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Impact of $600 unemployment bonus and people going back to work


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How will the $600 unemployment bonus affect people going back to work?

My state is opening up manufacturing next week.   That means many people will be going back to work (but governor gave lots of exemptions for workers).  Most manufacturing jobs in my area pay $12-16/hour.   Unemployment is now paying around $24/hour.  That means people that do go back to work will be making far less money now.  Then add in child care costs and travel expenses and this could be a big financial hit to them.

Similarly, so many of the essential workers that have been working all along are earning maybe 1/2 of what they would on unemployment.

I know, personally, I am earning far less working in education than I would be on unemployment.

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I read the article and think this is a huge overreach. The closest to an actual sickness complaint that I see is the person who says workers breathe in too much CO2 over the ten hours they wear t

I think one thing that makes it harder to go back is that this is an either/or situation.  You either stay home and get the $600 extra or go back to work and get $0.  Many local workers here don't eve

I try to remember that it's not an easy decision to make. For some people, that extra $600 might be the boost they need to get from behind the 8 ball - maybe it pays tuition for work certificate, mayb

This is a problem with the way the additional benefit was structured.  It does encourage people not to work, which was perhaps the original intent.  But it does cause incentive issues if we would prefer to have those who are unemployed work a contact tracers, PPE producers, or in other activities that would be of help in our current crisis.  

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5 minutes ago, Fifiruth said:

DS23 just experienced making more on unemployment and then getting called back by the employer.

When he first got the stimulus check deposited and then the enhanced unemployment checks he said, “I can see now why people like government benefits and why it’s so hard to get off. This is kind of nice.”

In the end, he went back because the job market it going to be tough for a long time, and this is a good employer.

 

I think one thing that makes it harder to go back is that this is an either/or situation.  You either stay home and get the $600 extra or go back to work and get $0.  Many local workers here don't even make $600/week working as that is an average of $15/hour.   I would love to see in all phases of government assistance a phase in incentive.  That would give people an incentive to work.....and some honestly would like to work but financially their family is better off with them NOT working.  What if until the end of July (or whenever this bonus amount is paid) that workers that go back to work could qualify for at least a partial payment.  For example, if you aren't working you get $980/week which is $24.50/hour.  If you go back to work for $14.50/hour you qualify for an extra $400/week to make it the same $980/week the people not working are getting.

So many government programs are either/or, no phase out.  Medicaid is often you get free health care coverage (or an extremely small amount like $5-10/month) or you get NOTHING if you are even $1/year over the limit.  What if they did a phase out program where as your earnings increased, you paid more towards your healthcare.....like $20, then $40, then $60, etc.

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6 minutes ago, Fifiruth said:

In the end, he went back because the job market it going to be tough for a long time, and this is a good employer.

 

I think this is exactly why most people will go back, even though it will mean less money.  How long will the $600 bonus last?  I had to look it up; July.  The choices seem to be more money for 3 more months and then little chance of finding any job, or the extra for 3 months and then unemployment for the foreseeable future.  

It really sucks, though.  I feel very fortunate that we don’t have to make that choice.

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Yes I know small business owners who took the payroll protection loan which will be forgiven if they use most of it on payroll but now their employees won’t come back. 
 

It is a problem. I’m more willing to see unintended consequences vs. conspiracy theories and malice at every turn but the nature of this thing has unintended bad consequences all over the place 🙁

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My husband is self employed so the $600 will go through the end of the year. I'm grateful for this because it makes me feel safe BUT it would be in our best financial interest for him to literally not work until January.  That's not a good position for millions of people to be in. I believe (we're actually having a hard time figuring this out so don't trust me 100% on this) that we can make $200 a week more plus food stamps which will be a difference of about $1,600 a month. I assume we could apply for more programs and be doing even better if we wanted. So that's about a $12,000 win for us if he just doesn't work. 

AND if he does work and makes too much we get nothing. So if he does his best we go homeless. I did not know this. He's been working as much as possible making about $250 a week but we just found out he will get nothing if he makes more than $207. So now he's working less. Lovely.

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I did hear of one company that was able to get workers to return by pointing out that they would lose company paid health insurance benefits for refusal to return. 
 

But a lot of people in the area where they are doing better on unemployment don’t have access to employer sponsored health insurance anyway.

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46 minutes ago, Fifiruth said:

DS23 just experienced making more on unemployment and then getting called back by the employer.

When he first got the stimulus check deposited and then the enhanced unemployment checks he said, “I can see now why people like government benefits and why it’s so hard to get off. This is kind of nice.”

In the end, he went back because the job market it going to be tough for a long time, and this is a good employer.

