Increased Unemployment Benefits Challenge Small Businesses

Unemployment Challenges for businesses

75% of your Workers Could Make More Money on Unemployment:
White Paper on the Challenges Increased UI Benefits Pose for Small Businesses 


Since it was enacted in March, the CARES act has increased the amount of weekly UI (Underemployment Insurance) benefits that unemployed workers can receive. A study done by the National Bureau of Economic Research (NBER), found that between April and July 2020, 76% of workers eligible for unemployment were eligible for benefits that were more than what they would earn from working. Simply put, up to 3/4ths of your employees could make more money collecting unemployment.   

Small businesses and businesses that recruit low-wage workers have been hit particularly hard by this, and despite high unemployment rates, many are struggling to fill their open positions. What can these types of businesses do to improve their hiring outcomes right now? 


It is challenging, and may even seem impossible, to convince people to return to work when they are earning more from unemployment benefits. If a new unemployment act gets passed, which seems likely, employers who are looking to hire new, low-wage workers will need to adjust their hiring strategy. 

Here are a few ways to improve recruiting outcomes until increased unemployment benefits expire:  

  • Offer more money: Though it may seem counterintuitive, if you have a hiring need right now, increasing your wages can end up saving you time and money in the long run. Similarly, offering incentives like a signing bonus can encourage people to take jobs they might not have otherwise. Simply put: your business is competing for workers against increased unemployment benefits. If you want to hire or retain workers, you need to pay more than the competition.
  • Promote your non-financial benefits: If your company offers benefits, now is the time to show them off. While unemployment can offer individuals money, company benefits may be even more valuable to some people. Offering health insurance and paid time off are a great way to incentivize people to opt out of unemployment and join your team. Consider using this time to implement a 401k matching program, or commit to providing company-lunch on a daily basis.
  • Keep it clean: Through a BOLT community survey, we found that more than one in four job seekers declined a job this year due to fear of contracting Coronavirus. Implementing safety measures like mask policies and social distancing guidance will not only keep your current workforce safe, but can also help to alleviate the concerns of potential employees. For more suggestions and resources on this topic, check out our blog.
  • Work with a staffing agency: Last but not least, working with a staffing agency can be a great way for companies to improve their hiring outcomes. Local staffing agencies often have valuable insight into the current state of your area’s job market, along with connections to local job seekers. We at BOLT work closely with our clients to provide them with recommendations and staffing solutions to address their unique hiring challenges. 

Case Study: 

Client: Large beverage distributor in Northern California
Employees: +/- 30 internal with a large temporary workforce
Staffing use: Seasonal increases in workload, special projects
Challenge: Finding temporary workers during COVID

One of our clients, a large beverage distributor in the North Baywas struggling to hire and retain employees for their distribution centerPrior to the pandemic, hiring for warehouse associates, logistics clerks, and shipping & receiving specialists was never a challenge for them. We encouraged them to increase their pay rates from $15.50/hour to $17/hour, and our client decided to give it a try. Following this change, BOLT was able to source and start new employees for their jobs within a week.  


If your business is facing difficulty hiring right now, you are not alone. We would love to speak to you about the unique recruiting challenges your business has faced this year. Call us at (707) 939-2800 or click here to get started finding the people you need.


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