The United States has experienced a historical year in 2020 due to the COVID-19 pandemic. Americans have been required by state governors to ‘shelter in place’; some for more than ninety (90) days and counting. All non-essential businesses have been advised to shut down. As a result, America has the highest unemployment rate since the Great Depression. The nationwide unemployment rate in April peaked at 14.7% and some experts anticipate that number could increase to as much as 25% by the time the fallout of the pandemic is done.
Federal, state, and local jurisdictions have been providing multiple programs to help Americans stay afloat and to prevent the economy from falling into complete shambles. Many businesses have had to cease operations all together because they are not considered “essential” or have to dramatically scale back their operations to comply with governmental closure orders or simply because their customers are locked down at home. The result has left millions of Americans either unemployed or with a significant decrease in their work hours. Many are also unable to work due to either exposure to COVID-19, caring for a family member with COVID-19, or school/daycare closures that have forced their children to stay home.
A. Unemployment Benefit Changes
In response to the unprecedented loss of jobs and decrease of work hours, almost all fifty states have made changes to their unemployment benefit programs. Prior to the pandemic, individuals who filed for unemployment had a waiting period of no less than one week before they could start receiving unemployment benefits. Also, before COVID-19, people receiving unemployment benefits in most states got, on average, less than half their average weekly salaries. Many states have waived the normal waiting periods, extended the time period for individuals to claim benefits, and some states have promised that some or all of the unemployment funds that workers receive will not be charged against the employer unemployment accounts. Many states have also temporarily eliminated the requirement that unemployment recipients must continue to seek re-employment. Prior to the COVID-19 pandemic, unemployment recipients were generally required to actively seek employment and had to provide proof of their job seeking efforts in order to remain eligible for benefits. But with the unprecedented layoffs and hours reductions across all businesses, states have temporarily eliminated this requirement.
In addition, the federal Coronavirus Aid, Relief, and Economic Security Act (“CARES”) that was signed into law on March 27, 2020, included language that would provide Americans who were on unemployment an additional $600 per week. Under the CARES Act, the additional $600 per week benefit is scheduled to end on July 25, 2020. However, Congress has hinted that this deadline could be extended, depending on how the pandemic progresses. As a result of the additional $600 per week, many low to mid-range hourly workers are receiving unemployment benefits that are equal to or greater than their regular wages prior to COVID-19.
B. Recruiting Amid Increased Unemployment Benefits
Despite the sudden layoffs and severe economic downturn, some “essential businesses” remained open…and busy. Businesses such as grocery stores, gas stations, pharmacies, hospitals, and delivery services are hiring and are reporting an uphill battle enticing some hourly paid workers away from the lucrative unemployment benefits they are currently receiving.
This perfect storm of sorts has resulted in a conundrum for both employers and employees – If the employee makes more money staying home on unemployment, what incentive is there for him or her to get back into the workforce?
Couple that with the shelter in place requirements, employers are also facing what is commonly referred to as the ‘fear factor’. Workers are simply afraid to leave their homes to go to the grocery store, let alone go to an in-person interview for a position or physically report to a worksite. To combat this trend, employers who have the ability to do so should consider a completely virtual recruiting and hiring process – including conducting virtual “in person” interviews via such programs as “Facetime” or “Zoom.” There are many different programs available, and candidates do not need a laptop or desktop computer but may attend using just their smart phone. In addition, if positions may be performed remotely (whether temporarily or permanently), giving candidates the ability to work from home may entice them to get back into the workforce.
Combatting the increased unemployment dollars is more challenging, especially when trying to fill low to mid-level hourly paid positions. However, some employers are bringing back “sign on bonuses” to entice employees back to work. Other “perks” such as compressed work schedules, more vacation time, lower health care premiums, or increased transportation subsidies may also be needed in the short run to help fill needed positions.
C. Employer Takeaway
COVID-19 related business closures and the corresponding unemployment has wreaked havoc on the U.S. economy. Nobody should fault Congress for taking an aggressive approach to provide much needed stimulus to individuals and businesses. Increased unemployment and stimulus checks will not be permanent fixtures, but their presence has inadvertently created a disincentive for some workers to go back to work because they are making more money staying home. As always though, money isn’t everything. Now more than ever, employers should be creative in their recruiting efforts when it comes to the recruiting process, job flexibility, and benefits to help entice those sidelined workers to “get back in the game.”
C2 provides strategic HR outsourcing to clients who want to develop optimal workforce strategies and solutions to allow them to be more competitive and profitable. C2 blog posts are intended for educational and informational purposes only.