Half Of U.S. Workers Can Make More On Unemployment After Emergency Benefits

About half of U.S. workers can make more being on unemployment insurance than working after Congress hiked benefits in the aftermath of widespread shutdowns over the coronavirus.
Most governors in the United States have instituted an emergency stay-at-home order in the past six weeks to slow the spread of the coronavirus, shutting down large sections of the economy and forcing businesses to lay off and furlough tens of millions of workers. Businesses are tapping new emergency aid programs to hire back some of their employees, but a recently inflated unemployment insurance program is often beating what employers can offer, according to The Wall Street Journal.
Congress passed a series of emergency aid bills to help people who lost their paychecks and businesses who lost most or all of their customers through the pandemic period. Lawmakers created the Paycheck Protection Program to provide forgivable loans to small businesses contingent on them spending most of the money on fixed costs such as rent and utilities and hiring back or keeping most of their employees.
Many small businesses that have received loans are trying to rehire their employees or take them off furlough, severing their unemployment benefits. For about half of employers, getting their employees back on payroll means cutting off benefits that were better than what the employer can offer.
Jamie Black-Lewis, who owns two spas in Washington state, said the unemployment benefits caused a division between herself and her employees when she took them off furlough, even though they were not expected to work.
“It’s a windfall they see coming,” Black-Lewis told CNBC, referring to unemployment. “In their mind, I took it away.”
“I couldn’t believe it,” she said. “On what planet am I competing with unemployment?”
Workers on unemployment earned an average of $377.97 last year, according to Labor Department data. Congress increased those benefits by $600 a week for the period of the pandemic.
“Our interior-cleaning staff are going to have to come back on the payroll rather than making the equivalent of $23 an hour to stay home,” said Tom Hoffman Jr., who owns several car washes in New York. Hoffman said that he typically pays staff $13 an hour, above the state’s minimum wage but far below the roughly $978 a week that unemployment benefits during the pandemic are expected to average.
Employers unable to entice their workers back on payroll may run into a situation where they have accepted a loan through the PPP expecting it to be forgiven, but they are unable to meet the threshold percentage for keeping workers employed.
“The unemployment benefits are so generous that in many places workers are telling their bosses they’d rather be unemployed than return to their jobs,” National Restaurant Association executive vice president Sean Kennedy told The Wall Street Journal. “It’s not that these workers are lazy, they’re just making the best economic decision for their families.”
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