What’s a government to do about unemployment benefits?
It’s a no-win situation. Gov. Ned Lamont has sided with Republicans who say the federal “true-up” of $600 a week extra from the feds should end as planned on July 31.
Instead of joining his fellow Democrats who favor extending the bonus payments, Lamont on Thursday hitched up with Republicans in Congress who prefer a $450 “stipend” to entice people back to work.
The reason: The economy is up and running for most companies in Connecticut, and six more weeks of supercharged jobless pay ought to be enough, Lamont said — at a New Britain health center for low-income people, of all places.
“We’re urging everybody to get back to work. You’ve got another month, now’s the time to plan,” Lamont said.
Trouble is, now that the Connecticut economy is 95 percent back — Lamont’s over-assessment, let’s say it’s mostly back for many people — workers earning less than $60,000 a year are better off collecting unemployment than trudging back to Acme Iron Works to pound metal all day.
That’s the effect of the $600 weekly bonus for anyone approved for unemployment — 269,000 Connecticut residents at last count early this month. As a result, employers say they can’t coax people off the golf course, or the couch, or the Internet. One restaurant owner told me four of his kitchen staff have simply not returned calls.
“It’s as if they already have a job,” said David Lewis, CEO of OperationsInc, a Norwalk-based human resources firm. “It’s already super-tough to find people down here at that salary range.”
Lewis runs weekly webinars on reopening, with hundreds of companies participating. When he polls them on how many are having trouble attracing people back,, he told me Thursday, it’s “at least 60 percent.”
Company owners have the ear of Lamont, a Greenwich business owner himself. But then, as a card-carrying liberal, he was elected on the sweat of organized labor after telling workers, famously in early 2018 at a watershed moment of his campaigm, “I’ve got your backs.”
Lamont has already signed an executive order making it easier for people who claim a medical risk for themselves or a household member, afraid of coronavirus, to continue to collect unemployment. He’s signed orders extending due dates for rent and other expenses.
That’s not good enough for ardent supporters of extending the $600 bonis payments in the General Assembly and Congress. Workers are hardly abusing the extra cash, they argue — no, they’re using it to barely get by.
“So many people lost their health insurance when they lost their jobs due to the pandemic,” said state Sen. Julie Kushner, D-Danbury, co-chair of the labor committee and a former union leader. “The $600 a week for the unemployed, in many cases, doesn’t even cover COBRA that must be paid to maintain health insurance.”
The problem here is that some workers aren’t being called back, and won’t have jobs by Aug. 1. That’s the nature of an economy in a state that saw 600,000 people apply for unemployment benefits. At the peak in early May, 319,000 were actively approved and collecting.
By mid-May, the state economy had recovered 26,000 jobs, but the unemployment rate was still 19 percent, the state Department of Labor estimated on Thursday, based on surveys. We have no idea what the numbers look like today, after two phases of reopening.
But the math is clear, as is human nature. Some people will still desperately need the extra money after July 31, while others will abuse the right and avoid work if they can.
That’s why Lamont can’t win here. Give him credit for taking a position on an issue he could have shirked as Congress duked it out.
Democrats were careful not to challenge Lamont head-on, at least not publicly. Rep. Rosa DeLauro, D-3, a leader of the effort in Congress to extend the payments, issued this statement but stopped short of criticizing a governor with surging popularity midway through his first term.
“This is the largest public health and economic crisis our country has ever faced. Workers were laid off because of it and did not choose to be unemployed. Unemployment insurance is vital for workers and families and is certainly critical in the coming months as economic uncertainly remains. And research shows that the more money getting into the pockets of workers, the better to spur an economic recovery. I’m in full support of the extension as included in the Heroes Act.”
Lamont did not pitch a state plan to pay workers to leave the unemployment rolls. At least one state, Idaho, has proposed to make stipend payments — $1,500 in that state — out of the federal recovery grants to states. Connecticut’s grant totals $1.4 billion and can only be used for coronavirus-related expenses, not lost tax revenue, a crisis the state is now facing.
Instead of extending the $600 weekly bonus payments for unemployment, Lamont said Thursday, “There are a few other ideas out there. One of them is, we’ll pay you $450 when you go back to work. ... I think that makes a lot of sense.”
Another idea Lamont pushed: A federal grant to the state’s battered unemployment compensation fund. “Make it a grant, not a loan to our states,” Lamont said. “That would allow us to keep unemployment taxes low and we still have unemployment for people in need.”
One complicating factor: We’re talking about federal payments here, funny money based on the Federal Reserve’s ability to electronically create $3 trillion to bail out America. Why shouldn’t unemployed people take their fair share of riches headed to hospitals, airlines, small businesses, governments and all manner of other deserving entities?
There is no fair way to shut and reopen an economy.
“I wish everyone was going back to work, but unfortunately, that’s not the case,” Kushner said. “I think it is critical to continue the $600. I’m confident that money isn’t being invested overseas, it’s paying for groceries, paying rent and keeping people healthy. We want our economy to survive — help workers to survive during this pandemic.”
Both sides are right. The correct path is an adjustment to the program, tightening the standards so workers can get bonus unemployment payments if and only if they prove they can’t find work, and previously worked full-time, not just part-time.
Lewis, at OperationsInc, points out that we have an overworked labor department that can barely get the checks out, let alone administer a complex new program. That, too, needs to be fixed — with federal money, Lamont would surely say.