 

This is by no means normal government benefits.

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A friend of mine is a grocery store manager in MD. He is extremely short staffed bc people are telling him flat out that they won't be back until UE ends. I forgot to ask him if he can fire them and just hire new employees.

I hope people who are milking this will have to deal with consequences....

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9 minutes ago, Slache said:

My husband is self employed so the $600 will go through the end of the year. I'm grateful for this because it makes me feel safe BUT it would be in our best financial interest for him to literally not work until January.  That's not a good position for millions of people to be in. I believe (we're actually having a hard time figuring this out so don't trust me 100% on this) that we can make $200 a week more plus food stamps which will be a difference of about $1,600 a month. I assume we could apply for more programs and be doing even better if we wanted. So that's about a $12,000 win for us if he just doesn't work. 

AND if he does work and makes too much we get nothing. So if he does his best we go homeless. I did not know this. He's been working as much as possible making about $250 a week but we just found out he will get nothing if he makes more than $207. So now he's working less. Lovely.

This is exactly the situations I am hearing about.  It is not that people do NOT want to work, it is just that their families are much better off (in current situation) if they do NOT work.  That is a sad place to be.  Something in our system has to change.  I am ALL for people who are able to work (even my disabled kids have part time jobs) but I am also for helping families have enough to live on and have food and medical care.  Sadly, right now, it is hard to have the two work together.

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2 minutes ago, SereneHome said:

A friend of mine is a grocery store manager in MD. He is extremely short staffed bc people are telling him flat out that they won't be back until UE ends. I forgot to ask him if he can fire them and just hire new employees.

I hope people who are milking this will have to deal with consequences....

I know in my state there was mention of NO fall out if you didn't go back to work if you had one of many situations.....including children at home that would normally be in school/day programs/camps, etc.  That is a LOT of workers that fit that criteria alone.

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My dd just took intermediate macroeconomics, and her final paper was on how Germany was handling this issue.  I was helping her translate the German gov't website, so I learned stuff too.

They have a program (it was already in place from a previous recession) where if companies furlough workers due to circumstances beyond their control (weather, natural disaster, plague, or other hopefully temporary emergency) the company applies for their workers to be eligible for the 'short work' program.  Then the gov't pays each employee 60% of their net income -  If they have at least one kid, they get 67% - for up to one year.  If the company ends the furlough, the employees go back to work.  The company also gets some relief, as they are refunded all their social insurance taxes (which include health, pension, and long-term care taxes) during this period.  So those people are never counted in the unemployment numbers, and it also deals with people making more while not working, and on when people are called back to work in a more organized fashion.

I think Britain copied this program, but they're paying 80% of wages.

I wish we actually looked around the world for how other people are solving problems in ways that make sense and have been tested in the real world instead of always reinventing the wheel and passing stuff that ends up having huge loopholes and unintended consequences...

Edited by Matryoshka
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1 minute ago, Ottakee said:

I know in my state there was mention of NO fall out if you didn't go back to work if you had one of many situations.....including children at home that would normally be in school/day programs/camps, etc.  That is a LOT of workers that fit that criteria alone.

I promised myself that I won't go on any rants either on internet or IRL about how this stimulus package was done. i didn't even make any snarky comments about my SIL getting $$ for her dead husband. But those type of policies make me very worried about what's going to happen in "life after Covid" when it comes to economy. I remember how hard it was to find people to hire back in 2008-2009 recession bc UE went on for a very long time, i.e instead of regular 6 months, you could be on it for much much longer. And while now UE is suppose to end in July, I bet it will be extended again. So.....I guess we'll see what happens. Good luck to us all 🙂

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6 minutes ago, Scarlett said:

This is by no means normal government benefits.

Going to disagree with you here. If you know how to work the system you can totally bank. My coworker who didn't get married so that both she and her "husband" as as he called him could get food stamps, WIC, rent assistance, gas assistance, and cash assistance made over $4,000 a month, more than twice what my 2 income family made, in a low COL area. I definitely think it depends on the state.

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9 minutes ago, Ottakee said:

I know in my state there was mention of NO fall out if you didn't go back to work if you had one of many situations.....including children at home that would normally be in school/day programs/camps, etc.  That is a LOT of workers that fit that criteria alone.

 

It makes total sense for those people to stay home. I'm glad they are protected.

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6 minutes ago, Slache said:

Going to disagree with you here. If you know how to work the system you can totally bank. My coworker who didn't get married so that both she and her "husband" as as he called him could get food stamps, WIC, rent assistance, gas assistance, and cash assistance made over $4,000 a month, more than twice what my 2 income family made, in a low COL area. I definitely think it depends on the state.

