Uncle Sam found it was actually pretty easy to get people to stop working during the coronavirus crisis — all it took was a generous $600-a-week boost in unemployment.
Getting them back on the job now is proving to be far tougher, at least as long as those payments are still rolling in.
From a bar in Baltimore to a restaurant-staffing service in Oregon, owners say they’ve tried to rehire employees and got brushed off. Their former employees are collecting significantly more money while binging on Netflix at home than they did sweating 10-hour shifts in the kitchen or waiting on tables.
By one estimate, 63% of workers would make more on unemployment than they would at their jobs. In some states, it could be as high as 75%.
President Trump weighed in Tuesday, according to multiple media reports, telling GOP senators in a closed-door meeting that he wants the enhanced federal benefits to expire at the end of July, as is called for in the stimulus law.
That puts him on a collision course with Democrats, who are already itching to extend the $600-a-week payments into next year.
A former Congressional Budget Office director this week suggested a middle ground.
Douglas Holtz-Eakin, who is now president of the American Action Forum, says cutting off benefits completely on July 31 “may appear heartless.” But the AAF says its calculations show that the $600 federally backed payments, added to existing state unemployment, are more than most workers made at their jobs.
So keeping the payments going isn’t a viable option for an economy looking to get revving again.
Mr. Holtz-Eakin said one solution would be to ramp the benefit down over the final five months of the year, say by $100 a month. That would entice more people into the workforce each month as their benefits drop below what they could make on the job.
He also said low-wage workers could be allowed to continue getting some benefits even when they’re back at work.
“This turns the federal bonus into a reemployment bonus, with a larger bonus the sooner a person gets back on the job,” Mr. Holtz-Eakin wrote in a memo.
Democrats, expecting a lengthy jobs slump and eager to have the federal government step in, say the current program should be renewed.
The bill that Speaker Nancy Pelosi pushed through the House last week would extend the $600-per-week plus-up through Jan. 31.
Sen. Jack Reed, Rhode Island Democrat, proposed an extension through Dec. 31, with a “soft cutoff” that would allow anyone who hasn’t yet collected the full 39 maximum weeks of benefits to continue getting paid until they do.
“Being jobless in these uncertain times and relying on unemployment is stressful enough,” Mr. Reed said in a statement announcing his bill. “If Congress arbitrarily cuts them off and tries to prematurely push them into unsafe work environments, it will cost families, businesses, and communities alike.”
Mr. Holtz-Eakin though, called plans for a blanket extension into next year “the worst choice.”
The goal of the federal plus-up was to get people to stay home at the peak of the danger of coronavirus, helping to “flatten the curve” so hospitals wouldn’t be overwhelmed.
Most analysts agreed a generous benefit helped keep people home.
Now, though, with governors across the country hoping to get workers off their couches, business owners say they’re butting up against the benefit.
Kurt Huffman, who owns a company that staffs restaurants in Portland, Oregon, said he initially laid off most of his folks because the businesses were limited by the state’s shutdown order. But after it became clear that take-out dining was booming, he tried to rehire.
“Almost all said ‘No,’” Mr. Huffman wrote in the Wall Street Journal.
He said his starting wage for a line cook was $15 an hour, plus at least $1 more in tips, so $640 a week before taxes. Under the heightened coronavirus unemployment benefits, though, he said they’re getting $1,016 a week to stay home.
In Baltimore, the owner of Charles Village Pub said she faced the same issue.
“I’m not even angry or upset. I understand. Why would you want to come back and actually work and make half as much money and you’re working as you can get to stay home,” Melony Wagner told WBFF-TV.
Some Senate Republicans warned of the perverse effects of the $600-a-week benefit before the stimulus law passed in March. At the time, the Trump administration said there was no way to more finely tune the benefit because state unemployment systems were so clunky.
On Tuesday, though, Mr. Trump signaled he’s not a fan of extending the benefit beyond the July expiration.
“He agrees that that is hurting the economic recovery,” Sen. Lindsey Graham said, according to The Washington Post.
It doesn’t help Democrats’ case that the $600 plus-up works out to the equivalent of a $15-an-hour minimum wage — one of Democrats’ priorities well before coronavirus.
In this case, the $600 comes on top of state benefits, as Mr. Huffman’s example showed.
Nationwide, the average state benefit was $378 a week in March, according to the Center on Budget and Policy Priorities. With thee federal plus-ups added, that meant the average person on unemployment gets nearly $1,000 a week.
In Massachusetts, which had the highest unemployment compensation rate at $557 a week, the jobless could collect $1,157 a week, which equates to pay of about $60,000 a year.
Under the coronavirus law, those claiming unemployment are supposed to lose their eligibility if their old employer calls up and offers their job back. But experts said that with workers allowed to self-certify, and with unemployment systems so overwhelmed, it’s not likely many people will be snared.
Reports of fraud are beginning to spread, with Washington state proving to be an epicenter.
The U.S. attorney for the state’s eastern portion issued a statement Monday warning that he’s prepared to prosecute fraudsters, but also warning the state to get its system in shape, and to set up a hotline so residents can figure out if someone filed a bogus claim in their name.
• Stephen Dinan can be reached at email@example.com.
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