Some Republicans are complaining that the special unemployment insurance Congress created to confront the coronavirus pandemic makes it too easy for workers to do what public health officials say they’re supposed to do: stay home.
Republicans say the new benefit is doing exactly what they warned about last month ― making it difficult for some businesses to keep their workers.
“The Senators were attacked in the media, and House Speaker Nancy Pelosi called them ‘cruel.’ But they turned out to be right,” wrote the editorial board of The Wall Street Journal, a line that was later tweeted by Sen. Lindsey Graham (R-S.C.).
“I want to make people whole who lost their job through no fault of their own,” Graham said in another tweet. “But I don’t want to pay people more NOT to work than to actually go to work.”
As part of its $2 trillion coronavirus relief bill, Congress expanded eligibility for benefits to workers not traditionally covered, such as Uber drivers and other independent contractors who are not payroll employees. And for four months, claimants will receive an extra $600 per week on top of their regular benefits ― an unprecedented boost that for some lower-paid workers does indeed exceed their previous pay.
But there’s a reason to pay people more not to work: to keep them from dying. To keep them from spreading a highly contagious virus that has already killed 50,000 Americans, and to keep hospitals from being overwhelmed by patients suffering from an illness that is not well understood.
“This is not normal times where we’re trying to partially cover your consumption and give you incentive to search for work,” said Lawrence Katz, a Harvard University economics professor.
Unemployment insurance is designed to maintain individuals’ well-being and consumption patterns, boosting the economy in the process. Workers are normally required to continue looking for jobs as a condition of receiving benefits, but Congress has told states, which administer unemployment insurance, to waive work search requirements.
“We’re sending a sharp and clear signal that only essential work should be going on,” Katz said. “We’re implicitly saying that the externality from your going to work and creating danger is very high and this is the time to stay at home.”
Graham, as well as GOP Sens. Rick Scott (Fla.), Tim Scott (S.C.) and Ben Sasse (Neb.), tried to limit the amount of the new benefit, but the Senate voted to reject their effort before ultimately passing the legislation.
The higher benefits are not in perfect harmony with the rest of the government’s economic response to the pandemic. Congress has balked at Democratic proposals to give extra pay to essential workers who are risking their health to ring up groceries, tend to hospital patients and respond to 911 calls. As a result, some essential workers might be earning less than people staying home.
And the boosted unemployment benefits are a headache for employers participating in a new program designed to help struggling small businesses that were forced to shut down due to the crisis. The Paycheck Protection Program backs forgivable loans to businesses that avoid layoffs or rehire their employees.
Some business owners have said the policy goal of the program seems to have been undermined by the extra unemployment benefits. If unemployment pays more than someone’s prior wage, it may not be advantageous for the worker to keep their job.
“This is a challenge, and business owners are really wrestling with it,” said Elizabeth Milito, senior executive counsel for the National Federation of Independent Business.
The owner of a cleaning service in Maine told The Associated Press he was reluctant to urge his employees to return to work because they could lose their unemployment checks ― which are more generous than what he pays them ― if he did. (The program does not require firms to rehire the same workers they laid off.)
But other small businesses don’t see much utility for the PPP loan program when they have no customers and can’t reopen because of public health guidelines. Shannon Adair, the owner of a brewery in Oregon, said she was approved for funds but is currently only using them for operating costs.
“We can’t bring employees back because there isn’t anything for them to do,” Adair said Friday on a press call organized by Sen. Ron Wyden (D-Ore.) “So we’re really stuck. We can pay our bills and we have a big chunk of money we may or may not be able to use in an eight-week period.”
Republicans have not focused their criticism of the higher unemployment payments on the PPP, which they support. Their complaint is more fundamental ― that the government is overly restricting the labor supply. In general, Republicans have been more skeptical of government measures interfering with economic activity in order to reduce the coronavirus’s massive death toll. Public health experts have said it’s not clear when it will be safe to ease up on stay-at-home orders and business closures.
Tim Scott tweeted this week that the extra unemployment benefits, which are set to expire at the end of July, “will create problems as we try to bring folks back to work.”
A spokesman for Rick Scott, meanwhile, said the senator “supports expanding unemployment benefits” but worries about Congress creating “a perverse incentive not to work.”
“This hurts our economy and our small businesses, and is exactly what Senator Scott was hoping to avoid with his amendment to the CARES Act,” Chris Hartline, the Florida senator’s communications director, told HuffPost.
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