How unemployment benefits are changing and what that means for your business
Unemployment has been one of the most significant economic consequences of the coronavirus lockdown. All states saw record highs in job losses at the beginning, leading in part to an unprecedented financial stimulus bill in March. The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, injected $2 trillion into the economy in the form of stimulus checks, business loans and unemployment benefits. Four months later and some of these safety nets are coming to an end.
But it’s not clear what’s coming next. Some states are continuing to reopen as others are going back into lockdown, causing more job losses. Even so, the unemployment benefits boosted by the CARES Act reach their expiration date at the end of July—and the federal government is going to rethink its financial support. Politicians and experts are making promises and predictions, but it’s still not clear what the future holds for unemployment benefits. Thankfully, there are some things that small businesses can do to support their staff and their local communities.
Since the CARES Act was passed by Congress in March, unemployment benefits have become more comprehensive and widely available. Since then, unemployed workers have been eligible to up to $600 a week in addition to their regular financial support, which varies from state to state. However, the CARES Act was never intended to be a permanent solution, so all of its terms have an expiration date.
The unemployment boost is set to end on July 31st, though the Democrats have requested an extension. They cite various arguments supporting an extension, including the still-high unemployment rate and small business PPP loans running out. The Trump administration is set on renegotiating the terms of the boost as various officials are concerned the added benefits are acting as an incentive to stay on unemployment rather than returning to work, a view supported by a report from the Congressional Budget Office.
This doesn’t necessarily mean there will be no benefits boost from August onwards. Treasury Secretary Steven Mnuchin recently said that the next coronavirus stimulus package would still provide enhanced benefits for the unemployed, but at a reduced rate. On top of that, other aspects of the CARES Act will stay the same—in most states, benefits will still be available for an extended 39 weeks, up from 26 weeks before the crisis, and it’s set to stay that way until the end of the year.
There’s also a possibility that the new stimulus contains a ‘back to work’ incentive for the unemployed. White House economic advisor Larry Kudlow claimed last month that the administration is looking into implementing a financial bonus for returning, though the specifics of such a plan are still unclear.
Beyond that, however, we don’t know much about the future of unemployment benefits. It looks very likely that the government will pass a fourth stimulus bill to help the struggling economy, but exactly what it covers likely won’t be clear until the Senate returns from recess on July 20th.
What can I do?
Even amidst the uncertainty surrounding the future of unemployment benefits, there are some things small business owners can do now to support their staff and encourage others to return to work.
First of all, if you’re looking to hire, make sure job seekers know. As states open up, applications are on the rise, as some states are requiring citizens to prove they are looking for work to continue receiving unemployment support. Accepting applications could support someone in need, so advertise your jobs widely.
Let your staff know that they may be able to continue receiving some benefits even if they do return to work. If your business has restricted operating hours or you are unable to hire full-time workers, emphasize that staff may still be eligible to receive some benefits while working part-time, depending on the state. Between the benefits and the part-time work, workers could continue to receive the income they’ve been used to even with a reduction in the unemployment boost.
If you’re fully open and looking to recruit new staff, the best thing you can do is make sure your business is a safe and supportive environment to work in. While state regulations say it’s safe to open up, many are afraid of returning to work and exposing themselves to coronavirus. Communicate in your job postings what you’re doing to implement social distancing regulations and how you plan to protect staff from infection. You should also consider what will happen to new recruits if your business is forced to close again under a new lockdown.
Much of public life is still governed by uncertainty—about whether the lockdown will last, what financial support will look like and when businesses can truly return to normal operations. Combat uncertainty by planning for different scenarios and communicating clearly and openly about those plans. Support your staff in these trying times and they are more likely to support your business.
About the AuthorMore Content by Joe Mackenzie