Beefed-up unemployment benefits that the US government is doling out in the coronavirus crisis are so generous they’re encouraging many recipients to stay home from work, The Post has learned.
The emergency legislation, the CARES Act, which was passed last month, is aimed at helping businesses and workers hurt by coronavirus shutdowns, including through $600 checks to people who can’t work or who were laid off.
But the federal checks combined with pumped-up state unemployment benefits, which in New York can add up to as much as $1,104 a week, means some workers are now getting as much — if not more — through unemployment than they were earning before the pandemic.
In addition, CARES gives families earning less than $75,000 in 2019 a one-time check for $1,200 — in addition to $500 for each child under 17.
These stimulus benefits make it tough for employers to ask people to work through the crisis, and raise questions about whether government stimulus is hurting the small, cash-strapped businesses it’s supposed to help.
“It’s put us in a weird position, because we are asking [employees] to come back to work, but they’ve told us they don’t feel safe, or they have said, ‘Why should I be paid less than I’m getting at home?’ ” said Meagan Beatty, who has been trying to reopen her Scranton, Pa.-based business after shutting it several weeks ago.
Beatty’s Northeast Commercial Sharpening company, which provides knife-and-equipment sharpening services to hospitals, schools, restaurants and grocery stores, was notified on April 9 that it is now deemed an essential business, giving it an opportunity to rehire.
The problem: Her seven drivers, who have been receiving unemployment checks, don’t want to resume their routes, she told The Post. Her drivers earn between $750 to $850 a week compared to the $1,000 or so in unemployment checks they are now receiving.
“We are looking at whether we can raise their salaries, but our revenues have declined by 100 percent. And if we reopen we will have 50 percent of the business we had,” Beatty said.
Matthew Tully, an owner of law firm Tully Rinckey, which has 11 offices, including in Manhattan, also said his company has suffered multiple defections in recent weeks due to the CARES stimulus.
Three employees providing support services to the firm — and earning salaries in the low $40,000 range — resigned within the past two weeks, Tully said. And one job candidate, who had been laid off from her previous job at a law firm, turned down his offer of $45,000, even though it amounted to a $3,000 bump-up, Tully said.
The job candidate, a mother of school-age children who had started the interview process in February, turned down the job last week to stay at home with her children for as long as possible, according to Tully.
The three other employees are single mothers who said they could not perform their job functions from home because they, too, have to look after their school-age children, he said.
“I understand their position,” Tully said of his employees, but at the same time notes that he finds himself “competing with the federal government to bring people back to work.”
Other companies have been able to keep their workers on the job through pay increases and other perks.
Nebraskaland, a large meat wholesaler based in the Bronx, raised the salaries of its drivers — which start off at roughly $1,000 a week — by $2 an hour four weeks ago, Chief Executive Richard Romanoff told The Post. Warehouse workers also got a $2-an-hour raise.
“When the different relief packages came out, I was so worried about losing our workers,” Romanoff said.
But the raises combined with free meat at the end of each week, as well as complimentary meals during their shifts since the start of the pandemic, have helped keep people on the payroll, he said.
What’s more, Romanoff and other office staff, including sales and bookkeeping employees, arrive daily to the Hunts Point facility in a show of solidarity in support of the drivers whose work brings them into contact with the public.
That’s helped staffers like Thomas Hidalgo, who has worked in Nebraskaland’s warehouse for nearly five years, feel good about the company during the midst of the pandemic, he said.
“We are scared, but every day we get plastic gloves, masks and Lysol,” Hidalgo said. “I feel pride about the work we’re doing. I work for my family, but I see we are feeding many other families.”
Stimulus checks are seen by economists as stopgap measure, with the real test coming when the economy reopens.
“Government action that corrects one problem usually leads to another problem somewhere else. This comes up during every recession,” said Chris Rupkey chief economist at MUFG Bank. “At the moment it doesn’t matter that the federal government has given more to workers because everyone is at home.”
Federal benefits expire on July 31 and require Congress to extend them, while New York state benefits continue for 39 weeks from the date they start.
But that might be too late for Beatty’s knife and equipment sharpening business. Rivals are already standing at the ready to take her customers, she said. Hiring new drivers is also out of the question because of the training required, she said.
If Beatty is unable to lure her drivers back, the company will apply for a loan through the CARES program to cover expenses until they can reopen. If they don’t reopen, Beatty says, “We will have to pay back the loan.”
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