Businesses: Extra unemployment money makes it hard to find workers

Eagle Landscaping & Supply Co. in Southfield had to use a temporary worker agency to find staff this year. Like many other businesses, the company is having trouble recruiting employees when many are collecting $600 per week from the federal government in addition to their regular state unemployment benefit.

“We usually have many, many people coming in here just looking for work,” said Deborah Eagle, manager of the landscaping supply yard and landscaping company. “But not this year because of what’s going on … I think there was only one person.”

Some businesses reopening after the pandemic shutdown are finding that the supplemental $600 per week offered under the federal Coronavirus Aid, Relief and Economic Security Act is a disincentive for workers who can make more money by remaining unemployed.

Other workers at small businesses who are worried about risking the health of themselves and their families — or who can’t find child care — are taking paid sick leave or family leave granted under the Families First Coronavirus Response Act.

The $600 supplemental unemployment benefit expires July 31. Members of Congress are debating whether to extend that benefit, which on top of state unemployment benefits brings many Michigan workers to receiving nearly $900 a week. Republicans have generally been resistant to such an extension, citing positive job reports.

Despite the problem Eagle has in finding workers, she also sees the benefit the supplemental benefit provides: “It’s making people go out and buy things they wouldn’t normally buy and do things with that money to keep the economy going, and I think it’s working.”

While it’s “not a universal complaint,” the extra $600 “is a notable complaint or concern” among businesses, Detroit Regional Chamber CEO Sandy Baruah said.

“Companies are dealing with it several ways,” he said. “There’s a segment of the people who’ve expressed concern about it — that it is inhibiting their ability because they can’t get people off of unemployment.”

Other companies have worked around the issue since they are in a slow ramp-up period, Baruah said. The chamber has recommended the state’s Work Share Program, which allows employers to bring employees back with reduced hours while they continue to collect unemployment for lost wages.

Ferndale’s Detroit Bubble Tea employed 15 people before the stay-at-home orders shut the place down in March. When owner Arun Prasad and his wife went to reopen for carry-out at the end of May, they struggled to convince workers collecting unemployment to return.

Prasad doesn’t want to see the $600 weekly payout extended. Two employees are not returning to work until Aug. 1 because one has a newborn and the other’s boyfriend has a health condition that makes him vulnerable to COVID-19 complications. Both are valid reasons, Prasad said. But another 10 workers have not responded to calls for scheduling. He is hiring again and has received more than 100 applications.

“It’s definitely beneficial toward certain individuals that need it,” Prasad said of the federal payments. “But I think it is a catalyst toward — dare I say it — laziness in a sense. No one wants to come back to work. You can make less money and do work versus make a ton of money and don’t do anything.”

‘Have to survive’

Some employees, particularly service industry workers, say they simply do not feel safe, given the conditions under which they work and their lack of health care benefits. 

A group of restaurant workers in Washtenaw County, for example, started a petition urging the extension of dine-in closures: “The data so far shows that in other states where bars and restaurants have reopened there has been a significant spike in cases and deaths,” the petition reads. “We fear that we are being forced back to work as ‘test subjects’ for the sake of the economy and that eventually, when the second wave takes place, businesses will be shut down again.”

Rachel Litwiller, a 20-year veteran of the restaurant industry who is a server at Coach’s Pub and Grill in Lansing, hopes the pandemic leads to change in the industry. She is involved with restaurant-worker rights group Restaurant Opportunities Centers United, and advocates for higher wages and better benefits. The pandemic has brought home the importance of both for her.

“Hopefully what will happen is these things will be more accessible — unemployment, sick leave, any type of benefit you get at any type of larger-scale corporate job,” said Litwiller, who volunteered to come back when Coach’s reopened. “I feel for an employer having to be in a position to … offset a wage when your cost of everything (is high). But at the same time, being a worker, I have to survive as well.”

A compromise on unemployment benefits might be for Congress to extend the duration of the benefit but reduce the payment, said Charley Ballard, a Michigan State University economist. That way, the larger safety net remains while still motivating some to return to work.

