Most U.S. workers, businesses not using key unemployment benefit

About 30 million workers in the United States have filed for unemployment benefits, but government statistics show that most aren’t using a potentially lucrative benefit that was part of the $2 trillion CARES Act that was passed in March at the onset of the COVID-19 crisis.

As part of the deep stimulus package, the federal government included provisions to encourage businesses to implement shared-work, or short-time compensation, programs.

The CARES Act provided 100 percent federal funding for the program and provided grants for maintenance. The idea was to keep employees on U.S. payrolls, even if their hours were reduced, and thus stabilize economies in the face of massive layoffs and furloughs.

“One of the department’s main objectives is to help keep workers connected to their jobs when possible,” Assistant Labor Secretary for Employment and Training John Pallasch said last month. “[It is] is one of many tools that employers can use to retain connection with their employees, ease the financial impact of the crisis on their employees and to be ready to reengage quickly as business restarts.”

Federal figures, however, show that the program has been underused by both businesses and workers. Thursday’s unemployment report showed that for the week ending May 30, only 227,000 of the 29 million Americans who filed for unemployment benefits — about 0.008 percent — did so through shared-work programs.

By using the program, employees who have had their hours reduced can make up for the lost wages with unemployment benefits plus receive an enhanced federal jobless payment of $600 per week. In some cases, the benefits added up to more than a worker’s normal, full-time wages.

Nate Cook, an entrepreneur in residence at Cornell University in New York, told media one reason for the low use rate might be because the program is poorly understood.

“Historically, shared-work was an alternative to layoffs and furloughs,” Cook said. “They would have a reduction of hours in lieu of a layoff. Now, the layoffs and the furloughs have already happened, so it’s a different thing.”

One possible deterrent keeping larger businesses from participating is that to receive money, they also must file a short-time compensation plan to appropriate state agencies for approval. And because each state operates differently, no uniform set of steps exists.

Each state runs shared-work programs on an individual basis, meaning that although there are some federal requirements, interstate businesses also face the added administrative burden of calculating benefits provided by each state’s program.

Still, some businesses and workers are in the programs, and the number is expected to rise. Unless Congress seeks an extension, however, the federal government’s $600 weekly enhanced unemployment payment will get over beginning in August.

Pic Credit: https://www.flickr.com/photos/182229932@N07/49733362677

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