Nongnuch Leelaphasuk / Getty Images / EyeEm
$ 600 per week.
This is what the federal government is now offering to people who have lost their jobs because of the coronavirus.
For many workers and employers, this money is a boon – a way to keep food on the table while reducing salary costs.
But the extra money can create awkward situations. Some companies wanting to keep their doors open say it’s hard to do when employees can make more money by staying at home.
“We basically have this situation where it would be a logical choice for many people to be unemployed,” said Sky Marietta, who opened a cafe with her husband, Geoff, last year in Harlan, Ky.
Their goal was to provide good coffee, good internet service and an opportunity in a hungry community of the three.
“We are very committed to helping transform downtown and main streets in eastern Kentucky,” said Marietta.
When the couple advertised the workers, nearly 100 people applied for a handful of openings.
The store had only been operational for a few months when the coronavirus struck. Marietta took precautions, asking her employees to wash their hands frequently and to disinfect the door handle.
Eventually, she stopped letting customers enter the store, instead delivering orders to the curb. But Marietta was determined to stay open.
“The # 1 people we serve right now are health care professionals,” she said. “I feel like they don’t have a lot of options, and they certainly deserve at least a little coffee, right? “
But even though she had customers, Marietta was reluctantly forced to close the cafe just over a week ago. With the federal government now offering $ 600 a week in addition to state unemployment benefits, she said her former employees could make more money by staying at home than they were at work.
“We are very determined to pay a living wage,” said Marietta. “Sometimes a living wage in Harlan, Kentucky is not exactly the same as in other parts of the country.”
Some Republican lawmakers have warned of this unintended consequence of the relief bill when it was drafted, noting that $ 600 a week equals $ 15 an hour, more than double the federal minimum wage. This is in addition to state unemployment benefits, which vary widely, from a high of $ 235 a week in Mississippi to $ 795 a week in Massachusetts.
Treasury Secretary Steven Mnuchin said the administration had chosen to provide a uniform federal unemployment benefit in order to withdraw cash quickly. As things stand, states are struggling to pay benefits to the millions of new unemployed workers who apply every week.
Many employers have welcomed the federal benefits. Knowing that workers have an extra government lifeline makes painful layoffs a little easier. Cincinnati Mayor John Cranley highlighted the federal payment at an emotional press conference last month when he laid off 1,700 city workers.
“We are taking these spectacular steps now, while the federal government is providing these dollars because it will give us the resources we need to bring you back,” said Cranley.
Some employers – like the auto industry – have always relied on unemployment benefits as a sort of taxpayer subsidy for workers during slow times.
“It helps the employer, because if not, they may think they have to pay more to convince them to take these jobs that tend to be temporary layoffs,” said Betsey Stevenson, economist at the University of Michigan.
But in her Kentucky cafe, Marietta wasn’t looking for someone to cover the cost of idling her employees. She wanted them to continue working. Unfortunately, she says, the $ 10 to $ 15 an hour they would make to serve coffee does not match the new benefits of unemployment.
“We have these adorable baristas,” said Marietta. “These are hard-working individuals. But literally, it’s the best possible living salary they could get for being unemployed. ”
She is concerned about what will happen to these workers when the federal unemployment benefits run out in late July. Maybe by then she can reopen.