Additional 6.6M File for Initial Unemployment Benefits [pdf]
Unemployment benefits have been significantly expanded under the Coronavirus aid bill. The benefit amounts will sound small if you&#x27;re living in an expensive city like SF or Seattle, but $600&#x2F;week from the federal government and a similar amount from state unemployment insurance means that unemployment benefits can pay up to an equivalent of $50-60K&#x2F;year right now. That goes a long way in most parts of the country, especially when you&#x27;re stuck at home. Of course companies are going to opt to shift people to unemployment benefits while they&#x27;re forced into downtime.<p>In some situations, people can actually earn <i>more</i> from unemployment benefits by being laid off due to some hasty oversights in the aid package (Reference: <a href="https:&#x2F;&#x2F;www.cnbc.com&#x2F;2020&#x2F;03&#x2F;27&#x2F;how-unemployed-workers-could-get-more-than-100percent-of-their-paycheck.html" rel="nofollow">https:&#x2F;&#x2F;www.cnbc.com&#x2F;2020&#x2F;03&#x2F;27&#x2F;how-unemployed-workers-could...</a> ). This doesn&#x27;t account for lost benefits or the risk involved in losing a job, but it could disincentivize people returning to work if it means their income will go down.<p>Of the many people I know who have been “laid off”, all of them have been told they’ll be first in line to be re-hired the moment quarantine ends.<p>If a business can’t make money, it makes more sense for them to let employees collect unemployment during the downtime than to overextend the business’s balance sheet. During normal times, this is a common tactic for seasonal businesses. I have friends in seasonal tourism industries who received training on applying for unemployment benefits during their annual off-season layoffs each year. They even have an explicit system for tracking seniority in the re-hires.<p>Of course, the longer this quarantine lasts, the more likely their businesses are to disappear before they can re-open. Unfortunately we won’t know this number for many months. For now, the initial unemployment claims number can&#x27;t discriminate between jobs that have been temporarily paused and jobs that have been eliminated.