Pretty sure that is fraud.  They ask you for the household income.  

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5 minutes ago, Slache said:

Going to disagree with you here. If you know how to work the system you can totally bank. My coworker who didn't get married so that both she and her "husband" as as he called him could get food stamps, WIC, rent assistance, gas assistance, and cash assistance made over $4,000 a month, more than twice what my 2 income family made, in a low COL area. I definitely think it depends on the state.

My disabled (cognitively impaired with health issues) daughter got married and both she and her husband both lost a lot of benefits by being married.

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1 minute ago, Scarlett said:

Pretty sure that is fraud.  They ask you for the household income.  

Possibly. She was not above such things.

Just now, Ottakee said:

My disabled (cognitively impaired with health issues) daughter got married and both she and her husband both lost a lot of benefits by being married.

I'm sorry. I know it's a thing.

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4 minutes ago, Slache said:

Going to disagree with you here. If you know how to work the system you can totally bank. My coworker who didn't get married so that both she and her "husband" as as he called him could get food stamps, WIC, rent assistance, gas assistance, and cash assistance made over $4,000 a month, more than twice what my 2 income family made, in a low COL area. I definitely think it depends on the state.

She is NOT an anomaly.

I did a tax clinic for my graduate program where we did taxes for low income people. That type of scenario was fairly common.

1 minute ago, Ottakee said:

My disabled (cognitively impaired with health issues) daughter got married and both she and her husband both lost a lot of benefits by being married.

Yep! On a flip side of  my last comment - my mom worked for non-profit that took care of disabled people and many many of them worked. Whatever jobs they could do, they worked. Then there is my SIL who got a few too many sinus infections and decided that she was "too sickly", so she stopped working almost 20 yrs ago. Now, that her husband died last year she is living off my IL's and "too distraught" to work.

OK, I think I need to stop now, I don't want to derail your thread with my rants 🙂  Sorry!!!!!

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Dh's work has been open throughout this as they are classified as essential business where we live but they sent all hourly employees home for a bit due to decreased demand from COVID (as people they supply were closed down). As people were called back slowly many of the ones that did get the call were not happy. Of course the better workers are called first so then it is like a punishment, it puts businesses in a tough spot. Now hourly employees are only working partial weeks due to lack of work and they have started rotating schedules so everyone gets some days off so everyone qualifies for the extra benefits.

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13 minutes ago, Ottakee said:

My disabled (cognitively impaired with health issues) daughter got married and both she and her husband both lost a lot of benefits by being married.

While I don't believe your disabled daughter should have lost benefits by being married, in general, the reason benefits decrease with marriage is because there are now two adults who are able to provide for the household.  

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I just started a new job and found out I'm being furloughed 😞 so I guess I'm about to find out how this whole thing works.

I do believe I'll be getting more in unemployment than I'm making now, which sucks because I'm a single parent with no help from my ex, and I have advanced degrees and this is the best job I could find after looking for a year (I was previously in a temp full-time hourly position. This job pays pennies more per hour but it is salaried with benefits, and permanent). 

Rather than incentivizing people not to work by paying more in unemployment, maybe we should reconsider the living wage? The money is obviously available. 

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4 minutes ago, Scarlett said:

While I don't believe your disabled daughter should have lost benefits by being married, in general, the reason benefits decrease with marriage is because there are now two adults who are able to provide for the household.  

I don't think so. MIL almost divorced FIL so he would qualify for Medicaid. Or maybe. I don't remember.

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44 minutes ago, Slache said:

I don't think so. MIL almost divorced FIL so he would qualify for Medicaid. Or maybe. I don't remember.

Yes, that makes my point.  There were two of them to work and support the household. 

And I understand that many on the edge of income guidelines feel like they get the worst of it.  They make too little to survive and too much for any government aid.  My point is just about marriage decreasing incomes.  And those who defraud the system are not good indicators of how well or poorly it is designed.

Edited by Scarlett
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2 minutes ago, Slache said:

I don't think so. MIL almost divorced FIL so he would qualify for Medicaid. Or maybe. I don't remember.

Oh that is the whole other problem in US. It's almost like govt doesn't want people to be self sufficient! Bc if you saved and saved but one of the spouses needs a nursing home, you have to be either incredibly wealthy or very poor. Anything in between and you can drain your life savings in a few years in a semi decent facility. And trying to predict anything and forming trusts is very hard and complicated

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1 minute ago, Scarlett said:

Yes, that makes my point.  There were two of them to work and support the household. 

And I understand that many on the edge of income guidelines feel like they get the worst of it.  They make too little to survive and too much for any government aid.  My point is just about marriage decreasing incomes.  And those who defraud the system are not good indicators of how well or poorly the designed.

