Republican and Democrat politicians, plus the Media brain trust, are missing the catastrophe coming from the $600-a-week Covid-19 unemployment compensation supplemental benefit for all 50 states.
In the ivory tower of statistic worship and technocratic analysis, the supplement makes sense. When millions lose jobs, unemployment insurance only covers about $400 average per week. With overtime, stock bonuses and such, the average earnings before taxes in America is about $970 a week, so $400 + $600 = $1,000, totally replaces the median wage.
The tragedy of this false logic: it ignores that half of the full time employed make more than $970, and half make less, many far less, as low as minimum wage: $270 weekly, after taxes.
- Median high school grad 25 and older (26 million workers) earns $710 weekly after payroll taxes, laid off and receives $400 unemployment compensation, plus $600 supplemental – a total $1,000. Earnings are $290 a week more by not working.
- Minimum wage worker earning $270 weekly, laid off and receives $210 unemployment compensation, plus $600 supplemental – a total of $810, three times as much by not working.
For millions of workers it pays to not work. Not only do they make more money, there’s no miserable boss, crazy deadlines, childcare costs, driving or transit expense. Even if the government payments were the same, let alone three times as much, wouldn’t nearly everyone stay home?
Some libertarians disagree, claiming that employees love their jobs, miss their fellow workers, find meaning in life by spending 40 hours or more away from home and family. This is another proof that libertarians are rich folks, who make up jobs they like, and just want to get away from the clatter of servants washing dishes (or a nagging spouse). For the rest of us, their golf and three-hour lunches are not real work.
Unfortunately, this supplemental unemployment cash will last until the end of July.
And that means going to work is stupid and irresponsible if you are the average person. Stay home. Enjoy the summer. You might even vacation with that earlier additional $1,200 per person stimulus check that went to every adult, except those claimed as a dependent on someone else’s income tax return (including blind, crippled and senile).
For two more months the current 17 million unemployed, mostly in lower paying jobs, will make every effort not to return to work.
For many businesses no staff means no income, and they will close, go bankrupt.
Even when workers return, what will be their reaction when, for example, their weekly pay is $300, not $800?
However, you might ask, suppose your boss decides to reopen and offer you your job again?
You might hate your boss if this happens. An employer who makes someone accept $300 or $400 a week for working, instead of earning $700 or $800 by not working, is asking for serious labor troubles.
Most employers are smart. They won’t bring back the workers until after the end of July.
And so the shutdown must continue for many businesses, even though they might enter the green phase,
This will kill the economy as more business go bankrupt – a bonanza by the way for the hedge funds, banks and investors who snatch up distressed firms.
A recent interview with National Public Radio (NPR) illustrated the problem:
“The very people we hired have now asked us to be laid off,” according to shop owner Sky Marietta, “Not because they did not like their jobs or because they did not want to work, but because it would cost them literally hundreds of dollars per week to be employed.”
You also have to think [of] the benefit of not having to go to work, especially during a pandemic.
It’s not that we don’t wish that we could pay our employees at that level all the time. You’re always wanting to pay your staff the best you possibly can. But to be put in a position where you can’t compete with them being at home, unemployed, it’s really tricky. It’s a really difficult situation to be in.”
To make things worse, the Covid-19 stimulus act also includes a provision to lend businesses money that doesn’t have to be repaid if it is used to pay salaries to retain workers.
Jamie Black-Lewis, who owns Oasis Medspa & Salon and Amai Day Spa in Washington state, said she received two forgivable loans through the new federal Paycheck Protection Program, She thought it was great to help keep her 35 employees who had their pay halted when the spas closed.
No surprise, the loans and being kept on payroll made many of her employees angry. The reaction she got was a “firestorm of hatred about the situation,” Black-Lewis said.
These employees realized they could make more money from unemployment than employment.
It’s a windfall they see coming, In their mind, I took it away.
Of course, the unethical business owner can win big if they want to break the rules.
First, don’t offer jobs back to your past employees, who are now on unemployment benefits.
Then hire new workers, who are employed elsewhere at a lower wage, and report you are not cutting staff and deserve a forgivable federal loan.
In time for August 1, lay off the “replacement” workers and rehire the old staff.
That way, they get the extra money, you get the help, and taxpayers are on the hook for your scam.
And with the efficiency of our government whiz kids, no reviews will be made of cheating the program, even if there was any way or desire to recover our money.