• A $600 federal boost to unemployment payments has caused some confusion, with some people are now earning more in unemployment than they were while working.
  • Some currently employed workers say the system seems unfair, and are asking to be laid off so they can collect unemployment.
  • Some business owners are struggling to hire people and wondering if they should stay open or allow their workers to get a pay boost through unemployment. 
  • "How do I say no to employees who asked to be laid off so they can get a raise?" asked one restaurant owner.
  • Visit Business Insider's homepage for more stories.

A federal stimulus program meant to aid the unemployed is causing confusion and frustration among some business owners, laid-off workers, and the currently employed, according to interviews.

The federal program pays $600 weekly to the unemployed, in addition to state unemployment payments. With the extra federal money, workers in more than half of US states will receive, on average, more than they were earning while employed, according to an analysis cited by the New York Times.

This is largely because the $600 boost, which is set to expire in July, was calculated based on the average weekly wage in the US. So workers earning less than the national average may end up earning more in unemployment than their regular salaries.

The federal money is an important lifeline for laid-off or furloughed workers. More than 26 million people have filed for unemployment claims since the beginning of the pandemic.

Marcus Anthony, a 48-year-old warehouse worker in Macon, Georgia, said he's receiving $300 more weekly in unemployment benefits — for a total of $730 after taxes — compared to his regular paycheck.

He said he's feeling conflicted about his eventual return to work.

The extra money "will undoubtedly come in handy during these uncertain times but will be missed when I'm called back to work because I make far less," he said. "On the upside, I guess after the pandemic I hope to return to a life of normalcy with a full-time job with full benefits."

While anecdotal stories like this are popping up, it's unclear at this point how many people are actually receiving more in unemployment that their regular salaries.

Employed workers say they might be better off without jobs

Meanwhile, some people who remain employed as essential workers say they are feeling disappointed by a system that hasn't rewarded them with a similar pay bump.

"I am very blessed to still be able to work both my jobs because they are deemed essential but you can understand my frustration," said Meaghan Rhead, an employee of The Country Market grocery store in Big Sky, Montana. "If I were to become unemployed, I would absolutely be bringing home more money confined to the safety of my home than working 50-60 hours per week." 

Miriam G., who requested that her last name remain private, said she felt initially relieved when she was spared from layoffs at the public relations firm where she works in New York City, and instead given a pay cut.

Now, she's thinking her laid-off colleagues might be better off.

"I'm trying to decide how is the best method to go about the conversation with my management about how unemployment benefits are more supportive right now than my steady paycheck," she said. 

She said she's trying to remain grateful for her continued employment, but she's also feeling over-worked and frustrated. 

"I find myself working around the clock," she said. "The need to be productive and running at 100% efficiency has increased, so there isn't an opportunity for slowing down. There's no time for breaks."

Business owners struggle to decide whether to stay open or lay off workers so they can collect unemployment

empty restaurant
Getty

The extra $600 boost to unemployment is making it difficult for some small business owners to hire laid-off workers. 

"We have had many staff that have said at this point the best thing they can do for their family is to collect unemployment," said Ian Lieberman, a multi-unit franchisee for Fuzzy's Taco Shop in Tampa, Florida. "When they explained their reasoning, I said I respected that, and that they would be available for rehire."

Adam Lowe, the co-owner of Sundara Indian Cuisine in San Diego, said he "ran into a wall" trying to hire cooks for his restaurant over the past few weeks.

"Everyone I was talking to was going on unemployment and getting raises," said Lowe, who pays cooks about $20 per hour.

"The $600 weekly payout has derailed the system," he said.

Lowe said he has contemplated whether he should shut down his restaurant entirely — which is currently offering only take-out and delivery — despite continued demand from customers. 

"How do I say no to employees who asked to be laid off so they can get a raise?" he asked.

Curt Blackwell, who owns two restaurants in central Missouri, said he has received $90,000 in forgiveable loans through the federal Paycheck Protection Program to stay afloat. The program requires that recipients spend 75% of PPP funding on payroll. 

But Blackwell said it's hard to convince his laid-off staffers who are receiving unemployment benefits to come back to work.

"We're probably going to have to send all that [PPP money] back because we're not able to use it for payroll," he said. (The National Restaurant Association has asked Congress to ease the requirements on payroll spending). 

To reopen one of his restaurants, Blackwell plans to cook and his wife will work in the front of the restaurant. He may try to hire back high school-aged workers who were unable to collect unemployment, he said.

Blackwell said he's also worried about the profitability of his restaurant once it reopens. The dining room will likely only be able to seat 50% of capacity to maintain social distancing.

"We are confident we can't make money doing that, much less paying employees enough to match unemployment right now," he said. 

Some people are still trying to get access to unemployment benefits

At the same time, some people who are out of work are having trouble getting access to unemployment benefits. 

This includes some self-employed workers and independent contractors, some of whom have said their claims have been denied even though the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), expanded eligibility for unemployment benefits include them. 

This may be due to the fact that in some states, unemployment benefits systems have been unable to process claims for these groups until this week, according to reports. 

Chris Roadarmel, a single father of two and the owner of a DJ and karaoke business in Michigan City, Indiana, said he has applied for unemployment benefits every week for the last month and has been denied each time. He provided evidence of those denials to Business Insider.

"This government help was supposed to help displaced self-employed workers but I haven't seen it," Roadarmel said.