Well, in my opinion, if the system can be easily defrauded it's not that well designed....

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We know a college kid who got fired from his (very easy) weekend job in mid-February cause he was late 11billion times.  A parent got him the job and I think that's why it took the company so long to fire the college student.  The parents only want him to have weekend job to learn to be an adult.

He applied for unemployment mid March. He's getting his $50ish dollars in unemployment plus $600.

His college is paid for by the grandparents inheritance. His parents cover everything else.  They have not lost their comfortable incomes during this virus.

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7 minutes ago, Scarlett said:

Yes, that makes my point.  There were two of them to work and support the household. 

And I understand that many on the edge of income guidelines feel like they get the worst of it.  They make too little to survive and too much for any government aid.  My point is just about marriage decreasing incomes.  And those who defraud the system are not good indicators of how well or poorly the designed.

But they still would have been in the same household. Is that fraud?

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10 minutes ago, Slache said:

But they still would have been in the same household. Is that fraud?

Well, I am not an attorney.  I think it would be.  Shrug.

Edited to add--Each state handles Medicaid differently.  But if you get divorced so that you can transfer assets to your spouse you might be looking at a 'gift' tax. And some maybe all states count household income.  So if you go to the trouble of divorcing in order to hide assets then yes to me that is fraud.  

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20 minutes ago, Scarlett said:

That is an interesting take on breaking the laws.

I didn't take it as advocating breaking the law but rather that poorly designed programs make it easier to play the system.

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1 minute ago, Ottakee said:

I didn't take it as advocating breaking the law but rather that poorly designed programs make it easier to play the system.

If the law says you must count household income and you are not doing so then that is breaking a law/defrauding the government.  That seems like more than playing the system.

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26 minutes ago, Scarlett said:

Yes, that makes my point.  There were two of them to work and support the household. 

And I understand that many on the edge of income guidelines feel like they get the worst of it.  They make too little to survive and too much for any government aid.  My point is just about marriage decreasing incomes.  And those who defraud the system are not good indicators of how well or poorly the designed.

But legally, according to Social Security disability law (SSI program) Roommates do NOT loose benefits and are each their own household.  Same sex couples do NOT loose benefits either.  It is if you are legally married or a couple acting like they are married.  That is my beef with it.  There was a law proposed (before COVID) that would allow people on SSI that got married the same protections as those that lived with roommates or same sex couples.

It is hard as her husband is also cognitively impaired.  Under SSI current rules they would get about $1,100 a month vs. over $1,500/month to live on.  With rent at $830 in our area plus utilities it is just not workable.  Thankfully they both are able to work part time but finances are very tight and they get $16/month in food benefits.  Before they got married my daughter got over $100 just for herself.

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1 minute ago, Scarlett said:

If the law says you must count household income and you are not doing so then that is breaking a law/defrauding the government.  That seems like more than playing the system.

I agree.  But the WAY these programs count a household is very complex.  Roommates living together but eating their own food are each counted as their own household.  Under SSI rules same sex couples or roommates are their own household but married is counted together.   They really need to fix/clean up, these rules and guidelines.

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3 minutes ago, Ottakee said:

I agree.  But the WAY these programs count a household is very complex.  Roommates living together but eating their own food are each counted as their own household.  Under SSI rules same sex couples or roommates are their own household but married is counted together.   They really need to fix/clean up, these rules and guidelines.

Yes I agree.  Which is an entirely different matter than people lying about their income and household.  

There are many things that don't make sense in the world of government benefits.  Or laws in general.  For instance, HCOL areas don't give higher benefit amoutns than LCOL areas I bet.  

And when I got divorced I received 3 years of alimony.  It was suppose to be an equalizing measure....to help me get back on my feet since I had  been a SAHM in a long term marriage.  So why did I lose it when I got married?  What does  my second marriage have to do with my financial loss from the first marriage?  But I did not shack up for 3 years in order to keep what I really felt was mine.  Life just is not fair but we should all do our best to be people of integrity and follow the rules and laws.

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4 minutes ago, Scarlett said:

If the law says you must count household income and you are not doing so then that is breaking a law/defrauding the government.  That seems like more than playing the system.

But, there is not a uniform definition of "household."  Even with different programs, it is defined differently.  As family structures and living arrangements have changed over time, the definitions have not necessarily kept up with those changes. 

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3 minutes ago, Bootsie said:

But, there is not a uniform definition of "household."  Even with different programs, it is defined differently.  As family structures and living arrangements have changed over time, the definitions have not necessarily kept up with those changes. 

