So first, what is this payroll tax deferral?

As part of the CARES act for economic relief during COVID-19, employers can choose to not withhold employee contributions to Social Security (6.2%) or Medicare (1.45%) for some employees, for a while.

Is it a bad thing if my employer is refusing to participate?

This is only a temporary delay in collection, the money would be still be owed in the future.  This money would only be withheld through the end of 2020, and employees would be responsible for repayment, meaning you’d have to come up with the cash in early 2021. Since the COVID-19 epidemic is not anticipated to have resolved by early 2021, and in fact may very likely be expected to be worse, it would be really awkward to expect these employees to be making this repayment in less than 6 months.

And you’d have to file additional paperwork.  Which for most people would mean an additional expense as they got additional or more expensive software, or paying for extra forms with their tax preparer.

This deferral is only applicable to some employees, you may never have been eligible for it, whether or not your employer chose to participate.

Also, for employers, since this payroll tax deferral doesn’t apply for all employees, they’d have to very rapidly get and deploy a software patch with differential rules.  And employers must still be making the employer portion of Social Security and Medicare (an additional 6.2% and 1.45%).  It’s much easier and cheaper for them to make no changes. Money your employer is saving helps keep them more financially stable.

So while it may be a short term convenience to have this payroll tax deferral, if your employer isn’t participating, don’t feel like you’re being shorted much.  In fact, your employer may be doing you a favor.