If the federal government’s pledge to give unemployed workers an extra $600 a week has you scratching your heads, you’re not alone.
I thought it was a typo the first time I read it. Then I started seeing the “hiring” signs around town. Jimmy John’s is hiring. So is Aldi.
Meantime, many other companies are pulling their open positions until further notice – perhaps so they’re not pressured to rehire their furloughed workers yet.
What’s going on here?
If employees furloughed early in this pandemic now stand to gain $600 a week plus the state unemployment check, the laid off workers could be earning more than they did on the job. The Wall Street Journal reported this morning that more than half of U.S. workers would earn more from the unemployment stimulus than they did on the job.
This might go for independent contractors and microbusiness owners, too. The extra $600 might be enough for contractors to close up shop and take the unemployment check if they can qualify.
This amount of government support might seem excessive, but think about what happens without it: Without the extra stimulus checks, where are unemployed workers, furloughed contractors and the economy? In dire straits, that’s where.
I hope the federal government lives up to its promise, because what’s missing from the American economy going forward are startups that convert to sustaining businesses.
Yang’s Universal Basic Income
I believe it was entrepreneur Andrew Yang, the former Democratic candidate for president, who during a presidential debate last fall suggested the federal government should hand out Universal Basic Income checks of $1,000 per month to Americans to stimulate the economy.
It’s not a bad idea. Given the economy is at risk of slowing to a crawl, any federal financial assistance without strings attached could stimulate business development – as long as people don’t lose their unemployment benefits for trying to develop a business.
Now the question becomes, will the money help to stimulate job growth through small business development or simply allow people to pay their bills and get out of debt? In reality, both might benefit the country. Few people keep spending big when they are under water on their bills.
If the workers most affected by the furloughs and layoffs also are tired of their repetitive jobs and contemplating starting a business, this program could be the ticket. Many people start businesses by moonlighting. I did this myself 30 years ago when I was young and had plenty of energy. But this approach also gets tiring.
Free time and money
What people need most when starting a business is money and free time. Having an entrepreneurial drive helps, too. Free time could lead latent inventors to come up with improvements to stimulate the economy, but they also need the money to act on their ingenuity. This program could allow for both free time and money.
Not everyone is an inventor, but the extra checks will allow the unemployed to keep spending until they return to the workforce, fueling the economy.
When the economy slows down, employment becomes more enticing than ever for everyone. Workers might become worried about their job prospects, but they’re still in a better position than business owners and contractors who lose their customers. Most don’t have a cushion. When businesses close, you can bet their owners are looking for paychecks wherever they can get them.
I’ve often thought our social system was upside down. Those people who take themselves out of the job market and hang out a shingle to support themselves are in essence putting others in a better position to win a job with benefits. This works for business owners when the money is coming in, but during those rainy days, business owners suffer disproportionately while the workers gain through consistent wages, health care benefits, vacation days and retirement accounts.
Let’s face it, most startups don’t survive. They aren’t sold for millions. They quietly close their doors, while the owners head to work or to school for training.
Is $600 enough?
Now whether the extra $600 a week is enough to encourage some businesses to lay off workers or stay closed longer than they need to becomes the next question for economists. If this phenomenon occurs, it could lead to prolonged reliance on government assistance, which could further cripple the economy.
On the other hand, the immediate risk to all of us is a real depression, and some might say $600 a week is still not enough to support new business development. But it’s definitely a start.
I personally am serious about looking for employment. But let’s hope the American dream of business ownership persists and the unemployment checks drive our economy to new heights.
— Ann Meyer
Contact me at firstname.lastname@example.org