Pretty sure if you are presenting yourself as husband and wife that is considered a household. But I agree it does need to be better defined.

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4 minutes ago, Bootsie said:

But, there is not a uniform definition of "household."  Even with different programs, it is defined differently.  As family structures and living arrangements have changed over time, the definitions have not necessarily kept up with those changes. 

EXACTLY

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36 minutes ago, amyx4 said:

We know a college kid who got fired from his (very easy) weekend job in mid-February cause he was late 11billion times.  A parent got him the job and I think that's why it took the company so long to fire the college student.  The parents only want him to have weekend job to learn to be an adult.

He applied for unemployment mid March. He's getting his $50ish dollars in unemployment plus $600.

His college is paid for by the grandparents inheritance. His parents cover everything else.  They have not lost their comfortable incomes during this virus.

Sure. I know a person who was technically still employed by a giant company but had stopped being on the actual schedule for months and months...maybe  a year? She went back to school so didn't have the time to work, they just kept her on as an employee in case she wanted to return later, or over school breaks. But she's collecting unemployment now! 

But better a few people get what they don't "deserve" than people not get what they need. You can't make it perfect. You either have to err on the side of a few people getting too much, or some people getting too little, or none. And given that choice, it makes sense to err on the side of everyone having what they need, versus some starving. 

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Had a chat with hubby (we're the people that can only make $207 or we get nothing). Apparently while he was making $250 a week in the beginning he's now making about $30. $18 this week so far. Svengo. So, we're theorizing that people are switching to rideshare so they can keep the $600/week through December.

Under the current circumstances my husband can work one hour a week, not look for a job because he's already employed, collect enough to survive until January. Maybe even work under the table for even more income.

So, I think that was an unforseen issue that people are taking advantage of.

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Here the extra money went to the employer to help pay wages.  It still gets abused but I don't think anyone who can work is choosing not to unless they can't.  We are still being encouraged to work from home and the schools are only open to the kids of parents who have to work.  Hopefully we drop down an alert level next Wednesday night and the schools will open the following Monday.  I need to do some intensive work with ds11 who I homeschool which isn't happening with ds13 interrupting.

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On 5/8/2020 at 7:05 AM, PeterPan said:

Our state has an anonymous reporting system and if employees refuse to go back to work they will be reported.

Interesting. Our Assemblyman is trying to put some kind of system in place so people cannot be on unemployment while their employers are trying to gather a workforce together.

I am all for helping those who need help but I am concerned who is printing the $ in the backroom. I know people who have done all kinds of home improvement projects on that money...and how deep is that particular pot?

 

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This was completely predictable to me.  It will be interesting to see how these same people handle tax time next year.  Unemployment benefits are federally taxable, and some states also tax them as well.  For us, we would have had to opt into having federal withheld.  We chose not to because we already have $0 tax liability.  But, many people don't understand how taxes work and people could find out that they owe when they usually get a refund, or they could find out that their refund is much smaller.  And then state taxes, our state does tax unemployment benefits, but doesn't withhold them from the unemployment check.  So, again, some folks might find that they owe their state, or they might find their refund is smaller (we will be getting a smaller refund.)

For us, because there is nothing being withheld, we actually do have more take home.  Of course when he goes back (now scheduled for 5/18 🙄) we are going to end up having a bunch of insurance premiums come out all at once so the difference in take home is being saved to cover that in June. 

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25 minutes ago, kiwik said:

The tax isn't taken off before you get the money?

The state income tax for the state of Ohio is not withheld from the unemployment, that is correct.  When we filed, we were given the option to have federal income tax withheld, at 10%.  But we had to elect to do that, it wasn't automatic, and I am going to guess a lot of people would not select that option.  BUT, even if people do, that 10% is only the lowest federal income tax bracket.  So, there's no option to have tax withheld at a higher rate if you end up falling into a higher tax bracket.  And for many of those who are furloughed and will end up going back, like nurses, engineers, even factory workers, they likely fall into a tax bracket higher than the 10%. (the lowest bracket only covers about $20k in taxable income, for those married filing jointly.)

Now, having said all that, for us personally, we actually have $0 tax liability, due to the child tax credit.  So we don't need to have taxes withheld.  But people who are single, have no kids, or maybe only have one, but make a higher income, etc....they likely do pay some taxes, and depending on how long they are furloughed, this could make a difference on their federal income tax returns next year.

And then there's the fact that I still don't know if the extra $600 a week is taxable at all.  And of course, different states handle unemployment differently, so some states might allow more withholding, some might not offer the option at all, some states also impose state income tax on unemployment, some don't, etc etc.  

 

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