Unemployment pays more. 7 ways to get workers back to work
Small businesses, including those which got PPP, are unable to get their workers back. Some workers are worried about being exposed, others point out that unemployment pays more.
Consider the example of Jenny, a hard-working, small restaurant owner. Jenny, who has arthritis, is now working 11 hours a day, 7 days a week. Maria, her cook, still works for her.
Jenny is unable to get any of her employees back because they make 67% more with unemployment. Maria, the cook, told me that the reason why she comes to work is that she feels bad about Jenny (read more). What upsets her the most, she says, is her colleagues claiming that they are afraid of being exposed and then posting on Instagram pictures having barbecues with others.
My career is in Finance. I work for large companies, some of which have 15,000 small businesses as customers. This is clear: if they go under, large companies will too. Back during the Financial Crisis, I set up financing arrangements to save the business of our customers. Due to the type of work I do, including teaching at NYU, I have access to a large network of experts. I’ve asked them to help me write articles and conduct webinars to help small businesses get through this. All the work we do is free.
The 3 reasons why workers are not coming back
Employers told us that workers have 3 main objections to return to work:
- “I am worried about being exposed”
2. “Unemployment pays more”
3. “Worst case I can get another job”
The case for daycares
The Economist made a strong case regarding why we should reopen daycares, pointing out that:
“With the lockdown, children could lose nearly a year’s math’s by autumn”.
“Videoconferencing can’t replace real-life teachers, or the social skills acquired in the playground”.
Thus, I asked experts to help me prepare these 7 speaking points for daycare employers which can then be used by other businesses.
7 reasons to entice employees back
I. Health
- It’s safe to go back to work with us. Our measures exceed all CDC and state government requirements. That includes conducting temperature and oxygen checks along with keeping people in isolated rooms. We have restricted access by over 95%. Parents are not allowed to enter the premises. Researchers have not found a single case in which a child brought the virus into their family.
One is more likely to get coronavirus at a grocery store, where the staff is exposed to one thousand different visitors per day.
2. Faster access to vaccines, testing. Currently, our daycare is open only for essential employees. Our staff is classified as such. That is why we were the first to have access to antibodies testing. Doctors, nurses and other essential workers could get vaccinated right away, according to the New York Times. Our daily health checks make it easier to detect and be prioritized for health care if needed.
II. Solidarity
3. Solidarity. Our manager is working 11 hours a day, 7 days a week. Three other staff members, who were also worried about being exposed, are coming to work to lessen her burden.
In addition to the aspect of camaraderie, other colleagues prefer to come to work because it gives them a sense of structure (having a routine) and is worthy reason to leave the house.
4. Facebook & Instagram. What irritates our staff members going to work the most? Colleagues claiming that they don’t go to work because they are worried about being exposed. And then posting pictures with friends, having barbecues, and going for a stroll.
III. Unemployment pays more
5. Part-time workers still qualify for benefits
Georgia allows people to earn up to $300 a week and receive full benefits. New Jersey allows workers to earn up to 20% and get full benefits. We schedule our staff so that they can retain benefits.
6. States will disqualify those not coming to work. Themselves.
The Department of Labor has clarified that:
“Voluntarily deciding to quit your job out of a general concern about exposure to COVID-19 does not make you eligible for Unemployment Assistance”.
To ensure there are enough workers, some state agencies may also proactively disqualify workers claiming unemployment benefits at daycares.
7. Employers will remember. The $600 unemployment supplement ends in July. By September, unemployment will peak at 16% according to the Congressional Budget Office. 20 months from now, unemployment may still be close to the peak of the financial crisis, according to The Economist.
What should Jenny do in September?
There is this cook named Maria, who keeps going to work for Jenny, a small restaurant owner. All other staff members quit to get more on unemployment benefits. By September, when unemployment picks, Jenny will only be able to keep a few people employed. Maria will have her job.
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About me
I worked as VP Finance, Global Controller, and CFO at Procter & Gamble, Tetra Pak, and Nivea and now work in Private Equity (PE). I also teach Finance at NYU. We have created a program to help small businesses navigate the PPP process. This is part of that project.
How other businesses can get help creating speaking points
I would like to thank Dan Kowalski and an HR colleague who helped me create this document.
See a discussion about different strategies in this Private, Facebook Group.
For specific assistance for your line of business, reach out to me (leave a comment below or through Linkedin) for the timing of our next webinar.
FAQ
To protect privacy, I modify some of the content of the questions so that everyone can still benefit from it
Can you can get new workers or not allowed?
Yes, you can get new workers. The drawback is the cost to find, hire and train them.
There is one more thing to bear in mind: you need to keep the same number of Full Time Equivalent Employees (FTEE). For example, if you had 10 employees, you can hire 10 new employees, but you still need to have 10 to get full forgiveness.
Can I use the PPP loan mainly to pay rent?
I run a preschool. We have 30 full and part time employees. We are not open and don’t know when we can open. The teachers are now all collecting unemployment. I need help paying my rent. Can I use the PPP funds for rent?
Yes, this would be a good way to go about it:
- Ask the landlord to waive 2 months in exchange for you paying upfront for 2 months. Use the proceeds from PPP for that. By doing that, you double the rent benefit.
- Do count all the hours you are working (for most of us is 80 per week, even if we are closed). Pay yourself a wage for 80 hours. That counts as 2 full-time employees.
- The fact that you have part-time employees reduces the number of Full-Time Equivalent Employees, which is good for you. See my post on how to calculate it here.
- Start thinking about the reopening and have teachers work on it. New Jersey allows workers to earn up to 20% and get full benefits.
What is the definition of Essential employees?
In New Jersey the definition of Essential employees includes (click here):
Health care workers, including home health and behavioral health,
Law enforcement personnel,
Fire and emergency services personnel,
Correctional facility staff,
Workers at child care centers,
Social services workers, including group home and shelter staff,
Government employees including child protection, child welfare, foster care, unemployment compensation, and public health employees,
Critical workers, which includes, grocery store and gas station employees.