Employees Furious When Owner Keeps Paying Them - They Would Have Made More on Unemployment
A small-business owner in Washington state is describing how the federal government’s increase in unemployment benefits for people who have lost their jobs because of the coronavirus is causing her to compete with unemployment.
Jamie Black-Lewis, who owns two spas, was thrilled after learning she had secured two small-business loans through the Paycheck Protection Program to continue paying her employees even though the businesses were closed.
But, according to Black-Lewis, her employees didn’t share her excitement.
She told CNBC that when she told 35 employees in a virtual conference that she had received loans of $177,000 and $43,800 for each spa to pay them, the news did not garner the reception she was expecting.
“It was a firestorm of hatred about the situation,” she said.
She got a forgivable loan. Her employees hate her for it. #investinyou (In partnership with @acorns.) cnb.cx/3bvqBOX
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Black-Lewis said her employees were upset because they were due to receive unemployment benefits that would have paid them more than their jobs.
The $2 trillion CARES Act, passed last month as an emergency measure to help workers and businesses hit hard by nationwide closures, included a provision that added an extra $600 a week to existing unemployment benefits.
CNBC reported unemployment benefits generally cover roughly 40 percent of a worker’s lost wages.
With the weekly increase of $600, many low-wage workers can come out ahead if they lose their jobs.
Black-Lewis said some of her employees were among those who were set to be paid more for not working than for retaining their jobs.
“It’s a windfall they see coming. In their mind, I took it away,” she said.
“I couldn’t believe it,” Black-Lewis added. “On what planet am I competing with unemployment?”
A number of Republican senators warned in March that the increase in unemployment benefits could create an incentive for people not to work.
“We have a virus and we know people can’t work for a variety of reasons,” Florida Sen. Rick Scott told the Miami Herald.
“[We’ve] got to help them, but at the moment we go back to work, we cannot create an incentive not to work. We cannot be paying people more money on unemployment than they get paid in their job,” he said.
Scott was joined by South Carolina Sens. Lindsey Graham and Tim Scott and Nebraska Sen. Ben Sasse in expressing concerns about the boost to weekly unemployment benefits.
The GOP lawmakers all argued that unemployment benefits should have been capped at a worker’s current income.
MarketWatch reported the $600-per-week in added unemployment compensation added by the CARES Act will be paid to unemployed workers weekly throughout the economic crisis and can last as long as 39 weeks.
Black-Lewis said the added benefit created an unintended consequence by causing her to have to compete with the unemployment system — and has forced her into being the one who took money from her workers, rather than being the one who secured their jobs and paychecks during the crisis.
“They were p—ed I’d take this opportunity away from them to make more for my own selfish greed to pay rent,” she told CNBC.
With her businesses securing PPP loans, it meant her employees were no longer eligible to receive unemployment.
“Bad will has been cemented into the business because I took it away from them,” Black-Lewis said.
“There’s a bad taste from it,” she concluded.
“We’ll recover. But it’s just a bummer.”
