business news in context, analysis with attitude

The Wall Street Journal reports this morning that a number of companies - including Equinox, Macy's and Steelcase - are "citing the federal government’s beefed-up unemployment benefits as they furlough or lay off staff amid the coronavirus pandemic. The stimulus package is changing the calculus for some employers, which can now cut payroll costs without feeling they are abandoning their employees."

The logic:  "The new stimulus package will give employees who have been laid off or had their hours cut an extra $600 each week for up to four months on top of their state’s regular unemployment payments. By itself, the $600 is the equivalent of working 40 hours a week at $15 an hour. For someone working full-time and normally earning $7.25 an hour that comes to more than double their income before getting laid off."

The Journal writes that "Macy’s Chief Executive Jeff Gennette said the new benefits in the federal stimulus program played a role in the company’s decision to furlough 125,000 workers this past week. The retailer’s leadership team decided that the extra $600 a week, plus the fact that Macy’s would continue paying health benefits through May, provided enough of a cushion to furloughed workers, he said."

KC's View:

I got an email from an MNB reader this week that read…

KC: we are a food manufacturing company. We are open for business, and we are hiring. But the candidate pool is not as deep as one would think. And then we got this yesterday from HR:

"Our recruiter sent us this note from one of her sources.

'I can share with you that we have seen candidates already reacting to the stimulus bill passed on Friday. We had several employees with good attendance not show up for work on Monday. Unemployed people now average $23-24/hour staying at home. The average person makes $350/wk from the state and then the Fed adds $600/wk.'

At this rate, it might take a long time to get people back to work, when 'not working' can seem a more financially rewarding option."