Job-Sharing Furloughs would pay off big for Employers, Workers, and Taxpayers
Below is a column written by Senate President Steve Sweeney (D-Gloucester/Salem/Cumberland) and published by the North Jersey Record on May 15, 2020
The bipartisan federal coronavirus relief legislation provides a unique opportunity for states like New Jersey to save hundreds of millions of dollars now to avert the need for future layoffs, while providing higher unemployment benefits to furloughed workers with the federal government picking up the cost.
The federal Coronavirus Aid, Relief and Economic Security (CARES) Act includes generous federal support for existing job-sharing furlough programs because lawmakers believe it is better for public and private employers to furlough workers part-time with full health and pension benefits than it is to lay off workers and cut off their benefits with no guarantee that they would be able to return to their jobs.
With the CARES Act requiring the federal government to pay 100% of the unemployment benefit costs of every furloughed worker, it is clear that the potential budget savings would be enormous for New Jersey state, county and municipal governments, school districts, colleges, and private and nonprofit employers — many of whom were being forced to begin layoffs because of declining revenues.
That’s why we urged the Governor and the Department of Labor and Workforce Development over a month ago to use their executive authority to immediately implement a job-sharing furlough plan to maximize federal aid to New Jersey employers and employees through a July 31 window.
Senators Nellie Pou (D-Passaic), Steve Oroho (R-Sussex) and I introduced Senate Bill 2350 to maximize savings by authorizing the Labor Department to approve furlough programs retroactively, and to fully guarantee worker pension, health benefit and seniority rights. Our bill overwhelming passed the Senate and Assembly yesterday, and it has broad support, including the New Jersey Education Association, State League of Municipalities, Business and Industry Association and the Chamber of Commerce. The governor should immediately sign the bill.
New Jersey residents pay more taxes to the federal government and get less back than any other state. We should take full advantage of this program that would save hundreds of millions of dollars for taxpayers and employers by having the federal government pay the unemployment benefits of furloughed workers, while putting hundreds of millions more in additional federal payments into the pockets of employees whose services are not needed full-time.
Under the CARES Act and New Jersey law, furloughed employees would receive the same $600 a week in additional federal unemployment benefits as laid-off workers, but their combined salary and unemployment benefits would be 25% higher, their pension and health benefits would continue, and the federal government would pay 100% of their unemployment benefit costs. In fact, employees making up to $89,000 a year would get more take-home pay on furlough than they would by working full-time until July 31, when the extra $600 federal payments end.
While a majority of state, county and municipal government and school district employees continue to perform vital services during the coronavirus crisis, many of the 147,000 full-time non-uniformed county and municipal government employees, and much of the white-collar state government workforce, and college and school district support staff do not have full-time work with their offices closed.
Public employers are looking for savings to make up for lost revenue and worry about budget deficits. Colleges are losing tuition and returning room-and-board payments. Local governments are losing parking and permit fees, and worrying about late property tax payments. State government is hemorrhaging sales, income, gas and corporate tax revenue.
The savings for public employers, employees and taxpayers are greater under our proposed Job-Sharing Furlough Program than the current unemployment system.
Under a traditional layoff, a town that self-funds its unemployment benefits would save only 40% of its payroll costs because it has to cover the cost of unemployment benefits. Laid-off workers would get 60% of their pay from unemployment benefits and would do no work, but their state unemployment benefits and $600 a week extra federal unemployment payment would put more money in their pockets than their colleagues who are still working. This is not a secret; everybody knows it.
Under our Job-Sharing Furlough Program, towns would save 60% of payroll because the federal government would pay for unemployment benefits. The town would pay 40% of regular salary, and the furloughed employee would work two days a week, which would enable the town to offer furloughs to more workers by dividing the work. Because state unemployment benefits under the furlough program are higher, the furloughed workers would take home 76% of their regular salary in combined pay and unemployment benefits plus the same $600 a week extra from the federal government.
The tens of thousands of New Jersey private employers participating in the CARES Act’s Payroll Protection Program would save even more because the U.S. Small Business Administration program provides loan forgiveness for 100% of payroll and benefit costs for workers in the furlough program. Furthermore, the federal reimbursement for unemployment benefits will keep employers’ future unemployment insurance rates from going up.
With the federal CARES Act providing such generous incentives to enable us to share the work and maintain the stability of our public and private workforce during the coronavirus shutdown, the governor and the Department of Labor and Workforce Development should act quickly to make the New Jersey Job-Sharing Furlough Program a reality.
Money on the table. Grab it.May 4, 2020