Millions of people across America are collecting $600 per week over an above their unemployment compensation. Now, as businesses start to reopen, some of these people are only too happy to continue to get unemployment at a rate of about $40,000 per year. The extra $600 per week is approved until the end of July. That's another two and a half months. The latest bill from the House Democrats extends that until the end of the year. The House Democrat bill has already been pronounced dead on arrival in the Senate, but there's a real question as to whether or not the unemployment benefits will be extended.
There's a major problem with extending the extra $600 per week. If the economy is truly reopened by June, there will be a need for millions of workers to return to their jobs. If these workers decide to stay home and just collect their government checks, we may well see a worker shortage. There is, however, a way to restructure the program so that the incentives not to work will be replaced with an incentive to go back to work. At the same time, there can be more help for small businesses.
Here's my proposal:
1. For unemployed workers who return to work, there will be an extra $200 per week added to their wages which will be paid by the federal government.
2. In addition to the first item, each small business that recalls workers to full time work will receive $100 per week per employee from the federal government.
3. These benefits will last for 8 weeks after being hired, but will only be available for those hired by July 31.
4. The $600 extra in unemployment benefits will stop as scheduled at the end of July.
5. For any business that got a loan under the PPP, there will be no $100 benefit during the time when the PPP money is being used to pay wages.
This plan will accomplish a few things.
A. It will provide an incentive to workers to go back to work. An employee who waits until the $600 per week expires before returning to work will not get the benefit of $1600 that comes from the extra $200 per week. Employees who return to work will also get the added benefit of making more in base wages than they get in regular state unemployment. They may also get benefits as well.
B. Small businesses will find it less expensive to hire workers. This will encourage more hiring and more jobs.
C. The extra money pumped into the hands of employees will provide another boost to the economy to get things going again.
D. The cost to the government will be less than 25% of the cost of extending the $600 until the end of the year. It would also provide a boost towards getting the economy moving again instead of resulting in another roadblock to economic growth which extending the $600 would do. It would incentivize work rather than staying at home.
Obviously, this is conceptual. There are many details that would need to be worked out, but the basic plan should work.
There's a major problem with extending the extra $600 per week. If the economy is truly reopened by June, there will be a need for millions of workers to return to their jobs. If these workers decide to stay home and just collect their government checks, we may well see a worker shortage. There is, however, a way to restructure the program so that the incentives not to work will be replaced with an incentive to go back to work. At the same time, there can be more help for small businesses.
Here's my proposal:
1. For unemployed workers who return to work, there will be an extra $200 per week added to their wages which will be paid by the federal government.
2. In addition to the first item, each small business that recalls workers to full time work will receive $100 per week per employee from the federal government.
3. These benefits will last for 8 weeks after being hired, but will only be available for those hired by July 31.
4. The $600 extra in unemployment benefits will stop as scheduled at the end of July.
5. For any business that got a loan under the PPP, there will be no $100 benefit during the time when the PPP money is being used to pay wages.
This plan will accomplish a few things.
A. It will provide an incentive to workers to go back to work. An employee who waits until the $600 per week expires before returning to work will not get the benefit of $1600 that comes from the extra $200 per week. Employees who return to work will also get the added benefit of making more in base wages than they get in regular state unemployment. They may also get benefits as well.
B. Small businesses will find it less expensive to hire workers. This will encourage more hiring and more jobs.
C. The extra money pumped into the hands of employees will provide another boost to the economy to get things going again.
D. The cost to the government will be less than 25% of the cost of extending the $600 until the end of the year. It would also provide a boost towards getting the economy moving again instead of resulting in another roadblock to economic growth which extending the $600 would do. It would incentivize work rather than staying at home.
Obviously, this is conceptual. There are many details that would need to be worked out, but the basic plan should work.
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