Restaurant Owners Now Face Another Problem--One Republicans Warned Would Happen

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Posted: Apr 21, 2020 8:15 AM
Restaurant Owners Now Face Another Problem--One Republicans Warned Would Happen

Source: AP Photo/Gerald Herbert

Coronavirus has presented a number of challenges to the restaurant industry, and now, owners are speaking out about another one: unemployment benefits are paying staff more than they'd make working. 

Christian Ochsendorf, owner of several coffee shops in Minneapolis who received a Paycheck Protection loan, told Politico that he's only been able to convince 40 percent of his furloughed staffers to come back.

“They’re getting paid more on unemployment than they would if they were actually working,” Ochsendorf said.

Workers in Ohio are experiencing a similar boost from unemployment benefits. 

“Heck, if they’re making more money sitting at home … I’m fearful that some may not want to come back,” restaurant and bar co-owner Adam Rammel of Ohio told Politico. 

The new Paycheck Protection Program waives repayment of small business loans if the borrower uses 75 percent of the money to maintain payroll, a measure intended to reduce layoffs. But with the expanded unemployment benefits included in the stimulus bill, some workers can as much as double their weekly checks if they stay unemployed. [...]

The mismatch is particularly acute for restaurants, cafes and small shops — nonessential businesses where pay scales tend to be low that have been put into indefinite hibernation. [...]

Unemployment benefits vary by state, but in 2019, before the coronavirus crisis, the average weekly benefit nationwide was $370. A $600 sweetener that the stimulus bill added, on a temporary basis, to weekly unemployment checks raises the average weekly benefit to $970, an amount that approximates average weekly pay nationwide and is nearly double average weekly pay within the food industry: about $500 nationwide for full-time workers. (Politico)

A handful of Republican lawmakers warned this would happen last month.

In a statement, Sens. Tim Scott, R-S.C., Lindsey Graham, R-S.C., and Ben Sasse, R-Neb., said the $2 trillion coronavirus relief bill could provide a "strong incentive for employees to be laid off instead of going to work." 

"This isn't an abstract, philosophical point — it's an immediate, real-world problem," they said. "If the federal government accidentally incentivizes layoffs, we risk life-threatening shortages in sectors where doctors, nurses, and pharmacists are trying to care for the sick, and where growers and grocers, truckers and cooks are trying to get food to families' tables."

They added, "We must sadly oppose the fast-tracking of this bill until this text is addressed, or the Department of Labor issues regulatory guidance that no American would earn more by not working than by working."

Their amendment to change this failed.

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