.
??Mortgage Verifications
Verifications associated with home loans play a major part in the Employment and Wage Verification service space and can have an impact on the overall volume of verifications. Coming off historically low interest rates during the pandemic period, 2023 saw rates increase and a subsequent decrease in employment and wage verifications associated with mortgage loans.
However, according to Mortgage Bankers Association’s (MBA) November 2023 forecast[1], the total mortgage origination volume is projected to increase to $1.95 trillion in 2024, showing an upward trajectory from the expected $1.64 trillion in 2023. MBA's baseline forecast also suggests mortgage rates may decline, reaching 6.1% by the end of 2024.
Concerns about a mild recession in the first half of 2024 are looming, according to multiple economists and MBA, attributed to higher interest rates, tighter credit conditions, and the depletion of pandemic-era household savings. As previously discussed, the job market is also expected to slow, with potential implications for unemployment rates and inflation, which may subsequently impact volume of mortgage related verifications.
?Background Checks: A Growing Market with Diverse Applications
Another verification need, which has expanded over the last several years, is background checks, including employment, rental, criminal, education, and financial history checks. According to Market Growth Reports[2], pre-employment screening has become a standard practice, reflecting a demand for qualified and trustworthy individuals aligning with organizational values. The rental market has also embraced background checks to ensure safe living conditions for their renters as well as protection for their properties.
Compliance and regulatory factors, as further noted by Market Growth Reports, also influence the growing need for background checks. An increase in the background check market means an increase in administrative burden for employers handling verification services in-house. For those outsourcing verifications, it may mean taking a closer look at how their verifications partner is handling these types of requests and more – or whether they are handling them at all.
At Thomas & Company, we work with our clients to ensure we are providing services and completing as many forms as possible with the data available.
??Immigration Requests: Shifting Policies and Global Events
Recently, there have been shifting policies and global events that have caused an increase in immigration requests. There has been a long-standing provision that is a part of United States immigration law that prevents people from receiving green cards and certain visas if they are found to be a “public charge.” Public charge is generally found if a noncitizen is reliant on government assistance for support. Historically, the only government support that was considered a public charge was Temporary Assistance for Needy Families (TANF) or long-term care for the elderly. However, in 2019, the definition was expanded to include Supplemental Nutrition Assistance Program (SNAP), housing and rental assistance, and non-emergency Medicaid benefits. An applicant could be denied under the 2019 rule if they received one or more of any of the prohibited benefits for more than 12 months in aggregate within any 36-month period. Receipt of two benefits in one month counted as two months.
In late 2022, the expanded definitions were removed, restoring the public charge provisions that were established in 1999, and allowing immigrants that may have been ineligible in 2019-2022 to reapply. In December 2022, a new requirement was also introduced requiring all green card applicants applying from within the United States to complete form I-485, which includes a verification of employment.
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Events in Ukraine may also be a contributing factor to the influx of immigration to the United States. A Declaration of Financial Support must be filed if an employee is a potential supporter as a part of the Uniting for Ukraine program. The same process is in place for immigrants from Cuba, Haiti, Nicaragua, and Venezuela. They may be allowed entry if they have a financial supporter in the United States, among other requirements. The final elimination of all COVID-19 associated travel restrictions and continued visa backlogs also led to an increase in immigration into the United States.
When you combine the changes in public policy with the increased freedom to travel around the globe, it is easy to see why there has been such a dramatic increase in immigration verification requests. It is hard to tell how long this trend will continue but with the backlog of immigration cases, we suspect that the need to provide immigration verification requests will continue to remain higher than normal.
????Indicators of Economic Need
Tracked by the US Bureau of Labor Statistics (BLS), the Consumer Price Index (CPI) is a measure of the change in prices paid by consumers for goods and services. The CPI, along with other key indicators of economic need, such as food insecurity and poverty, can provide insight into current and future trends of social service verifications.
Although decreasing from its peak, inflation is still impacting consumer prices and families in need. In its November CPI report[3], the BLS reported that, on a seasonally adjusted basis, the All Urban Consumers CPI (CPI-U) increased 0.1% after remaining the same in October. Over the last 12 months, the all items index increased 3.1% (prior to seasonal adjustment). Both the index for shelter and food (both at home and away from home) as well as all other items (minus food and energy) increased in November. Many compulsory need indexes increased, including rent, medical care, and motor vehicle insurance. The 12-month rolling (ending November) all items index (unadjusted) rose 3.1%, which represents a small decrease over the October rolling 12-months (3.2%).
While data for 2023 has not been released associated with Welfare Indicators and Risk Factors nor United States food insecurity, overall trends from 2022 indicate an increasing portion of the country face insecurity and rely on assistance. If these trends continue throughout 2023 and into 2024, social services will continue to be impacted and employers and third-party verifiers alike will continue to see an increase in verification requests for these services.
Thomas & Company will continue to track important data and trends associated with our Employment and Wage Verification service.