REHOBOTH BEACH, Del. – Kelsey McGarry returned to work at Thompson Island Brewing Company in Rehoboth Beach, Del. In April. Back, although this meant that she earned less than she would have earned an additional $ 600 a week just from taking out unemployment insurance.
“I’m a go, go, go personality,” said Ms. McGarry, 26, through her face mask on June 15, sitting on the terrace of the now partially reopened restaurant, an airy space with colorful beer cans on offer. It was also flattering that she was given the opportunity to return early. “It was nice to be asked. Being here, being with everyone was better than being at home. “
Right down the street at Jakes Seafood House, Courtney Ewell made a different calculation. On March 14, she was fired from her job as a service provider. When her boss received a federal loan for small businesses, she was given the opportunity to do odd jobs around the restaurant, which was still closed. She missed the chance and continued to receive unemployment benefits, although she helped repaint the place for fun – just to get out of the house.
“Who rejects unemployment insurance plus $ 600?” She said.
Ms. Ewell officially returned to her job this month when Jake was preparing to reopen and she was confident that between this restaurant and another restaurant where she worked, she could tip enough to offset the extra money.
When they rested in March to support the economy, Legislators approved the $ 600 supplement to help workers who were suddenly excluded from their jobs when the economy closed. This extra money, which expires on July 31, has become a source of debate as lawmakers, the White House, and economists do not know how the increased benefits stop people from returning to work and how they do so against the critical financial cushion can be weighed it offers displaced persons.
Democrats are pushing to expand the added value to continue helping workers with double-digit unemployment. Many Republicans want the additional $ 600 to expire or be cut back, and say that more generous payments will worsen unemployment.
Rehoboth gives an insight into this concern: City employers find that the added value can keep workers from looking for new jobs, but not as often as one might expect. And if so, other factors generally play a role.
The supplement is essentially a $ 600 weekly bonus in addition to traditional unemployment benefits for workers who have lost their jobs and applied for unemployment. This bump allowed a large part of the dismissed workers to get more money out of unemployment than they earn in their work. If it expands by the end of the year, the impartial budget office of Congress appreciates it five out of six The recipients receive more from the government than they would earn at work.
The extra money has helped millions of Americans survive the sudden shock of losing jobs, hours, and income. It boosted both savings and consumer spending when many largely homebound Americans withdrew their purchases. Many economists, including those in the Budget Office, say that the added benefits are a major reason that the economy is recovering – as in a Retail sales increase in May.
So far, there is little evidence in national economic data that many workers choose to remain unemployed. The law that created the benefit prohibits Americans from continuing to receive the money if they are called back to their regular jobs by employers who have fired them but refuse to return. States have suspended the normal job search requirements required to qualify for unemployment insurance during the pandemic.
And many people lack the opportunity to return to work: the nation is still down According to the Ministry of Labor, almost 20 million jobs have been available since February, and the number of job seekers far exceeds the number of vacancies.
“At some point when the economy returns to normal, you want to think about relative prices,” said Austan Goolsbee, now at the Booth School of Business at the University of Chicago and former President Barack Obama’s top economist. “This is not the world we are in.”
If the economy comes out of its recession hole, this calculation could change. The Congressional Budget Office estimates that an expanded improvement would likely result in higher unemployment in the second half of 2020 and almost certainly raise the unemployment rate by 2021, as low-wage earners continue to receive additional benefits rather than securing jobs.
Some economists – including several who originally campaigned for the expanded benefit – suggest that it be eliminated or phased out. Casey Mulligan, former chief economist of President Trump’s Council of Economic Advisers, predicted a “sharp increase” in employment when the extended benefits run out.
“The direction is clear,” Mulligan said in an email interview, “but more than usual humility is required in terms of scale.”
It is difficult to know how employees would react to an extension, also because employees make long-term decisions. They know that generous benefits won’t last forever, so they may be trying to secure jobs now. Many enjoy their work and want to return. For others, unemployment insurance improves the attractiveness of staying at home, but is only one of several factors alongside the limited options for childcare, as schools and camps remain closed and health concerns remain.
The Rehoboth Beach-Dewey Beach area could show how these interactions will impact as the resort continues to have high labor demand in parts of its service industry.
The region has seen a huge seasonal increase in consumer demand at this time of year as beach goers descend and need bartenders, cooks, cleaners and other workers. The demand for workers was exacerbated by the fact that the foreign students Those who normally come to America for seasonal jobs stay stuck in the middle of the pandemic and leave a hole in the usual summer workforce.
In large parts of the country, the unemployment rate of 13.3 percent means that there is a large workforce. So if a person wants to continue collecting unemployment instead of returning to work, a job is simply left open for another available applicant.
Because Rehoboth needs certain – often relatively low-paying – workers to get its tourism industry up and running, incentives that keep potential employees on the sidelines could be harmful.
Rob Marshall, owner of the Atlantic Oceanside Dewey Beach Resort a few minutes from Rehoboth, said the headache was real. He had so much trouble hiring cleaners and the other staff needed to maintain his 60-room hotel that he initially expected to spend most of June at half capacity on weekends.
The additional $ 600 makes it difficult to find new employees who were working elsewhere at the time of the layoffs, he said. You are not required to apply, which makes it difficult to do the usual seasonal approach.
“It makes the government a competitor,” he said. “A lot of people want to get out and get to the beach – and we want them. The problem is that we have no staff. “
He managed to blunt the impact. By switching some rooms for cleaning offline on weekdays, recruiting schoolchildren and giving a laundry worker a start bonus in order to keep up with the expansion of unemployment insurance, he is 70 to 90 percent busy at the weekend.
This is not enough to make a good profit, and he tries to hire new employees for more reasons than just an expanded unemployment insurance scheme. Some of his employees were nervous about withdrawing from virus exposure concerns, and childcare was also a problem in the case of his new laundry worker.
“She wanted to work and the daycare center opened this week,” he said in mid-June. Delaware moved to phase 2 of its reopening plan on June 15, which allowed full-capacity restaurants to be run and several other businesses to be restarted.
Many Democrats who are in favor of expanding performance say they will tie them to economic conditions and cut them as unemployment drops. Some Republicans, including Texas representative Kevin Brady, the top Republican on the Ways and Means Committee, are in favor of replacing the supplement with a “bonus payment” for unemployed people who are back to work – an idea that has been well received by White House officials Has. who have also expressed their reluctance to expand services.
Business leaders across the country have confirmed White House concerns. The latest from the Federal Reserve Beige bookA survey of individual reports from companies across America highlighted concerns that fear of the virus, childcare problems, and unemployment insurance would prevent people from returning to work, including in the Dallas and San Francisco districts.
These obstacles could prove to be less economically debilitating than they seem. The Frontline Source Group, a human resources company in Dallas that participates in the Beige Book, saw a wave of people refusing their jobs because of unemployment insurance. According to Bill Kasko, the managing director, the company was able to fill all vacancies after interviewing other applicants.
Many economists warn that the greater risk is to cut benefits too early, so that people who cannot find new jobs have limited financial cushion based on assumptions about work-related incentives that occur sporadically.
Ms. Ewell’s friend is an example of how the benefits may differ from what one might expect from cold equations. He works for a cook in another local restaurant and went back in May, although that meant he left a lot of money on the table.
“I told him he didn’t,” she said. “He did double” with the extra $ 600 a week, she said. “But he’s a workhorse – he couldn’t be at work.”