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Honda And Nissan Tell Their Furloughed American Workers To File For Unemployment

Illustration for article titled Honda And Nissan Tell Their Furloughed American Workers To File For Unemployment
Photo: AP

Honda idled its North American plants on March 23, while Nissan did on March 20, both to help contain the deadly outbreak of coronavirus, initially still paying its workers. But now both companies have told their furloughed workers to apply unemployment benefits as the shutdown of factories drags on.

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Honda has been paying its workers 100 percent of their wages, while Nissan paid 80 percent of wages, but now both companies say they will have to temporarily stop paying workers, making them eligible for unemployment, according to Bloomberg.

Furloughed workers at all 10 of Honda’s U.S. factories won’t receive wages from April 13 to May 1, making them eligible to get unemployment benefits from local authorities, said Teruhiko Tatebe, a Honda spokesman.

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Nissan is temporarily laying off about 10,000 workers at its auto-parts and vehicle-assembly plants in Mississippi and Tennessee, and asking them to apply for state unemployment until the facilities re-open in late April, company spokesman Lloryn Love-Carter said in an email.

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What’s striking here is that Honda still says that they could still resume production after May 1 at its plants, including ones in Ohio and Alabama, while Nissan is aiming for April 27 at its plants in Tennessee in Mississippi. What those dates should probably read instead is, “indefinite,” since no one can predict the future of the virus and we are still far from the apex, especially in the south, which is home to not only Nissan plants but also those belonging to BMW, Mercedes, and Volvo, among other automakers who have also idled.

Nissan and Honda’s timelines, in other words, still seem pretty optimistic, and telling your workers to apply for unemployment suggests to me that Honda and Nissan may not even believe the timelines themselves. We’re in this for the long haul, pretty clearly, as crappy as that is.

These workers should be eligible for both state unemployment and the $600 promised weekly that was included in the $2 trillion federal rescue package, but what they’ll actually get in the end depends on where they live. To take two examples, Mississippi, where Nissan employs over 5,000, offers the lowest amount in the country, or $235 per week maximum, while Ohio, where Honda has a huge presence, offers a max of $480 weekly.

None of the American employees for Nissan or Honda are unionized, while this is how Bloomberg reports pay was handled at the Big Three:

Unionized employees of General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV receive state unemployment and supplemental benefits that make up about 75% of their pay, based on collective-bargaining agreements.

News Editor at Jalopnik. 2008 Honda Fit Sport.

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DISCUSSION

halftrackelcamino
Half-track El Camino

Nissan and Honda’s timelines, in other words, still seem pretty optimistic, and telling your workers to apply for unemployment suggests to me that Honda and Nissan may not even believe the timelines themselves.

Eh, not necessarily. Not getting paid by your employer is kind of the definition of furlough. The whole point is that you stay on the books, keep (some of) your benefits, and are expected to return to work eventually—but you don’t work, you don’t draw a paycheck, and you qualify for unemployment. The specific timelines may or may not be realistic but that isn’t relevant. The whole point of putting your employees on furlough is to save costs by not paying them, but be able to get them back easily when business improves.

Right now, furloughing a lot of employees makes sense for a lot of employers. There are programs in the CARES Act designed to help employers keep meeting payroll, but they won’t kick in until at least May. Meanwhile, unemployment benefits have gone up by $600/week across the board, starting April 1—which makes being on unemployment a lot more workable for most people. So it makes sense to furlough a lot of people now, with the intent to bring them back in May or whenever the money is there to start paying them again.

The key points in terms of how successful this gambit will be are whether people can get unemployment benefits quickly enough for it to matter (depends a lot on what state you work in, some state unemployment systems are fine while others are melting down) and whether the payroll protection money starts showing up in May or not (again, probably depends—some major banks have already decided not to finance these loans).

Some of the above applies mainly to small businesses, though. I’m not really familiar with what kinds of programs large auto manufacturers have access to, but I imagine the general idea is similar. Furlough people now to save payroll costs, get money from the feds to cover it, then bring them back once you have that in place. Meanwhile, workers collect the enhanced unemployment and are mostly fine financially.