Watching and Collecting
Jobless Benefits Are Keeping Many Laid-off Workers on the Sidelines
With layoffs in Massachusetts soaring to levels not seen in almost 20 years, one might expect employment agencies to see a huge influx of job seekers for the limited number of openings that are available. But that has not been the case across the Pioneer Valley. Sure, the available talent pool is larger than before, but not significantly so, as many laid-off individuals are apparently taking advantage of government-extended unemployment benefits and waiting out the storm.
In a time of economic freefall, it seems people appreciate a good safety net.
As the job market has soured nationally, Massachusetts has seen its unemployment rate soar from 4.3% in April 2008 and just 5.4% as recently as October to 8.2% this past March. Typically, a trend like that translates to a rush of new applications at employment agencies, as the ranks of the newly laid-off scramble for available work opportunities. But in that regard, this recession has been somewhat different than others.
Weve seen recruiting become easier for sure, said Andrea Hill-Cataldo, president of Johnson & Hill Staffing Services in Springfield but only to a point. Its definitely easier to find skilled people, but typically in a recession like this we would be inundated with people. Wed be so busy, wed have to turn people away.
Simply put, the current recession isnt bringing that huge influx typical of past downturns Hill-Cataldo has witnessed. Part of that, she told BusinessWest, might be the larger safety net being set out for jobless Americans.
Im thinking that part of it is that unemployment benefits have been extended so much, and the government is backing COBRA, she said, referring to the program that allows people to hang onto their health insurance after leaving a job. Meanwhile, people are hearing so much bad news that theyre kind of opting out of searches for awhile. Theyre just not looking.
Most of those hunkering down seem to be individuals who have worked and advanced steadily in their careers for some time and have a reasonably strong skill set exactly the sort of applicant an agency wants to see in its talent pool.
Its a really interesting market, said Allison Ebner, executive vice president of United Personnel in Springfield. We have not seen a huge influx of high-level candidates or really solid workers who are looking to make a change because of layoffs. Those people seem to be staying at home.
The story changes for lower-paying positions requiring more basic skills, she noted. Were able to find those folks out there.
The extended benefits wont last forever, of course, and no one knows how the behavior of job seekers will change as the recession drags on. But for now, the number of Western Mass. residents taking a deliberate break from punching the time clock is on the rise.
One of the ongoing economic stories in Western Mass. is that of a persistent gap between the skill level of job seekers and the demands of potential employers. And by most accounts, it hasnt narrowed appreciatively for area agencies.
Certainly theres still a recruiting challenge, and there still is a skills gap, said Hill-Cataldo, particularly in typically hard-to-fill areas such as legal and administrative. That challenge isnt helped when promising individuals stop looking for work, instead filing for unemployment pay.
Indeed, the federal government has actively intervened in extending unemployment benefits across the nation. In two separate extensions, one last July and another in November, Massachusetts has seen the benefit ceiling raised from 26 weeks to 46. (Typically the state limit is 30 weeks, but that base period drops to 26 weeks when federal extensions come into play.)
However, the incentive to stop looking for work can vary with ones previous income level. Thats because, while unemployment pay in Massachusetts covers around 50% of someones previous salary, it maxes out at $628 per week.
So, while someone in a lower pay bracket might see their income halved if they dont find new work, an individual who brought in, say, $1,200 a week before being laid off might be reluctant to take a lower-paying job when they could collect almost as much by staying at home.
At the same time, however, someone laid off from an especially high-paying position isnt likely to find much relief in even the full unemployment benefit. These factors, and how they affect each family differently, has made it tough for employment agencies to predict when, and in what fields, theyll see an influx of new job seekers.
In addition, as Hill-Cataldo noted, the federal stimulus package passed by Congress in February includes a subsidy that covers 65% of the COBRA premium, for up to nine months, for laid-off workers who use the program to maintain their group health insurance.
COBRA is a lifeline for millions of Americans, particularly at a time of soaring job losses, but its also expensive; typically, workers must pay the entire premium, plus a 2% administrative fee, when before their employer picked up most of the tab. The average familys cost of COBRA coverage is around $1,100 per month, which is being reduced to less than $400 with the 65% benefit further persuading many individuals to ride out the economic storm using unemployment benefits, rather than looking for a new job.
With people able, in many cases, to pocket from the government a sizable portion of their paycheck while retaining health coverage, said Ebner, many are choosing to do so in some cases taking advantage of worker-training resources or going back to school, but in others simply taking an extended vacation from working. The benefits, in other words, provide a much more emphatic reason than usual to pass up jobs at lesser pay rates than theyre used to.
A common assumption is that folks out there are willing to take less money for more work, but we have not seen that to be true, said Ebner. People who made $20 an hour and are now willing to work for $14 those people are not there.
Its a case where unemployment benefits have been extended, and Washington is giving people longer to collect, she continued. Right now, the career centers are flooded with people filing for unemployment; theyre swamped. But the employment agencies, the temporary help services, theyre not seeing an influx of highly qualified people.
Indeed, the areas one-stop career centers, FutureWorks in Springfield and Career Point in Holyoke, have not only reported a massive surge in new filings, but their leaders have lamented being forced to pull limited resources away from their key missions, such as job training, to meet the need.
Geography plays some role, too, in how aggressively people pursue new jobs, Ebner explained. There are positions in Monson and Palmer at an entry-level rate, but folks in Springfield who are unemployed are not willing to go out there, she said. Most people are not willing to make that drive.
Despite those factors, Joseph Ascioti, president of Reliable Temps in Agawam, still senses a desire for work out there.
There are more candidates. When we do off-site job fairs, were getting double the amount of people we did in the past, he said and that, in his agencys case, has eased the skills gap somewhat.
For instance, with some of the machine-shop positions, a year or two ago we couldnt find anybody. But now, at least some people are responding with the skill level the company is looking for. Thats interesting. But we still have jobs, some of the higher-skilled positions, that go wanting because we cant find the right skill set.
At the same time, he told BusinessWest, many applicants dont fully recognize how much an employers market this is, and come in with higher expectations than they should about pay and benefits.
Were definitely seeing more people come in, said Ascioti, particularly on the low end of the pay scale. But were also seeing some people who dont yet understand what the reality is. Maybe theyre more willing to work a job they dont like once they understand whats out there.
The fact remains, of course, that harsh realism could turn into desperation for many out-of-work individuals if the frozen job market outlasts government assistance.
A lot of our clients are in hiring freezes right now, said Ascioti, and it doesnt matter how many people we have coming in the door if we dont have any work for them. Companies are being very cautious right now, and its a little worrisome. But Im cautiously optimistic that well see some light at the end of the tunnel.
Joseph Bednar can be reached at