Furloughs: Weighing the Unemployment Costs and Benefits

Abstract

In response to the COVID pandemic, the CARES Act created a $600 federally subsidized weekly increase to existing state unemployment benefits. This leaves struggling employers with a dilemma: Should they do whatever they can to maintain payroll for employees who might have very little work in light of quarantines and shutdowns, or should they conduct temporary furloughs so their employees can access expanded unemployment benefits?

Keywords: CARES Act, Unemployment, COVID

JEL Classification: K30, K31