As federal legislators debate renewing CARES Act unemployment benefits, 25 million Americans — 7,867 in Johnson County — are left in limbo.
The main issue of debate is whether to renew the $600 weekly benefits provided by the federal government to supplement state benefits. For many Americans, these federal benefits have allowed them to survive and continue paying their bills during the coronavirus pandemic.
What the benefits provide
Franklin resident Sherry Fauris was laid off from her job as a server in a Columbus restaurant in mid-March when Gov. Eric Holcomb first ordered restaurants to close in-person dining.
With half of the tables in her restaurant still closed to meet the six-foot-distancing guideline, Fauris and many of her co-workers haven’t been called back yet, she said. Though Fauris has thought about getting a new job, she is holding out hope to return to the job she loves.
Edinburgh resident Josh Viewegh just returned to his job about two weeks ago. He is a coffee machine repair technician who was laid-off after a decline in business at hotels and convenience stores forced his company to temporarily cut staff. With the $600 payments in limbo, he is especially glad to be back at work, he said.
In Indiana, the maximum weekly benefit is $390, according to the Indiana Department of Workforce Development. However, benefits are set based on previous weekly wages and are calculated based on 47% of previous earnings, so most Hoosiers do not meet the max.
Unemployed people earning the $65,272 average income in Johnson County would receive $990 per week between state and federal benefits, but would still be underpaid compared to their normal pre-tax wage of $1,255, for example.
Because Fauris often worked 50 hours and earned tips, the $600 weekly benefit in combination with her allotted state benefit was less than her normal earnings, she said.
If not for the $600 benefit, Fauris would not have been able to keep up with her bills though, she said.
“I might be living on the streets without it,” she said.
As the sole income earner for his family, not having the $600 benefit would have forced tough choices, Viewegh said.
“You have to pick priorities. Maybe I could have kept my house, but probably not my vehicle. And you have to have internet because the kids were in school at home,” he said.
What the benefits cost
For Americans like Fauris and Viewegh, the $600 benefit has been critical. However for lower-paid workers, the $600 payments provide a higher standard of living, a chance to catch up on bills they had left unpaid or to pay down debt.
In Johnson County, 57% of residents make $40,000 or less, according to Data USA, an online economic data hub. For these residents, the $600 benefit provides more money than they had previously earned while working. At a $40,000 annual salary, the total benefit would be $961, which would exceed the pre-tax income of $769 weekly.
The lowest earning Hoosiers may receive for state benefits only $37 per week, according to DWD.
According to a study from the Becker Friedman Institute at the University of Chicago, the $600 payments provide two-thirds of Americans with more money than they had previously earned while employed.
In Indiana, payments were 182% of previous income for those in the 25th income percentile and 147% for those in the 50th percentile. At the 75th percentile, benefits met 99% of previous income, while the highest-paid individuals earned less than their previous income.
Legislators, especially those from the Republican party, say the $600 payments are providing a disincentive to go back to work and are causing the recession to deepen. Legislators and some Johnson County business leaders say the $600 benefit is keeping too many out of the job market.
With the $600 benefit in limbo, more unemployed people have been looking for work.
At Express Employment Professionals – Indy South, more phones have been ringing this week than before the benefits expired on July 31. Mike Heffner, owner of the Greenwood staffing agency, said many of the 300 companies he assists have been struggling to both get employees to come back and add to their workforce in the midst of the pandemic.
On Tuesday, there were about 200 unfilled jobs from companies that Express serves. With the previously low unemployment, the labor market was already tight, but the benefits have made it even more challenging to fill jobs, Heffner said. Some companies in dire need of workers had to raise wages in response to the market now influenced by federal benefits, he said.
Not all unemployed workers are staying home, though. Many who were furloughed sought temporary jobs because unemployment benefits were not enough, Heffner said.
“Everybody’s situation is a little different,” he said. “Some have really been displaced because of COVID-19 so they have chosen to stay on unemployment because they can. Others are not in that situation and they have had to look so they are taking the jobs that are available”
The proposals
A proposal passed by the Democrat-majority U.S. House of Representatives would keep benefits at the same level until Jan. 31, 2021, but the proposal is not getting traction the Republican-majority U.S. Senate.
The Senate proposal would offer $200 in federal benefits until the end of September. From October to the end of 2020, the Senate proposal would provide a benefit that equals 70% of an individual’s pre-pandemic income when combined with state benefits. For Indiana residents, the federal government would provide a payment to equal 23% of their income as the state benefit replaces 47%. The Senate proposal caps federal aid at $400, so many Hoosiers would likely make less than 70% of their previous income.
The U.S. Chamber of Commerce is advocating for a middle ground with a calculation based on 80 to 90% of an individual’s pre-pandemic income. Instead of an official end date, the chamber’s proposal suggests ending the benefits when each state’s unemployment rate falls to a certain level.
Aspire Economic Development + Chamber Alliance, an economic development group in Johnson County and the southside, also backs the U.S. chamber’s idea and hopes it would lead more to return to work if they can, said Christian Maslowski, Aspire president and CEO.
“The federal government boost was a good thing for sustaining homelife, but it was a blanket, across the board and across the country calculation. $600 goes further in Indiana than in California,” Maslowski said.
Based on feedback from local businesses, Maslowski said the benefits are providing a disincentive for lower-paid workers to return. The problem is seen among many industries in the county, including logistics, warehousing, retail and small businesses, he said.
With this incentive to stay home, Maslowski said employers are in a tough position while still dealing with a fragile economy.
“Now you have a situation where employers had a punch to the gut with COVID-19, had to lay people off and now compete with the government unemployment,” Maslowski said.
For the unemployed, the hope is that extra benefits at least on par with their income will be approved by legislators soon.
Even for those like Viewegh who are back to work, the fear is that the government could easily shut down their industries again. If legislators don’t reach a deal soon, they, too, could be in a dire situation.
“I don’t know what I would do if I were someone who was getting my benefits cut,” Viewegh said. “I hope they can figure this out and give these people some help.”
Since the benefits remain uncertain, Heffner urges anyone who needs a job to look now while the options are many and the applicants are fewer.
“Those jobs are not going to (be) open forever. And so now is a good time to find a good company where they want to work and grab that great job that has upward mobility and advancement,” Heffner said. “You don’t know when the extra benefits are going to run out and you don’t know how these opportunities are going to be available.”
Right now there are jobs ranging from $13 per hour with no experience required up to highly skilled jobs at $30 per hour, Heffner said.
“Express is a connection point,” Heffner said. “There is a job out there for everyone. It may not be a perfect fit right now, but there is upward mobility.”
