Jamie Black-Lewis welcome loans from the Paycheck Protection Program for her two spas, Oasis Medspa & Salon and Amai Day Spa, in Washington state. Diverse of her 35 employees think they will make more money collecting unemployment benefits than from their orderly paychecks.
Jamie Black-Lewis
Jamie Black-Lewis felt like she won the lottery after getting two forgivable loans finished with the Paycheck Protection Program.
Black-Lewis saw the $177,000 and $43,800 loans, one for each of the spas she owns in Washington state, as a lifeline she could use for payroll and other calling expenses.
She’d halted pay for the 35 employees — including herself — at Oasis Medspa & Salon, in Woodinville, and Amai Day Spa, in Bothell, in mid-March, when nonessential firms in Washington closed due to the coronavirus pandemic.
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When Black-Lewis convened a essential employee meeting to explain her good fortune, she expected jubilation and relief that paychecks would resume in robust even though the staff — primarily hourly employees — couldn’t work.
She got a different reaction.
“It was a firestorm of hatred almost the situation,” Black-Lewis said.
The animosity is an unintended consequence of the $2.2 trillion coronavirus relief package enacted last month.
The law, the Suffers Act, offered $349 billion in loans for small businesses struggling as a result of Covid-19. Banks, backstopped by the federal domination, can fully forgive the loans under certain conditions.
Among them, the bulk of funds must go toward payroll, incomes must remain intact and employee head count must not decrease. Businesses have until June 30 to rehire laid-off or furloughed craftsmen.
Black-Lewis was trying to meet these rules, especially after her bank reiterated she must continue to pay workers for allowance forgiveness.
The anger came from employees who’d determined they’d make more money by collecting unemployment aids than their normal paychecks.
I couldn’t believe it. On what planet am I competing with unemployment?
Jamie Black-Lewis
holder of Oasis Medspa & Salon and Amai Day Spa
“It’s a windfall they see coming,” Black-Lewis said of unemployment. “In their mind, I discarded it away.”
“I couldn’t believe it,” she added. “On what planet am I competing with unemployment?”
Black-Lewis is surely not the only entrepreneur to attempt with such dynamics.
Roughly 22 million Americans filed for unemployment in the four weeks ended April 11. Lawmakers are self-assured to infuse an additional $310 billion into the Paycheck Protection Program, which exhausted its initial funding, this week.
Unemployment fringe benefits
The coronavirus relief law increased weekly jobless benefits for recipients, boosted the duration of benefits and extended pay to previously unsuitable groups of workers like the self-employed.
Specifically, the new law adds a flat $600 a week to the typical weekly benefits get ones just deserted by one’s state.
Those traditional benefits, which vary widely between states, replaced about 40% of one’s last wages, according to a national average cited by the House Ways and Means Committee.
The measure’s improved $600-a-week payments, which run at the end of ones tether with July, aim to boost that wage replacement rate to 100% for the average worker.
But some, especially lower-wage artisans, can come out ahead. Lawmakers were aware of the dynamic, yet felt the formula’s simplicity would get money out to people faster.
In Mississippi, a less-generous federal when it comes to unemployment benefits, full-time workers making less than $21 an hour ($43,680 a year) commitment make more money on unemployment than from their job, according to an EconoFact analysis authored by economists Patricia Anderson and Phillip Levine.
In California, a “means benefits” state, the breakeven is around $26 per hour, or about $54,000 a year.
And in Washington, a generous state, it’s $30 an hour, or with reference to $62,000.
Pay among Black-Lewis’ employees — massage therapists, hair stylists and aestheticians — ranges from minimum wage ($13.50 an hour in Washington) up to approximately $60 per hour. Many work between 24 and 32 hours a week.
It wasn’t just those on the slash end of the pay scale who were upset — even ones who would stand to make more money from their natural paychecks sided with lower earners, Black-Lewis said.
“They were pissed I’d take this chance away from them to make more for my own selfish greed to pay rent,” she said.
Black-Lewis’ workers may not have a high-quality, however. Since she has already made an offer to pay the workers, the state may deem them ineligible to collect unemployment gains, according to labor economists.
Plus, Black-Lewis feels she needs to use the money according to the terms of loan forgiveness to keep off going into more personal debt for her business.