An additional $600 per week in unemployment benefits has started going out as part of the coronavirus relief bill passed in March -- but the new payments, combined with state unemployment benefits, already are causing concern that some workers could be in a position to actually make more money by leaving their jobs.
For an economy already fractured by social distancing policies meant to curb the spread of the coronavirus, the perverse incentive threatens to do further damage, according to workers, business owners and economists who spoke to Fox News.
“It’s a huge issue. A large slice of the U. S. workforce will make more money by not working than by working,” David Henderson, an economist and research fellow at Stanford University’s Hoover Institution, told Fox News.
The average state already gives out $463 per week in unemployment benefits. When combined with the new $600 per week, that works out to $1,063 per week – the equivalent of more than $26 an hour, or $55,000 a year.
That angers some essential workers on the front lines on the crisis.
“I can tell you as a worker who barely makes over minimum wage, at $12 an hour, the whole thing is complete BS,” Otis Mitchell Jr., who works in West Virginia transporting hospital patients to get medical tests, told Fox News.
Mitchell Jr. added that he has unemployed friends who already are getting the extra $600, and that “I prefer to work, but sadly I’d make more staying home.”
“I work in a hospital of all places and we aren’t being compensated anything [extra],” he added.
He said he also knows people at his workplace “who are just wanting to get laid off, completely because they’d get more money being at home.”
Unemployment benefits traditionally require a worker to be laid off to collect benefits, and so many people are not yet aware that the relief bill allows a person to quit and still collect as long as they “self-certify” that they had to quit because of the coronavirus situation. The relief bill says that staying home to be the primary caretaker of children who are out of school counts as one automatically valid reason.
And while traditional unemployment benefits pay out based on an employee’s previous income, the new benefits pay a flat $600 extra per week even if a worker’s previous job paid less.
The generous payments are temporary, however. They are scheduled to last for four months, ending July 31.
But politicians already are considering extending that end date in a follow-up relief bill. This weekend, House Speaker Nancy Pelosi wrote a letter to colleagues saying: "CARES 2 must go further... extending and strengthening unemployment benefits."
Several GOP lawmakers, including Sen. Lindsey Graham, R-S. C., had tried to change the language in the $2 trillion-plus stimulus bill last month to remove any incentive for workers to leave their jobs in order to make more on unemployment. The effort failed.
Proponents argue that the “unemployment insurance on steroids” is critical at a time when millions are now out of work due to the restrictions in place. Senate Minority Leader Chuck Schumer, D-N. Y., said before passage that the bill means employers will be able to furlough workers while those workers can essentially make their “full salary” for four months.
But some see a glaring downside, and are warning against an extension.
“The longer they extended it, the more they guarantee that people will remain unemployed,” Steve Anthony, CEO of Anthony Timberlands, a sawmill operation in Arkansas that employs around 750 people, told Fox News.
Anthony has already let workers go based on the federal benefits -- he polled his employees to see who wanted to stop working, and has since let hundreds of employees go home and collect unemployment for more than they were... (Read more)
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