…the obvious conclusion here is that employers are underpaying their staff. The solution for these furious employers who are underpaying their staff is to** pay their staff more.**
I think you misread the article. It’s not the employer who is furious, it’s the employees.
That was my immediate thought after reading the article linked in the OP.
So, back to the topic at hand: we’re talking about income that is surplus to the worker’s normal salary. It’s not just replacing lost income - it’s additional money. If we want to give out that additional money (which we should!), there’s no reason to tie it to unemployment. Except for the real-world constraints with implementing the 100% salary replacement policy, that would make the ideal plan possible.
So explain to me again why it’s desirable for Suzie to not only have all her time free, but also make more than Johnny in this scenario? Because remember, again, what I’m arguing is ideal is that both Suzie and Johnny make the same amount, and it’s more than what they were earning in January.
Not all incentives are inherently perverse. A perverse incentive is one that rewards people more for doing the wrong thing. Like, with normal unemployment that pays a percentage of what you’d make working, the incentive isn’t perverse, because you still get more by working than by not working.
And these payments are going to help people, certainly, but they’re not going to be much of a stimulus. People always spend money on essentials. In an ordinary economic downturn, though, they stop spending on non-essentials. That snowballs the downturn, because it means less money to the people who provide those non-essentials. In that environment, a relatively small stimulus can have a large effect, because people start buying non-essentials more, so other people have more money, so they spend more too, and so on.
But this isn’t an ordinary downturn. Plenty of people right now would like to spend money on non-essentials, but they can’t, because everything non-essential is shut down. Give those folks more money, and what can they do with it? It’ll just sit there, and not have a multiplicative effect.
That’s weird to me, because when I agreed to the terms of my job, the boss said: “If you do this for the company, I’ll pay you this.” And I accepted it. I was in favor of it. Anything beyond that, it’s on me. I’m grateful to be still working during this weirdness, and I pay my bills and feed myself with the money I make. But that’s me.
Its the employees who are furious at the boss (for failing to match unemployment) but its the boss who is complaining about the stimulus making her look bad. I don’t see any of the workers complaining about the unemployment being too generous.
And what this particular group of employees may be missing is the following:
The critical part in the decisionmaking is: The supplemental unemployment benefit carries with it NO requirement of the beneficiary being reinstated if and when the employer gets back to business, while the PPP is conditioned on employee retention. Yet I strongly suspect they would have expected the shop to lay them off and then as a matter of course rehire them once they opened back.
Those employees may even be unaware themselves that they are gambling on that the shop will fail anyway nd not be there come August, so they are going to be unemployed anyway, but at least will have enjoyed the “bonus” above their regular pay while it lasted.
And yes, adding the FTE equivalent of $15/hr was a clever way to seed in the workforce the notion of $15/hr as the income baseline. Nicely played.
Damn timeout…
…and the Payroll Protection Program does NOT allow for a retained position paid with those funds to be paid more than you paid that same position *before *the legislation was enacted. So she **cannot **boost them to “match” the supplemental unemployment.
Thank you, I am always a lady, except for those times when I’m not 
I was bothered that my part time employee wanted to be laid off so he could get the extra money while having the full expectation that he would be rehired after things got back to normalish. I felt that he was taking advantage of the taxpayers who were going to be funding the stimulus bonus cause money don’t grow on trees.
That was years ago subjectively, and I’m not that sure that I would feel the same way if it happened today.
Of course, in this case, the end result would have been the same. If I was allowed to lay him off so he could quadrupedal his weekly income, the company would have to lay off all of the non-essential workers so they could also increase their income, while costing the company tons of money in their increased unemployment insurance costs.
This is one way to think about the problem. The government had to quickly come up with a way to keep the temporarily unemployed from crashing and burning during this pandemic. Their solution was to boost unemployment.
This is fine, but the problem is that we have a whole class of worker for whom this bump in emergency relief is, by itself, more than they normally get paid for working. Of course the employees are furious. Half of Capitol Hill has no problem telling those workers that their productive work isn’t worth $600/wk, yet decided on that amount for the weekly bonus checks they’re handing out to help people through a temporary but difficult time.
It seems to me that those angry people are looking at it shortsightedly. The main difference is they have a job while those unemployed don’t, and that goes forward. Once the coronavirus is ‘normalized’ or is immuned away, the damage to the economy with remain for quite some time. People will not have the disposable income that they once enjoyed in the mass numbers, thus many businesses that rely on high profit margin items will suffer. It would be expected to be tough to get a job to some degree, so better to maintain one now then enjoy unemployment now and can’t find a job later.
In that it does sound like this anger is not real as stated, the only anger would be from the workers who’s work would expose them and families to the virus.
It’s easier to take the long view when your income is more than $450 per week. Having a job that earns you a bit more than minimum wage for not quite a full 40 hour week isn’t the sort of job that offers a worker financial security. It’s the result of a decades long effort to maximize the value of capital by minimizing the value (cost) of labor. You cut the cost of labor, you cut the value of having a job.
That person at her spa who earns $450 (30hrs@$15) a week would get $825 on unemployment. You are suggesting that they essentially forego $375 per week, 83% of their normal pay, for an untold number of weeks, to ensure that they can retain their job at a spa that may well go belly up anyway.
Looks like the breakeven annual wage with this policy in Washington State is around $60k.
It seems like a flat weekly increase doesn’t make much sense. If we want to stimulate, then ideally we would stimulate separately, not contingent on employment status. In this case it’s federal funds paying their salary vs fed funds paying their unemployment suplement. But given the computer issues referenced above and the need for expediency, I can’t get myself too worked up by the odd boundary cases.
However, if we wanted to think long-term, I would propose a different way to go about unemployment insurance.
This was as mentioned partly the result of the rush to *pass something, anything, quickly!!! *without having to convene Regular Order, so broad one size-fits-all provisions were crammed into the deal. You get “small business” loans on such generous terms that even Shake Shack can get it (and the pot runs out in three weeks), I get flat $15/hr unemployment benefits even if it means it’s higher than some regular wages (and in some places after a month it’s still not getting paid because the state system is so obsolete it can’t handle even this AND a massive spike in applications).
Normally, when you double someone’s salary by “being let go” , I’d be mad too if I was asked to go back to work making less than I did off of work …