“For almost 100 days Moshe Schulman had to wait, now the moment has come: The “Ruffian”, his small wine bar in southern Manhattan, is allowed to reopen. Not yet complete, but from next week a few tables are allowed on the sidewalk. New York, still the center of the Corona epidemic in the UNITED States, a metropolis considered a high-risk area, is slowly returning to normal. And yet Schulman can’t really rejoice. For the struggle for survival of the “Ruffian” suddenly begins from the beginning.
Although 1.8 million New Yorkers lost their jobs in the Corona crisis, Schulman has trouble finding employees. “The bill is simple,” says the landlord. “It may be more worthwhile in America to stay at home than to work.” Some of the waiters Schulman had to sack in mid-March do not want to come back. In the “Ruffian” they earned 600 dollars a week, which is as much as the US government now pays in unemployment benefits, in addition to the support of the local authorities.
Many entrepreneurs in the US feel like Schulman. After three months of lockdown, the country is ramping up the economy again, but the laid out are despising their old jobs. Until July 31, they will receive money from a 2.2 trillion dollar Corona aid package, probably longer. With the Cares Act, President Donald Trump wanted to boost consumption and thus support the economy. But the law has a side effect: it appears to contribute to unemployment.
“The Corona aids,” says Matt Weidinger of the Washington-based American Enterprise Institute think tank, “could inadvertently delay the economic recovery.” 600 dollars extra per week, just like that – this has never happened in US history. Weidinger fears that companies will now have to leave many vacancies vacant. “Supply chains in critical sectors, such as the food industry or the healthcare industry,” he believes, “threaten to be disrupted.” According to Weidinger, important products may soon become scarce.
Some politicians see it similarly. “Companies tell us that their employees no longer want to come to work,” Republican Senator Rick Scott wrote in a recent email to his supporters. “And who can blame them? We cannot pay people more money for unemployment than they get in their job.”
Massachusetts is the most generous state
About half of U.S. workers, Labor Department data show, would earn better from Corona’s aid than in their profession. America, the country in which it was always said that only the effort of the individual counts, seems to have become the welfare state overnight.
The amount of unemployment benefit depends on the place of residence. Massachusetts, the most generous state, pays 555 dollars a week, regardless of the epidemic. Adding the 600 dollars from Trump’s aid package will add to the 600 dollars, you’re going to get to 1155 dollars – more than 4600 dollars a month. In Mississippi, where there has been virtually no hedging so far, it’s now about 3250 dollars.
Across the country, you hear about entrepreneurs who, like the New York landlord Schulman, can’t find staff. Michigan-based steel company Moran Iron Works fired almost all of its welders when the state went into lockdown. Now the bans are being relaxed, orders are coming back. Moran Iron Works is supposed to build a small car ferry – but the workers refuse to return. The monthly social benefits they receive, the company says, would be about 320 dollars higher than wages.
The seven truck drivers of a Pennsylvania knife manufacturer also prefer to stay at home. On the couch, they earn 800 dollars more a month than behind the wheel. And the company can hardly afford higher salaries, as its sales plummeted to almost zero during the epidemic. So America’s companies, it seems, have a new rival in the fight for employees: the labor office.
Risk: In the later hunt for jobs, the empty
For the unemployed, however, it is a risky decision. If they reject an offer, the companies are obliged to notify the authorities. They then cancel the Corona aids and usually also the regular support. Many states, such as Vermont, Montana, and Tennessee, have set up websites where staff are supposed to report unwilling workers. In addition, all e, who now prefer to stay at home, may later go out empty – when the “Cares Act” expires and the whole of America goes on the hunt for jobs.
It is unclear when that will be. Democrats want to extend the weekly 600-dollar payment beyond July 31, some until the fall, others even until next year. But Republicans are against it. You have another idea: bonuses for those who find a job.
Senator Rob Portman of Ohio is proposing to pay re-entry to the newcomers 450 dollars a week for a certain period of time, on top of their wages. The governor of Idaho, Brad Little, is considering a one-time reward of 1500 dollars.
In the end, there should be a compromise. Corona aid could be extended, but the sum could be reduced to give more incentive to work. But then it may be too late for some small companies.
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