Jobless Sacramento workers rely on weekly $600 benefit. What happens if it disappears?
Jeremy Lanni hates to think what the past few months would have been like without the extra $600 in weekly unemployment benefits he received after the coronavirus pandemic struck and he lost his restaurant job in Sacramento.
“That $600 was everything to a lot of people,” said Lanni, who was a manager at Punch Bowl Social across from Golden 1 Center before getting furloughed. He was recently rehired but considers the extra benefits an economic lifeline.
One of the centerpieces of Congress and the Trump administration’s efforts to stimulate the economy is about to expire. The additional $600 in weekly unemployment payments runs out Saturday unless Congress and the White House can agree on a plan to extend the benefit.
An extension is far from certain. Democratic lawmakers want to keep the $600 payments going, there’s no clear consensus yet on what will happen. On Thursday, U.S. Treasury Secretary Steven Mnuchin rolled out a proposal that would shrink the benefit to around $200 a week.
In the meantime, a separate debate simmers in Sacramento over the worthiness of the extra pay. Some business owners in Sacramento believe the benefits are so generous that it’s become difficult to rehire workers. But residents who fell victim to furloughs say the extra benefits should continue — people like Mikhala Taylor Lazetich.
Lazetich was a bartender at the Press Club until the economy imploded and the furloughs came in mid-March. The midtown Sacramento bar reopened as Gov. Gavin Newsom relaxed his stay-at-home order, but she declined to return to work because her partner’s immune system is compromised. About two weeks later, the bar shut down as COVID-19 infections and hospitalizations spiked and Newsom partially reversed course, ordering broad segments of the economy to go dark again.
She said her own financial situation is pretty healthy — “I saved a lot, I’m very, very lucky in that regard” — but she believes the $600 benefit has been a valuable resource. “We live in California and rents are high and things are tight,” she said.
Lazetich is watching closely as negotiations in Washington come down to the wire. “I’m following it,” she said. “I’m holding out hope that people in red states realize this is important.”
Some think tanks argue the extra $600 has done exactly what it was supposed to do — prevent millions from going into an economic free-fall at a time when unemployment has soared into the double digits. Unemployment in the Sacramento area has fallen to 12.8% but is expected to rise again amid a new wave of closures.
Californians filed more than 290,000 new claims for unemployment last week, the federal government reported Thursday. That’s a sign that the economy is weakening again.
“Through the end of June, even if the economy was not fully reopened, there was an expectation that a renewed economy was not too far in the future,” said Michael Bernick, a labor law specialist at the Duane Morris law firm in San Francisco and a former director of the California Employment Development Department. “The past two weeks have brought a new narrative in California government that the lockdowns may well be with us through the end of the year or longer.”
The California Policy Lab, a research organization run by UCLA and UC Berkeley, said an estimated 3 million Californians have received the extra payments. In one week alone, in early June, that ran to about $1.8 billion.
What’s more, without the extra payments, about half of the Californians on unemployment would be getting benefits that would fall below the federal poverty level — the threshold used by the U.S. government to determine eligibility for many safety-net programs.
In a state where ordinary unemployment benefits top out at $450 a week, the Policy Lab says the benefit has been particularly valuable for low-wage earners. Retail workers, for instance, saw their average unemployment benefits jump from $240 a week to $840, “providing an important lift for a group of workers that were particularly impacted by this crisis,” the lab says.
Does extra benefit keep workers home?
A University of Chicago study found that some employees in construction, retail, sales, food service and other fields have been receiving more in unemployment benefits than they made at work. Mnuchin picked up on that theme Thursday when he told CNBC that the White House is willing to extend the benefit, but at a reduced figure.
“We’re not going to pay people more money to stay at home than work. We want to make sure the people who are out there that can’t find jobs do get a reasonable wage replacement,” he said.
Lanni, the recently-rehired restaurant manager in Sacramento, disputes the idea that the $600 has been some enormous windfall, a reward for staying home.
Without the additional benefit, he would have collected just $1,800 a month in unemployment — enough to pay rent on his apartment and have about $300 left for food and other expenses. The extra cash from Congress made the past few months a lot more bearable.
“That $600 didn’t get me to what I was earning, but it got me pretty damn close,” Lanni said.
Some employers, though, would approve of the benefit disappearing. They believe the extra $600 is so generous that it’s created a disincentive for furloughed employees to return to work, especially those who weren’t earning much on the job.
“The whole point of it was to stimulate the economy; I think it’s hurting the economy,” said Ryan Hammonds, owner of R Douglas Custom Clothier, a tailor shop with locations in downtown Sacramento and north Fresno.
When R Douglas was allowed to reopen, one of his employees declined to return, saying he was afraid of the health risk. Hammonds suspected the man preferred to stay home and remain on unemployment.
They had what Hammonds described as a parting of the ways, and “we decided to operate with less payroll.” Two other furloughed employees did return to work, but after a delay, Hammonds said.
Hammonds said he’s sympathetic to employees wary of exposing themselves to the coronavirus. He also thinks the extra $600 was warranted as a short-term boost for people’s pocketbooks.
But, he said, “it shouldn’t be prolonged.”
Kim Barnett, co-owner of House of Chicken & Ribs restaurant in Antelope, said she understands how coming back to work hasn’t penciled out for some of her employees.
“Six hundred a week is a lot when (they) only made $300 before,” she said. “That’s the reality of it.”
The impact of the $600 came clear when summer arrived and Barnett didn’t receive the usual flood of job applications from high school and college students, she said.
That could change if Congress allows the benefit to lapse. “It’s going to increase the number of people who start returning to look for work,” said Roy Kim, deputy director of workforce development at the Sacramento Employment and Training Agency. “You’re going to see a more immediate need to return (to work), or supplement their earnings somehow.”
This story was originally published July 23, 2020 at 10:20 AM.