Business & Economy

Paid more to stay home? Legislation leads to unintended consequences

Danforth pewter
Danforth CEO Bram Kleppner holds one of the rubber molds used to make pewter ornaments and other items. Photo by Anne Wallace Allen/VTDigger

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This article was updated on April 2, at 4:40 p.m.

As he ponders a future where online orders are dropping and the opening of a new store in Connecticut has been delayed, Danforth Pewter CEO Bram Kleppner is also wrestling with another unexpected problem: Workers who leave their posts are eligible for more than $1,100 a week in state unemployment insurance and a federal supplement, more than most can make on the job.

“We are now trying to figure out how we navigate an environment in which people get paid more to stay home than they do to go to work,” said Kleppner, whose Middlebury company normally employs 100 people who work in stores or make pewter ornaments and keepsakes. 

It’s a question many business owners and managers are asking as state officials start untangling the array of new programs that were approved as part of the $2 trillion federal disaster aid package approved by Congress in late March. 

Vermont lawmakers in March approved a bill that makes it easier for people to qualify for unemployment insurance.  While the details haven’t been fully established, it is widely understood that under the new law, people can choose to leave their positions for a number of reasons related to the virus, and qualify for unemployment insurance. Previously, workers would only qualify for unemployment insurance if they left their jobs involuntarily, or if the position was eliminated. 

Meanwhile, the new federal aid package pays $600 per week to every person who receives an unemployment check. Vermont’s weekly unemployment benefit tops out at around $513. The result is that anyone making an annual salary of $53,000 or less can break even or make more money by leaving their job to collect unemployment, according to the Lake Champlain Chamber of Commerce. That includes workers who are only receiving partial unemployment benefits, according to the DOL. Austin Davis, the director of government affairs for the Chamber, said members think the incentive will prompt their workers to stay home.   

“We’re not worried about the whole entire workforce abandoning their post,” said Davis. “I’m not assuming the worst of people. But it only takes a few people at an assisted living facility, or an essential business, leaving to make it harder for everyone else who stays.”

People who are still on the job, often at much less than $53,000, are also concerned, and they’ve been contacting state officials and journalists to point out the unintended consequence of the fast-moving policymaking that emerged as the extent of the COVID-19 pandemic became apparent.

Kleppner, of Danforth Pewter, said March 31 that a number of workers had already decided to stay home and go on unemployment because they didn’t feel comfortable going to work. He expects more to follow suit when the $600 from the federal government becomes available this month. He added that he has no problem with people earning more on unemployment, in theory.

“It’s certainly true that people feel safer at home,” he said. “So if you can make more money and feel safer, it’s hard in good faith to tell people they should come to work.”

Members of the Vermont Chamber of Commerce have stories similar to Kleppner’s.

“I am getting informal reports,” said Chamber President Betsy Bishop on March 31. “This morning I had a company say they had 10 workers leave. I had another company that had two workers leave today.”

Asked about the unemployment benefit at a meeting Wednesday of the House Committee on Commerce and Economic Development, Joan Goldstein, the state’s economic development commissioner, replied that people cannot simply leave their jobs for any reason and receive the $1,100 per week.

“The first thing they should keep in mind is if somebody just quits, they are not eligible for unemployment,” said Goldstein, noting that her department has heard from many businesses on the topic. Goldstein said the recently passed state and federal unemployment bills do contain guidance that prevents people from leaving in favor of earning more at home. Officials are still sorting through the details.

Joan Goldstein, commissioner of the Department of Economic Development
Joan Goldstein, commissioner of the Department of Economic Development. Photo by Glenn Russell/VTDigger

“Granted, it is quite a lot of money to not be working,” Goldstein added. The self-employed and independent contractors who are newly eligible for unemployment will also receive the extra $600. 

Michael Harrington, the acting commissioner of the state Department of Labor, said Wednesday that workers cannot leave voluntarily and receive unemployment insurance if the companies they work for are following sanitary guidance from the state Department of Health or from VOSHA, the Vermont Occupational Safety and Health Administration.

“So long as the employer is following all best practices and is able to open back up and bring people back to work, should someone collecting UI refuse to go back to work, that would make them ineligible to continue to collect benefits,” said Harrington. He acknowledged that the state doesn’t have a system in place to make sure everyone who receives the benefits is entitled to them. 

“We recognize that may pose a concern for businesses out there, and we’ll address that when the time comes,” Harrington said. “The priority right now is making sure those benefits get to those individuals who are in need.”

As with so many of the mandates and directives created to suppress the spread of the new coronavirus, state officials are focusing on education and information to guide workers, employers, business owners and others in the right direction.

To keep their workers in place, some companies are offering bonuses. Cabot Creamery confirmed it had raised some plant workers’ hourly pay, although officials declined to go into details about why. Supermarket workers have received raises. And some Vermont lawmakers are talking about using money from the federal aid package to increase pay for workers who choose to stay on the job.

Senate President Pro Tem Tim Ashe said he had talked to colleagues in the Senate about creating a “pay bump” for essential workers. Despite the precautions taken in workplaces, workers are at risk, he said. And he added that the Vermont companies still operating need to make sure their workers stay on the job. 

The intent of the recently enacted Vermont law was to let people stay home with their children or to protect their co-workers from being infected, Ashe said. He sees his proposed pay raise as hazard pay for people whose cleaning or public-facing jobs put them at higher risk of infection.

Ashe said April 1 that his Senate colleagues generally seem to agree with him that such pay is warranted, though it’s not yet clear whether federal money will be available, or how much it will cost.

“We’re in the formulation phase,” he said. “We want to talk to the governor and to our House counterparts to see what is realistic and easy to administer.”

Betsy Bishop, president of the Vermont Chamber of Commerce. Photo by Glenn Russell/VTDigger

Rep. Mike Marcotte, R-Coventry and chairman of the House Committee on Commerce and Economic Development, said a recently formed panel on small business might be able to come to some conclusions about who can draw unemployment insurance and who can’t. The panel of lawmakers, which will meet remotely more than once a week, will have a lengthy list of questions to answer and puzzles to solve as it works its way through the vast new state and federal legislation covering loans, grants and other relief for small businesses.

“There are still a lot of questions out there,” said Marcotte, who himself owns a convenience store in Newport. “The task force is going to try to unravel all this stuff and assist businesses in how they work their way around this.”

Bishop said she understands that workers need to stay safe. But her members are worried the new unemployment insurance payments, if they remain after the crisis has passed, might deter workers from returning to their jobs.

“What we’re really looking for is how do we find a balance between helping people in the emergency time frame, but not incenting them to stay out of work when the emergency is over and the ban is lifted?”

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Anne Wallace Allen

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