The debate about whether expanded unemployment insurance is too generous, explained

An extra $600 a week for people who lost their jobs is a decent deal for those who can get it. But it leaves essential workers asking: What about me?

Fran, a nursing aide in Georgia, has lost all but two clients amid the coronavirus crisis. She’s an essential worker, but the pay isn’t good — $8 to $12 an hour, depending on the client. Her husband was laid off from his factory job at the start of the month because of the economic shutdown, and the unemployment benefits he receives are now keeping them both afloat. She’s heard the chatter about expanded unemployment insurance being too generous, but she’s not having it.

“It’s not their fault that their unemployment is more, they didn’t want to stop working,” she told me. “A lot of people are living on the unemployment because they didn’t have a choice, they were out of work. Most of the problem lies with how much essential workers were getting in the first place.”

The Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, signed into law in March made a major change to the American unemployment insurance system to respond to the pandemic, which has left millions of people out of work. It tacks on an extra $600 per week to unemployment benefits through July and expands the pool of potential recipients to people who are self-employed, freelancers, and contract workers who are usually ineligible to collect. The point of the expansion is two-fold: to help people stay afloat during the economic shutdown, and to keep them at home.

When the $2.2 trillion stimulus package was being debated, some Republicans in the Senate argued it was being too nice to unemployed workers, noting that for many people, unemployment benefits may actually amount to more than they’d be paid if they were going to work. Indeed, in many states, beefed-up unemployment insurance is greater than the average wages being replaced.

Beyond the politics of it, the situation has caused real tensions for people affected. Expanded unemployment is a source of animosity among some essential workers who realize they’re making less than they would if they were unemployed. Some would rather quit, stay at home, where they’re safe, and collect benefits, but they’re in a tough spot — unemployment is generally for people who are fired, laid off, or furloughed, not people who voluntarily leave their jobs. And as certain states begin to reopen parts of their economies, more people are going to face a similar conundrum: go back to work and put their health at risk, or stay home and bet on unemployment, even though collecting benefits is far from guaranteed.

Adding an extra $600 a week makes a real difference. It’s supposed to.

Typically, unemployment benefits were meant to replace about 40 percent of a person’s weekly earnings, explained Gary Burtless, a senior fellow in economic studies at the Brookings Institution. In February, before the pandemic took hold, the average unemployment benefit nationally was $387, though it varies a lot by state — the average in Mississippi was $215, in Massachusetts, it was $550. Adding on an extra $600 makes a big difference.

“It just transforms the whole system,” Burtless said. “For people with average pay or below-average pay, it’s a very big weekly benefit if they ever receive it.”

More than 26 million people have filed new jobless claims over the span of five weeks amid the pandemic and accompanying economic shutdown. Unemployment systems across the country have been jammed, meaning many people haven’t begun collecting benefits at all — more than two-thirds of jobless Americans didn’t get unemployment benefits in March. But if and when people do get the money they’re entitled to, for many, it will make a real impact. That’s the point.

“Part of the way I like to frame this is there are different problems we’re trying to solve for,” said Bradley Hardy, a professor of public administration and policy at American University. “The first part of the problem providing liquidity to individuals and families so they can pay for their lives, maintain their wellbeing, economically and otherwise.”

In other words, it’s meant to keep people afloat.

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The expanded benefits are also supposed to keep people home and allow them to social distance, helping to bring down numbers of coronavirus cases, the ultimate goal. The benefits are supposed to keep people who are laid off or furloughed in their homes instead of knocking on doors trying desperately to get reemployed so they can feed themselves or their families.

And in many states, unemployment benefits — if you can get them — are a good deal, and indeed, a better deal than going to work. According to an analysis from the New York Times, workers in more than half of states will get more in unemployment benefits than their regular salaries, on average.

There’s a tension here, but not the one some Republicans are stressing

While the CARES Act was being debated, some Republican lawmakers flagged that expanded unemployment benefits would likely be more than many people make at their jobs. “This bill pays you more not to work than if you were working,” Sen. Lindsey Graham (R-SC) told reporters at a press conference in March. The concern he and others expressed was that the expanded benefits would disincentivize people from going back to work.

But part of the plan is to keep people home instead of scrambling to find a job. The expanded benefits are temporary — as it stands, they only last through July — and many people prefer to work anyway.