“We need to be really careful about offering unemployment insurance that’s so generous that people don’t want to go back to work,” Ballard said. “But the unemployment insurance doesn’t do a great job of distinguishing between those who are able to go back to work and those who aren’t. So that’s the trick.”

The prospect of staying on unemployment is appealing primarily to low-wage workers, he noted. Among U.S. workers eligible for unemployment, two-thirds can collect more than their typical earnings, according to a study published last month from the University of Chicago’s Becker Friedman Institute for Research in Economics. Non-tipped minimum-wage workers in Michigan making $9.65 per hour stand to make substantially more by staying at home.

The pandemic, as a result, has spotlighted the country’s deep income inequality, which is even starker along racial lines, Ballard said: “If wages of low-wage workers had increased at the same rate as wages of high-wage workers, nobody would be working for less than $600 a week.” 

Since the outbreak began, some companies nationally have moved to increase wages or provide bonuses. Target Corp. earlier this month moved up the date to July from the end of the year when it would increase its starting wage to $15 per hour.

But it doesn’t matter what hourly rate Phantom Fireworks offers to work in his fireworks showrooms, CEO Bruce Zoldan said, it’s still difficult to get people to work there. 

“They’re collecting unemployment plus the $600, so nobody wants to work,” he said. “You might get someone at $20, $25 or $30, but for the fireworks business at this point, it would be difficult.”

Auto plants

The automotive sector has faced separate challenges in getting workers to return after the COVID-19 shutdown. Some plant workers have stayed home because of compromising health problems or trouble finding child care.

On a single day — June 4 — 1,350 members across two shifts were unable to make it into work at Ford Motor Co.’s Kentucky Truck Plant, United Auto Workers Local 862 plant chairman Allen Hughes said in a recent letter to members. The plant employs 8,620 hourly workers.

The Dearborn automaker had processed more than 1,000 leaves at the plant for those with health conditions that make them vulnerable to the virus or who cannot find child care, Hughes said. Ford had hired 795 temporary full-timers at the plant since March to fill in.

Absenteeism has not stopped Ford from returning to full, pre-coronavirus production levels, spokeswoman Kelli Felker said: “We hired additional temporary workers as we prepared to resume production because we expected higher absenteeism due to concerns about child care and COVID-19.”

General Motors Co.’s truck plant in Wentzville, Missouri, also has had attendance issues, said Glenn Kage Jr., president of UAW Local 2250. Some workers have called in to use paid sick time or are applying for unpaid leave under the Family and Medical Leave Act.

During GM’s eight-week shutdown when there were some plants with voluntary paid shifts, the company did “feel the stimulus money influenced employee’s decisions to accept work,” company spokesman David Barnas said in a statement. “In contrast, when we began the resumption of operations (in mid-May) on a mandatory or recall basis, the stimulus dollars would no longer be applicable because they were not offered an option of remaining on layoff.”

The UAW and GM have agreed, on a case by case basis, to use temporary employees to supplement the workforce to accommodate leaves of absence related to COVID-19, Barnas said.

Overall absenteeism at some Fiat Chrysler Automobile plants has been “slightly higher” than before the pandemic, spokeswoman Jodi Tinson said in a statement.

“Our employees also have been able to request leaves of absence, which are considered on a case by case basis,” Tinson said. “Through this unprecedented situation, our manufacturing teams have been able to successfully manage how our workforce is utilized, which includes the use of supplemental employees, to keep our plants running safely.”

Not everyone who requests a leave is granted one. That was the case for Dajuan Hampton, who had child care for his 5-year-old daughter fall through after returning to work June 8 at Fiat Chrysler’s Warren Truck plant. 

The 39-year-old Detroiter said he was turned down for leave by human resources. So he is using two weeks of paid vacation time through the end of this week when the plant closes for retooling through September.

“I was concerned,” Hampton said. “The steps that had been taken outside of the plant that were viewable to everyone — the walking in, checking your temperature, turning in the questionnaire — that was done to the T.

“When I walked in, nothing was done. People are getting in trouble for taking their masks off. It is hard to work for eight hours and having a mask for a prolonged period of time. We didn’t have the break times we were going to have. They were scheduling overtime. I didn’t stay long. I was out of there.”

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