Companies Cite New Government Benefits in Cutting Workers

Employers factor in extra federal pay in deciding how to handle their workforces; it ‘made that part of the decision more palatable’

By Patrick Thomas and Chip Cutter of The WSJ. Excerpts:

"When Equinox had to start furloughing some employees at its chain of upscale fitness clubs, Executive Chairman Harvey Spevak had a surprising message to stakeholders.

“We believe most will be better off receiving government assistance during our closure,” he said in an email. The company said the majority of employees remain on its payroll.

Equinox joins a number of companies, including Macy’s Inc. M 10.82% and Steelcase Inc., SCS 6.63% that 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."

"Other parts of the stimulus package encourage companies to keep people on the payroll. For instance, the Small Business Administration’s Paycheck Protection Program allows companies to take out loans that are forgivable if they keep their workforce largely intact and use the money for eligible expenses such as rent and utilities."

"Some of Ms. Anderson’s clients are essential businesses that have employees who would make more in the short term under the federal benefits program and, in some cases, have asked to be laid off. Some of those workers are fearful for their safety—and that of their family members—during the pandemic, she said, and would rather take the federal benefit and not come into work."