About 30 million unemployed Americans are now on tenterhooks waiting to see if the $600-a-week federal unemployment benefit created by the Cares Act will be renewed. As the political row over its efficacy and necessity continues, the House and the Senate remain far apart on a compromise.
What shouldn’t be left out of the discussion is an unlikely, yet numerous, group of people who do support the added benefit: small business owners.
The issue is complicated.
Many I know in the business community have taken issue with the additional $600 federal payment. They complain that a great number of their workers – particularly hourly and part-timers – have avoided returning to the workplace because the benefit provides them with more compensation then they were getting at their job and merely incentivizes them to stop working.
But some studies – like this one from a group of Yale University researchers – have found the opposite to be true. The study found “no evidence” that workers receiving the added federal unemployment benefit were disincentivized to work and that “people with more generously expanded benefits also resumed working at a similar or slightly quicker rate than others did”.
However, as the Wall Street Journal points out, the study excluded part-time workers and other “short-termers” who make up the vast majority of employees that benefited the most from the federal bump. “A worker in Louisiana who made $2,400 from part-time jobs all of last year would collect $2,516 a month in jobless benefits today – $29 a week from the state plus the $600. An average worker who had made $17 per hour ($680 a week) in Ohio has been able to collect $940 each week with the federal boost.”
The debate will continue.
But many small business owners remain convinced the payments should continue. Why? Because it has provided a safety net for their employees during a time when their companies couldn’t pay wages due to the country’s self-inflicted economic collapse.
“We want them to succeed, and we want to help them grow their careers, and we hope to continue to employ them well into the future,” Mark Frier, a restaurant owner in Vermont told NPR’s Marketplace. “Initially [the federal benefit] was a lifesaver.” Frier is just one of many business owners who have been unable to sustain employee wages – even with help from the paycheck protection program – and who are grateful that there’s an added federal benefit available to help them through these times.
Julie Wineinger, the owner of Lulabelle’s Sweet Shop in Washington DC, has gone out of her way to assist her employees in applying for unemployment benefits. She has also run fundraisers – selling ice cream and other products – specifically to raise additional cash in order to help her staff through these difficult times. “Some of my employees are very young, some have to support families,” she told me in a podcast interview. “They didn’t ask for this and I’m going to do my best to do what I can for them.”
One of the many benefits of working for a small business is that employees oftentimes develop close relationships with their employers. When bad things happen – a family illness, a financial problem, a global pandemic that causes an unprecedented economic downturn – many small business owners are as much concerned with their employees’ welfare as their own families. Because they are like family.
But these same employees are also assets, which is why many small business owners I know are in favor of the additional federal unemployment benefit. Knowing that the benefit is there, they could furlough their staff and not terminate them. Without these checks, those employees who have worked for them for years and gained experience and knowledge of their businesses may be forced to move elsewhere or take other jobs in order to make ends meet. When that happens, small business owners like Wineinger and others lose good people and have to search and train replacements. That creates disruption and added costs.
Maybe the added federal benefit does discourage some from going back to work, particularly part-timers and hourly workers. And it is true that many small businesses are finding this situation a frustrating obstacle towards rehiring and getting back to normal. But for many other small business owners, that additional $600 check every week has helped them retain and sustain their employees during an unprecedented national emergency until times – hopefully – get back to normal.