CNBC ran a story last Wednesday about Jamie Black-Lewis, owner of Oasis Medspa & Salon and Amai Day Spa in Washington state. The article detailed how Black-Lewis secured two loans through the new Paycheck Protection Program, for $177,000 and $43,800, to keep her businesses afloat through the pandemic.
But according to the article, Black-Lewis’ employees were fuming when they heard the good news. The reason? The money they were collecting through unemployment benefits was more than the wages they earn working for Black-Lewis, due to an extra $600 per week that the federal government’s Coronavirus Aid, Relief and Economic Stability Act provides.
Black-Lewis recounted the reaction as “a firestorm of hatred about the situation.” “They were pissed I’d take this opportunity away from them to make more for my own selfish greed to pay rent,” she told the outlet. CNBC described the employee “animosity” as “an unintended consequence” of the $2.2 trillion relief package. It ran with the headline: “She got a forgivable loan. Her employees hate her for it.”
The story seemed to confirm the suspicion that generous government benefits would turn willing workers into lazy mooches on the dole. Right-leaning outlets like the Federalist, the Blaze, the Washington Times and the New York Post all picked up the story. Sen. Lindsey Graham (R-S.C.) tweeted out the story, saying it’s wrong “to pay people more NOT to work than to actually go to work.”
The story quoted none of Black-Lewis’ employees, but HuffPost spoke to three of them. They all disputed the central narrative ― that they resented Black-Lewis for securing the loans, and that they heaped “hatred” on her for it. Indeed, group messages from Black-Lewis herself to her workers undermine her own quotes. In messages before and after the CNBC story ran, she thanked them profusely for supporting her as she pursued the loans.
The workers said their portrayal was unfair and mortifying.
“It just makes us look awful ― greedy, money-hungry, selfish, just lazy. It’s very embarrassing,” said one worker, who, like the others, spoke on condition of anonymity for fear of losing her job.
“I felt like I got punched in the stomach,” said another.
The spa dustup involves just one boss and her three dozen or so employees, but it reveals a lot about the tough tradeoff facing some small business owners and their employees across the country as the government offers help through separate but overlapping programs. It also says plenty about the hardships facing service workers in the worst downturn since the Great Depression, as well as the nasty politics of America’s social safety net.
“For once [employees] were getting paid what they could live off of.”
The workers HuffPost interviewed said most employees did stand to earn more on unemployment than on Black-Lewis’ payroll, due to their relatively low wages and the increased federal benefit. The fact was indeed on their minds as Black-Lewis told them they would be rehired ― as it would be for any sentient person with bills to pay. At the same time, there may have been workers who were ineligible for unemployment benefits for one reason or another. If so, Black-Lewis would have wanted to get them back to work as soon as possible.
The three workers all described themselves as living “paycheck to paycheck” in normal times. The possibility of an extra few hundred dollars a week during a period of extreme economic uncertainty felt like a lifeline.
“For once,” one worker said, employees “were getting paid what they could live off of.”
Given Washington state’s ongoing stay-at-home order, the employees wouldn’t be working whether they were receiving unemployment or on Black-Lewis’ payroll, at least not working the way most of them normally do. During a pandemic, they cannot give massages, manicures, pedicures, facials or haircuts — the core services the spas provide — though there may be administrative and promotional work to do.
“I’m not at all complaining that we’re going to be getting paid by Jamie,” said one worker. “Especially if it means we’ll have a job when this is all over, and Jamie doesn’t lose her business.”
Congress passed the CARES Act last month as the country hunkered down to slow the spread of a virus that has since killed more than 50,000 Americans. The bill aimed for comprehensiveness, with provisions to pay households directly, to pay laid-off workers and to pay both big corporations and small businesses that have had to curtail operations.
Lawmakers boosted unemployment benefits to cover the income loss from layoffs ― but also specifically to help people stay at home, since social distancing is essentially the country’s only prescription for fighting the virus. They chose $600 because it is roughly the difference between the average weekly unemployment benefit and the average weekly wage. Congress also specifically told states to waive the usual requirement that unemployment claimants keep searching for work while they receive benefits.
Nevertheless, some Republicans have acted as though there’s no pandemic outside, complaining like they would during any old recession that extra unemployment benefits present too much of a work disincentive.
