Stimulus Jobless Benefits Spur Some Businesses to Cut Workers
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What is the main topic discussed in this episode?
Here's your money briefing for Wednesday, April 8th. I'm J.R. Whalen for The Wall Street Journal. The coronavirus pandemic has caused many business owners to make painful decisions about whether to lay off or furlough workers. Wall Street Journal reporter Patrick Thomas says the unemployment benefits in the federal stimulus package have made that process easier, not only for employers, but for employees as well.
It almost completely supplemented some of their workers' wages.
How did the stimulus jobless benefits change employers' decisions to lay off or furlough workers?
They also started offering voluntary layoffs because they felt like some employees might want to take the benefits and not have to work during this time. Maybe they're caring for a family member. So voluntary layoffs were an option for them because of what was in the stimulus bill.
Coming up, he'll tell us how some employers feel that the jobless benefits could put them in a tough spot, even when it's time to bring employees back.
Unemployment benefits in the coronavirus stimulus plan provide a financial lifeline for workers who have lost their jobs or who have had their work hours cut back. But they also provide a cushion for employers who need to make hard staffing decisions.
Which examples illustrate employers saying benefits 'supplemented' employees' wages?
Wall Street Journal reporter Patrick Thomas is with us to explain how it's all playing out. So Patrick, how have the jobless benefits in the stimulus bill helped employers with the process of laying off or furloughing their employees?
Well, the stimulus package is really changing the calculus for some employers. They feel like they can now cut payroll costs without feeling like they're abandoning their employees. The stimulus bill beefs up unemployment benefits to $600 a week on top of what states were already offering. And that has supplemented some workers' wages completely.
Why did some companies offer voluntary layoffs instead of mandatory cuts?
Does the jobless benefits package give employers any sort of peace of mind in terms of having to make these staffing changes?
Yeah. Some of the lawyers we talked to specified that in the case of their clients, they're getting a lot of calls where employers are wondering, why wouldn't I do this? It can be a win-win in terms of, in theory, my workers might make the same amount or in some cases more. And during a pandemic, they're getting rid of that extra payroll costs and they see it as a win. Some employers have said their employees might be better off
How could expanded unemployment benefits create challenges when employers try to rehire staff?
Macy's said that it factored in their decision to furlough. They would continue paying certain health benefits through May, which they felt that along with some of the unemployment benefits, because when you're furloughed, you can still get unemployment benefits provided enough. a cushion for their workers to furlough them indefinitely. In the case of Steelcase, an office equipment manufacturer in Michigan, they had to shut down their factories last month and they said it really softened the blow. It made it easier and it almost completely supplemented some of their workers' wages. They also started offering voluntary layoffs because they felt like some employees might want to take the benefits and
What limitations and risks do workers face when relying on enhanced unemployment insurance?
not have to work during this time. Maybe they're caring for a family member. So voluntary layoffs were an option for them because of what was in the stimulus bill.
But how could this also put employers in a tough spot?
In theory, this might seem like a good idea to employers to get rid of that extra payroll costs, but they risk alienating their workforce if they decide to furlough employees for a long period of time or lay them off completely. You risk losing your workforce and then you have to hire them back when this all blows over.
How do small-business programs like the Paycheck Protection Program affect hiring decisions differently?
you have to completely rehire everybody and they might not want to come back or maybe have found work someplace else. So in some cases, it's kind of a gamble for employers. And that's why a lot of them are opting to furlough their workforce. Like in the case of Macy's, they're opting to furlough rather than completely say you're laid off. A furlough implies that the workforce will be recalled at some point. So that helps soften the blow a little bit.
Now, as much of a lifeline as these benefits might be, for a lot of workers, the unemployment insurance does not replace a recurring paycheck.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:05–0:31
2
How did the stimulus jobless benefits change employers' decisions to lay off or furlough workers?
0:31–1:14
3
Which examples illustrate employers saying benefits 'supplemented' employees' wages?
1:14–1:53
4
Why did some companies offer voluntary layoffs instead of mandatory cuts?
1:53–2:28
5
How could expanded unemployment benefits create challenges when employers try to rehire staff?
2:28–3:12
6
What limitations and risks do workers face when relying on enhanced unemployment insurance?
3:12–3:42
7
How do small-business programs like the Paycheck Protection Program affect hiring decisions differently?
3:42–5:31
Speakers
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