Covid-19 - Unemployment "Pay Cuts"

I wish I had an easy answer for you.  Unfortunately, the government created some incredible perverse incentives here: people are being paid more to not work than they can earn by working...why would a smart person *want* to be employed under such circumstances?

We can argue about short-term vs. long-term thinking, but the truth is that only some people are mature and functional enough to engage in that sort of deferred-reward long-term thinking under the best of circumstances.  In this case, we're talking about a scale of months with a great deal of uncertainty...nowhere near the best of circumstances.  Consider that during the boom time just prior to COVID, 25% of Americans making $150,000 per year or more had $0 emergency savings.  Now imagine what the numbers are like for people without six-figure incomes, and imagine what the numbers are like when the economy isn't expanding like mad.

My point is, I'm not sure how much the uncertainty about leaving lush unemployment benefits for lower-paying work is about being in the wrong job or not being committed vs. responding to the incentives right in front of them.  In my perfect world, I'd work with a bunch of capable, ambitious stoics who are principled and playing a long game.  In reality, I can only find and hire so many of those.

You don't know why they are begrudging the idea of returning. 

Here's a little anecdote from another time of instability, around the '07-'08 housing crash, that illustrates the social pressures that can compound the perverse financial incentives at play.

I was netting $400/month after taxes and my ex was not paying child support.  A bureaucrat in my son's former school had called him a vegetable and pulled the services he needed to learn to read and speak (my little one had multiple disabilities).  Due process to challenge the decision would have taken two years, which is an eternity of precious developmental time, so I packed up and moved us to a district where there was the right specialist prepared to help him.  However, I'd underestimated how many of my Chicago clients I'd lose by moving away from the city and it wrecked my business.

We scrimped on the heating.  I dressed him in donated or hand-me-down clothes.  I ate less so my child could eat.  I got very creative in educating him and finding activities we could afford to keep him busy and learning.  We walked everywhere.  I worked hard to rebuild my career over the next few years...but in the mean time his school, people from our neighborhood, and many others shamed me for not giving up and going on welfare.

I was told that if I loved my kid enough to want to spend time with him, that if I really wanted to give him stability, that I should stop "gambling with his future" and live on entitlement programs.  Welfare was a "sure thing", and no one would blame me as the single mother of a child with multiple disabilities.    This was near the tail end of the housing crash of '07-'08, and everyone saw uncertainty around every corner.  What could an uneducated young mother like me hope to accomplish?  Anyway, if I didn't have a job I could spend more time caring for my child, and help my parents out as they got older.  Shouldn't I make my family my priority instead of some self-aggrandizing idea of a career?  Only my parents, brother, and a few close friends both knew my situation and gave me something other than this tired narrative.

The thing is, I'd grown up working poor in an area of extreme poverty on Chicago's south side.  I knew what dependence did to families.  That's the first step in ceding freedom and agency.  With the "support" comes leverage: leverage for other people to direct your choices.  They choose what your child eats, how they get to school, where you live, whom you will live with, who cares for your child if you work, whether you work, the type of work, and how much, and more.  You are now forever suspect...and if you do find new and better opportunities you may be forced to move (housing under Section 8, the most popular government-paid housing program, can't usually be changed to renter-paid housing), or not allowed to move (if you have an open child services agency case, even without any wrongdoing, you may not be allowed to move from your current jurisdiction--usually either at the school district or county level--for any reason).

I didn't want that for my family.  I wanted a better future, so I worked, and I lost relationships over it.  I was insulted by teachers over it.  I was called a reckless parent, an unloving mother, someone who gambled with her son's life and didn't care for him.  It was petty and cruel. One school official (I was never told which one) called Child Protective Services on me with the utterly insane accusation that because I fed my son a banana and eggs each morning for breakfast instead of claiming the government-subsidized breakfast of graham crackers and milk at school, I was putting him in danger of nutritional deficiencies that would stunt his development.  They dropped the case when I (knowing the law well) pointed out that if the school had a health concern for which they required a medical evaluation, the school was legally required to pay for the visit to my son's pediatrician and any associated care.

Three years later, I had my financial act together.  We lived in a nice duplex in a desirable part of the city.  I bought a car.  My career was on an upward trajectory, and things were much better than they would have been if I'd given in to the entitlement crowd.  More than a decade later we're doing even better financially, and my son, once nonverbal and deemed hopeless by the supposed experts, is a thriving junior at a science and entrepreneurship high school.  He started his first small business when he was 14.  He not only speaks and reads, but is a capable public speaker without a trace of speech impediment.

Not to toot my own horn, but most moms and dads don't have the guts to assume the world is wrong and steam on ahead.

I suspect many people are hearing similar messages now.

"You're making more money home safe with your kids than you could working...what kind of parent would you be if you went out in the world where you could catch this disease and bring it home to your family, only to bring home less money than you are making now?"

"Why would you give up a sure thing for a job that could furlough you or lay you off again in eight weeks when the PPP runs out?  That's gambling with your kids' future and safety."

"If you were smart, you wouldn't go back to work, you'd bank the extra unemployment so you have a safety margin...in a few weeks both the PPP funds and the unemployment will run out and then where will everyone be?"

"The state is weeks behind in processing unemployment claims...if you start working again, you may never get on unemployment if it all blows up."

"What are your kids supposed to do while you are at work?  You could support them *and* be there to take care of them."

"If you go back to work, you'll be bringing in less money *and* you won't be able to claim economic impact from the pandemic, so any assistance you were getting from lenders or your landlord will go away."

I'm sure that most people in this position are feeling extremely conflicted about choosing between inflated unemployment payments and lower-paying employment, especially those who were living on the edge financially to begin with.

I'm not suggesting you accommodate those who choose not to return.

We all make choices.  Just as you can't expect furloughed or laid off employees not to seek new, more stable employment, an employee who chooses not to come back after a layoff or furlough can't expect you to hold their position.  As long as you are clear in your expectations--and it sounds as if you absolutely have been--that is fair.

However, in your position, I would not be plotting to terminate everyone who seems conflicted about returning or resists doing so.  It's a pressure cooker out there and compassion is warranted.  Think about it from their point of view:

"I took a 20% pay cut vs. unemployment to come back when the company needed me, and the boss hasn't stopped resenting me since I returned."

How unfair is that?  They did something against their own immediate interestes (regardless of their long-term interests) to serve the company, or more likely their manager.  Should you really spit on them for it because they had second thoughts, or because they noticed the sacrifice?  Do you want to teach them that being honest with you will be punished?

Try leading with appreciation.

It sounds like you have a number of people who took a pay cut in order to return to work for you.  That's something.

I'd like to think that if I were in your shoes--and I'm not right now, so take my words with a grain of salt--that I would stand back and find some appreciation for everyone coming back to work in the midst of this national and international pressure cooker.  I'd do my best to lead and manage well, and I'd evaluate those who returned on their behaviors in the workplace, not on whether it seemed like theirs was an easy or difficult decision to return.

The decision isn't all about you anyway.