Brandon Lee, a sanitation worker in Ohio, makes $14 an hour, which amounts to $560 a week if he’s getting 40 hours, which he sometimes doesn’t. He has a 10-month-old son and looked into unemployment so he could stay home and take care of him, but decided against it. “I’d rather be working, honestly, but I’m kind of happy I’m working,” he told me.

But many workers like Lee who have been deemed essential and are still on the job have noticed that unemployment is indeed a more lucrative deal than their own situations. Many of the jobs deemed “essential” — at grocery stores, fast food restaurants, pharmacies, elder care, etc. — are also low-paying. For some parents who are continuing to go to work, their costs are actually increasing because their kids are home and they’re having to pay extra for child care. One Minnesota factory worker told me they make $16 an hour but are now paying $10 an hour for child care.

“There is a tension there, and the tension is whether there will eventually be some perceived unfairness of treating people who are staying at home and trying to avoid the risk of infection while these people who are exposing themselves to that risk are not necessarily getting a pay increase,” Burtless said.

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Some businesses are offering hazard pay, but it’s being handled on a case-by-case basis. There are some proposals in Congress to include hazard pay for essential workers in upcoming legislation, but it’s not clear any of those proposals will become law.

Many essential workers are stuck. Some of them would rather not work and put their health at risk, but generally, people who leave their jobs voluntarily aren’t eligible to collect unemployment. They can quit and apply, but there are no guarantees they’ll be able to collect benefits.

Kristi, a Family Dollar worker in Georgia, told me she normally makes $10.50 an hour but has now had her pay temporarily bumped up to $12.50 an hour by the company. She’s aware that unemployment would be a more lucrative and safer option, but she’s worried if she quits and applies, she won’t be approved.

“If I say, look, I want to be at home with my family, then, okay well you lost your job and you can’t collect unemployment,” she said. “I was looking into that, if there’s some loophole where I can say, look, I’m terrified to do this, and I don’t want to be exposed to these people that aren’t following the rules, that don’t take it seriously, for $12.50 an hour.”

Others are taking the chance. Eva Coyle was working part-time at a local grocery store in North Carolina when the pandemic hit and grew increasingly concerned about her safety. When her store offered a leave of absence, she took it, opting to “throw myself at the mercy” of the social safety net. She’s over 65 and collects Social Security and is on Medicare, and she’s applied for food stamps and unemployment.

“You get to a certain age, and I’m not somebody who’s looking for a career anymore or a full-time job, but I can’t live on Social Security, so I have to continue to work and I’m not quite sure what the future holds for me,” she said. “I have no savings, so I’m in the boat with so many other Americans, really no backup.”

As some state economies open back up, unemployment benefits are going to be a big part of the conversation

Thus far, essential workers have largely been the ones experiencing this scenario of having to work when they’d rather stay home and collect unemployment, but as states begin reopening their economies, it’s something more Americans will face.

Georgia began to lift some restrictions and allow some businesses to reopen on Friday. Colorado is starting to do the same. That means people are being recalled to work.

Some people would, understandably, rather stay home instead of going back on the job, but it’s not clear they’ll be able to collect unemployment. As a Reuters article recently noted, people who are afraid of getting the coronavirus when going back to work may not get unemployment benefits. Being too scared to work isn’t a qualifier.

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Jess Clark, a self-employed tattoo artist in Georgia, would rather continue to social distance but instead is going to have to go back to work. She’s been out of work for six weeks and because of delays in the system was never able to collect benefits at all. “Many of us are being forced to go back to work because we no longer are eligible for the unemployment benefit many of us have yet to receive,” Clark said in an email.

A benefits system with weeks upon weeks of delays where many people never are able to collect at all isn’t too generous, it’s not generous enough.

As people are asked to go back to work, there certainly will be some who try to make a calculation as to whether they can continue to stay home and stay safe instead of putting their health at risk. Or people might look for different types of jobs. But it’s going to be difficult to tease out what is driving decisions. “To the degree that there are vacancies, how much of this is really explained by the fear of coronavirus, which is legitimate?” Hardy said.

The last recession is also fresh in many workers’ memories, including how hard it was to find a job for many people. Staying at home and collecting unemployment benefits set to expire in a few months isn’t a risk-free calculation.

“You might be quite legitimately fearful that if you turn down the job from which you’ve been furloughed, it may take you a very, very long time to find another job that pays the bills,” Burtless said. “And that is a reasonable fear based on what we just went through from 2008 to 2015 or so. Those spells of unemployment were extremely long.”