People who lost their jobs in the pandemic are now earning more in benefits than they did in wages, creating a nightmare economic situation that is stopping people from returning to work and in turn, driving up inflation.
In March 2019, the average weekly payment to an unemployed person was $348 when combining federal and state unemployment payments.
That nearly tripled to $938 in April 2020, when Trump passed COBRA – a temporary economic plan that boosted weekly unemployment payments by $600 and also gave employed people one-off stimulus checks. COBRA expired in July and the unemployment boost was halved to $300-a-week. Now, they are $638-a-week on average and they’ll stay that way until September 6 at least.
It means, someone who was working 40 hours a week before the pandemic now gets nearly $16-an-hour to do nothing at home, which is more than double the federal minimum wage of $7.25.
Bank of America estimates that anyone who earned $32,000 before the pandemic can now get more from a combination of state and federal unemployment benefits. They are also allowed to claim benefits for up to 39 weeks – nearly a full year – whereas before, it was capped at 26 weeks. The average US salary in 2019 was $31,133.
It has created a scenario where restaurant workers, cleaners, retail workers and other people who slogged for minimum wage are simply choosing to stay at home because they earn more and are not put at risk of catching the virus.
Now, the only way for businesses to make up for it is by raising their prices – and Republicans are up in arms about the fast-paced inflation it is causing.
But on Friday, President Joe Biden said the answer was to spend more money. He claimed Americans are looking for work – despite there being some 9million unemployed – and that there just needed to be more jobs on the market.
He was slapped down immediately by economists, including the U.S. Chamber of Commerce Executive Vice President Neil Bradley, who said: ‘The disappointing jobs report makes it clear that paying people not to work is dampening what should be a stronger jobs market.’
A third of the country is now vaccinated and business owners are frantically trying to revive their profits but with no one there to fill the jobs, they’re unable to.
In eight states, the unemployed can earn at least $600 per week in benefits. Massachusetts offers the most generous benefits
In March 2019, the average weekly payment to an unemployed person was $348 when combining federal and state unemployment payments. That nearly tripled to $938 in April 2020. Now they’re still $638 -a-week – $300 more than they were before. It means, someone who was working 40 hours a week before the pandemic now gets nearly $16-an-hour to do nothing at home, which is more than double the federal minimum wage of $7.25
Restaurant owners who have been financially knee-capped with closures now have to compete with higher-paying sectors if they want to attract staff, and with rising vendor costs across the board, it is manifesting in higher prices for customers.
Republicans want to stop the cycle before it goes any further; in Florida, Governor Ron DeSantis is telling those people that they have to prove they are looking for jobs again if they want to receive unemployment. In Montana, the Governor has ditched the $300 weekly boost and instead, is offering people a one-time bonus of $1,200 to go back to work.
Unemployment has shrunk from 14% last April to 6% but that is still nearly double what it was in March 2019, before the pandemic had begun.
This week, the number of people being put out of work shrank, with 500,000 claiming unemployment for the first time as opposed to around 6million at the peak of the crisis.
Last week, 550,000 new claims for unemployment were made. In total, some 9.7million people in America are claiming some form of unemployment aid.
But the number of people getting back into work fell far short of what Wall Street predicted. Only 266,000 new workers were registered for April, a quarter of the 1million that were predicted.
In May 2019, the unemployment rate was 3.9 percent. It skyrocketed to 14 percent in April 2020 and has since dropped but it’s still 6 percent.
Business owners, eager to revive their profits after a deadly year of closures, can’t find staff.
‘Every hospitality owner I know is suffering. We just cannot find workers at all.
‘When customers are paying 20 percent more in their bills, they’ll know why. It’s inflation across the board, in every aspect, and it’s here now. We’re no longer waiting for it – it has arrived,’
Robert Mahon, NYC restaurant owner
‘A lot of them have changed industries into construction, for example, or others have just moved away. What we’re seeing is a major wage increase and an increase in vendor costs.
‘This is going to lead to higher prices on food checks so when customers are paying 20 percent more in their bills, they’ll know why.
‘It’s inflation across the board, in every aspect, and it’s here now.
‘We’re no longer waiting for it – it has arrived,’ restaurateur Robert Mahon, who owns Toro Loco and Broadstone in New York City and is affiliated with the Pig N Whistle Group, told DailyMail.com on Friday.
‘If I was working a back-breaking job and making $600 a week and I had had the option of making $600 and not breaking my back — the choice is obvious. The government unintentionally shot itself in the foot.
‘The stimulus plan is being completely undermined by the unemployment program,’ Philippe Massoud, CEO of the Lebanese eatery Ilili, told The New York Post.