The Paycheck Protection Program, on the other hand, is designed to keep workers attached to their employers by covering two months of payroll costs through loans that are forgiven if the borrower avoids layoffs during that time.
Even though lawmakers have said it doesn’t matter if employees are actually working, the goals of the payroll program seem out of step with the goals of the unemployment benefits, which for some workers may be higher than what they usually earn. But the program might also be out of step with the pandemic itself; business groups have complained that two months of immediate payroll support is less than ideal since nobody expects the pandemic to be over that quickly.
In a message to workers before the CNBC article ran, Black-Lewis braced them for what was to come. She said she told the reporter she had received “negative feedback” about their pay being less than unemployment benefits, and that it might become the focus of the story.
“While I believe that the article is accurate, I want all of you to know that I am aware that most of you were very supportive of my decision to proceed with the PPP,” Black-Lewis wrote. “I am very grateful to those who have supported me and my efforts to ensure that we all have jobs when we can return to work.”
In another message, she stressed that “nearly ALL of you have been supportive.”
“The one thing I would want people to know is I’m not ungrateful to have a job.”
Some of the tension ahead of the article’s publication may have been of Black-Lewis’ own making. She had sent a note to employees after the pandemic began, when millions of workers were on the verge of losing their jobs: “I know this is a difficult and scary time for all of us and some of you might be tempted to do things that violate your noncompete. Please don’t ― we need to stay united and not divided ... ”
Like several other states, Washington recently passed a law restricting the use of noncompete agreements because they weaken worker leverage and depress wages. HuffPost could not obtain a copy of the one used by Black-Lewis, but it may not be legally enforceable depending on how much her workers earn and other factors.
After her business was approved for the federal aid, Black-Lewis told everyone she had good news, but the details would have to wait for an online meeting. In the meantime, their assignment was to watch the movie “Brewster’s Millions,” a 1985 Richard Pryor vehicle about a down-and-out minor league pitcher who stands to inherit $300 million. In order to receive it, he must spend $30 million in 30 days.
If the assignment was a joke, it didn’t go over well with some anxious employees, who just wanted to hear whatever news Black-Lewis had.
“The firestorm of hatred” cited in the CNBC story allegedly came during the online meeting when she explained the CARES loans to employees. The three workers HuffPost spoke with said they don’t recall any exchanges they would consider hateful. At least one employee on the call brought up the fact that their income might go down, casting it as something most people were thinking about, one worker recalled.
“We all asked questions,” the worker said. “It doesn’t mean we’re angry. We’re just trying to navigate this. We all sympathized with her plight.”
Even if the workers’ account is correct, it’s possible Black-Lewis received nasty individual messages about the loans and their loss of unemployment. She did not respond to several emails requesting an interview.
Black-Lewis sent out an apology to employees after the story appeared.
“I’m so sorry that many of you were embarrassed and hurt by the article,” she wrote. “It really left out many significant parts of my conversation where I praised you guys. I was so saddened when it came out the way it did. I have been working hard to respond to social media letting people know who you REALLY are!”
Not even a pandemic can shut down the politics of social spending, in which Republicans are eternally skeptical that everyone who benefits from government spending actually deserves the help. Lawmakers agreed on stimulus checks for the vast majority of households, agreed on hundreds of billions in business subsidies, but still fought over the increase in benefits for laid-off workers.
“I can promise you this: If you pay somebody $23 an hour not to work, they are probably going to find a way to get there rather than staying in the workforce,” Graham said during a Senate floor debate on the extra $600.
The spa workers who spoke with HuffPost said they resented the scorn heaped on them, much of it from people who probably don’t struggle financially the way they do.
“The one thing I would want people to know is I’m not ungrateful to have a job,” said one. “I would like people to understand this is a really hard time for everyone. Having extra money so you can take a breath and not have to worry, that was something that was great.”
“We’re very hard workers,” said another. “We have [employees] who come in on their days off to accommodate clients. We’re working five or six days a week. We’re ready to work, but our state is shut down.”
In a message to employees after the CNBC story ran, Black-Lewis told them she had been invited to go on Fox News and a local NBC affiliate to talk about the situation. She said she was inclined to take the offer and set a few things straight ― “that many of you have been a serious source of support for me and the business since the start of this covid fiasco.”
“In response to that, they said they no longer had time for the segment,” she wrote.