The Back-to-Work Math Gets Messy for America’s Newly Unemployed
It involves life and death, economics and family and has left many reluctant to return to work for the time being.
(Bloomberg) --
Riley Crutchfield, a hairdresser in Macon, Georgia, is nervous about going back to a job that requires her to touch people all day. In Houston, former Waffle House trainee manager Maxime Pierre has election-year politics and risk-reward tradeoffs in mind. In Angie Barksdale’s Michigan home, it’s the three kids without a school to go to.
Across America there’s a heated discussion underway about when and how to restart an economy that was put on hold to contain the Covid-19 virus. But the often partisan debate can ignore, or reduce to caricature, what’s become a complicated calculus for millions of Americans suddenly thrown out of their jobs.
It involves life and death, economics and family and has left many reluctant to return to work for the time being. It also points to the challenges now facing America’s policymakers and the sometimes clashing incentives government’s response to the crisis has created.
“I love what I do and I would do anything to be back in my salon,” says the 22-year-old Crutchfield, who was laid off four weeks ago and has yet to receive an unemployment check in her home state of Georgia, where Republican Governor Brian Kemp has been pushing for an aggressive reopening. “But I don’t feel safe as of right now,” Crutchfield says. “I don’t see how I can touch people all day long and stay safe.”
There’s a financial dimension too. The re-opened salon will likely be booking fewer clients to keep everyone at a distance and safe, so Crutchfield will earn less than both the $700 per week she took home before the crisis or the almost $1,000 a week ($365 from Georgia and $600 from the federal government) she is due in unemployment benefits.
Reopening the economy sounds good in principle. To Crutchfield, who voted for Kemp in 2018 and is now souring on both him and President Donald Trump, it means ``I will be barely able to make enough to live’’ just as she is planning an April 2021 marriage to her fiancé, who is in the restaurant business.
Maxime Pierre is doing the same kind of math. He is also betting that the $600 top-up from the federal government that is changing the equation for many unemployed workers will be around beyond its current expiry at the end of July — thanks to the elections looming later in the year.
Pierre, who left the army in February 2019 after 17 years, was laid off by Waffle House on March 20. He was earning $699 for a 55-hour week at the restaurant chain. The unemployment checks he’s getting now represent a raise of more than $300. In his mind, the lurking virus and lack of the mass testing that experts say is needed mean anything below $40 an hour isn’t worth the risk.
At 36, the unemployment benefits also represent another chance to reboot his career after having spent almost his entire adult life in the military. Armed with an economics degree he got while he was in the Army, he had high hopes when he was emerging from his military life into a booming economy and tight labor market.
But Pierre says he struggled to find work until he eventually ended up at Waffle House. And there he had slowly grown disillusioned with the promise the restaurant chain was holding out of a manager position, which also evaporated when the company abruptly decided in March it wouldn’t be opening any new locations.
To Pierre the government’s largesse this time is only fair.
“In 2008 the big corporations got away with murder. Now the average people are saying ‘It’s our turn’,” he says. “This is the people’s bailout.”
The new calculations aren’t just being made by employees.
The government’s main relief effort for small business is the Paycheck Protection Program, topped up with another $320 billion in the bill signed Friday by President Donald Trump. It offers loans that will be written off, provided companies keep workers on their books or hire them back before June 30.
But the plan doesn’t address what business realities might look like even shortly after that.
Pat Weiler got a loan, and it helped him preserve production at his paving equipment company, Weiler Products, in Knoxville, Iowa — and jobs for its 440 employees, some 5% of which he estimates are still stuck at home because schools and day cares remain closed.
But Weiler says his order book is diminishing. He’s already ordered a two-week shutdown in early July, and acknowledges it could last longer. If the economy hasn’t corrected by then, “it’s inevitable that we are going to end up cutting hours anyway,” he says. “Then we’ll have to decide what August brings.”
That uncertainty is leading some small businesses to forgo federal help altogether.
The owners of Decades, a bowling alley and retro video-game arcade that opened last year in Lancaster Pennsylvania, haven’t applied for the small-business loans. That would involve committing to carrying a full payroll to the end of June. It’s too risky, when what lies beyond is so unclear, according to Adam Ozimek, one of its shareholders.
The case shows how policies improvised on the fly during a crisis can collide. Generous unemployment insurance and business incentives to keep people employed don’t always mix.
Ozimek, who’s chief economist at online jobs site Upwork and a regular commentator on the U.S. labor market, argues that if policy makers are going to offer a $600-a-week boost to unemployment benefits, they should also make part or all of the money available to workers who are kept in their jobs by companies struggling to meet payrolls.
“It’s OK to pay people who are unemployed, he says. “But you also have to pay people who can’t keep people on staff.”
The U.S. has already seen more than 26 million jobs vanish in five weeks. Economists expect next week’s data to show another 3.5 million people, roughly the population of the San Diego metropolitan area, filing jobless claims.
But many of those who have lost their jobs are in an economic limbo. Some four-fifths of those who’ve experienced layoffs in their own households expect the jobs to return once the epidemic has passed, a new poll co-sponsored by the Associated Press showed Friday.
Angie Barksdale calls what we’re seeing now a “gray space” in the economy.
The chief operating officer for state-funded agency West Michigan Works!, Barksdale recently helped organize an online jobs fair in Grand Rapids. She says just 54 people logged on.
That’s likely because some workers have been told by their employers that they’ll get rehired, while others are making different calculations in the face of the crisis. Like Barksdale’s own family.
Her husband, Adam, was laid off by a local manufacturing company, then later called back to work. But with three school-age children stuck at home, the couple decided to take advantage of extended family-leave benefits passed by Congress.
It means Adam can stay home, and help the kids adapt to online schooling, on two-thirds of his usual salary — while Angie is at work trying to get help to the legions of other people who’ve lost their jobs.
“We’re in a blessed situation,” says Angie, pointing to friends and neighbors who face harsher times. Still, “it’s stressful,” she says. “I think going back to whatever we go back to is going to be just as stressful.”
©2020 Bloomberg L.P.