In April, only 266,000 people joined the workforce – a quarter of the 1million that were predicted to join. The loss has stunned experts and prompted many to ask why. The conclusion most have drawn is that there isn’t enough of an incentive to go back
Unemployment skyrocketed to 14% in April 2020, when the country shut down along with the rest of the world. It has since dropped to 6 percent but it’s around double the 3 percent it had been in 2019
This is how unemployment maps across America. The darkest shaded states – many of which are Democrat states – are where it is the highest. Some of those states like New York, have among the highest combination of benefits in the country. Massachusetts has the highest with a max of $855 a week. The unemployment rate in Massachusetts is 7.1 percent – higher than the national average
States that voted for Biden lost jobs at a higher rate during COVID than states that voted Republican
More than 110million people in the US are now fully vaccinated – that is about a third of the population. The daily rollout has slowed – now, the majority of people lagging behind are children (who aren’t yet eligible for it) or the adults who don’t want to get it
COVID in America has now calmed again – while there are still new cases, the number of people dying from it every day has settled
BIDEN CLAIMS MORE SPENDING IS NEEDED AND PEOPLE ARE TRYING TO GET JOBS BUT CAN’T
President Biden on Friday claimed that the lack of people joining the workforce was proof that the government needs to spend more money, and not cut it.
Economists have slapped down his argument and say all the signs point to people not going back to work because they’re being paid too much to stay at home.
Biden spoke after April jobs figures were released. Only 266,000 people joined the workforce – a quarter of the 1million that were predicted.
Industry leaders are complaining that they cannot fill roles, because people are being paid too much in benefits.
But Biden claimed that wasn’t the case.
‘This month’s job numbers show we’re on the right track. ‘We still have a long way to go. Today’s report is a rebuttal for loose talk that Americans just don’t want to work.
‘I know some employers are having trouble filling jobs. But what this report shows is that there’s a much bigger problem.’
‘The economy still has eight million fewer jobs than before the pandemic hit. The data shows that more workers are looking for jobs and many can’t find them,’ he said.
McDonald’s is offering bonuses to hire people, and fast-food chain Chipotle is pushing one of its perks – paying college tuition for workers who have been with them for four months or more.
One unemployed restaurant worker told AP anonymously that she’ll use the unemployment benefits as leverage to get higher pay.
‘Unemployment benefits have been like collective bargaining. They made a union out of all of us,’ she said.
‘Demand is outpacing supply,’ said Daniel Zhao, senior economist at Glassdoor, a job listings website.
‘That’s something that is occurring across the economy, in semiconductors to lumber, and we’re seeing a similar crunch in the labor market.’
The reasons people are giving range from still being scared of COVID, not wanting to get a vaccine, being unable to find childcare for their kids who are still at home and, not seeing the point when benefits are high.
The latter has Republican leaders up in arms.
South Carolina and Montana have both dropped out of the $300-a-week boost in federal unemployment payments.
‘We have flooded the zone with checks that I’m sure everybody loves to get, and also enhanced unemployment.
‘And what I hear from business people, hospitals, educators, everybody across the state all week is, regretfully, it’s actually more lucrative for many Kentuckians and Americans to not work than work.
‘We have a workforce shortage and we have raising inflation, both directly related to this recent bill that just passed,’ Kentucky Sen. Mitch McConnell said on Thursday.
Gov. Henry McMaster in South Carolina is also stopping the federal payments to ‘address ongoing workforce shortages throughout’ his state.
DeSantis, in Florida, said he is now going to demand that people claiming unemployment benefits start proving that they are looking for work.
‘Normally when you’re getting unemployment, the whole idea is that’s temporary, and you need to be looking for work to be able to get off unemployment.
‘It was a disaster [at the beginning of the pandemic], so we suspended those job search requirements. I think it’s pretty clear now, we have an abundance of job openings.
‘We suspended that last year at this time because, quite frankly, there weren’t jobs.
‘I think now we’re in just a different situation, you have a surplus of jobs, particularly in restaurant, lodging, hospitality, that people want to hire.
‘But we also just want to make sure, like, look, if you’re really unemployed, can’t get a job, that’s one thing.
‘But making sure that you’re doing your due diligence to look for work, and making sure those incentives align better,’ he said at a press conference on Friday.
Montana’s Governor Greg Gianforte is giving people $1,200 bonuses to return to work.
‘Montana is open for business again, but I hear from too many employers throughout our state who can’t find workers. Nearly every sector in our economy faces a labor shortage.
‘Incentives matter and the vast expansion of federal unemployment benefits is now doing more harm than good. We need to incentivize Montanans to reenter the workforce.
‘Our return-to-work bonus and the return to pre-pandemic unemployment programs will help get more Montanans back to work,’ he said in an announcement this week.
People line up for unemployment payments at an Arkansas government center in April 2020. Despite many returning to work, millions haven’t and it’s due in part to the high handouts they’re getting from the government