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Washington Times

Trump’s unemployment stimulus is a win for states … and small businesses

By September 2, 2020No Comments

(This post originally appeared on The Washington Times)

Tom Wolf, the Democratic governor of my home state of Pennsylvania, is (not surprisingly) no fan of the president. But there’s rhetoric and there’s reality, and the reality is that the residents and small businesses in our state need help.

That why, in light of the stimulus stalemate in Congress that will likely continue for the next few weeks, Gov. Wolf felt he had to take advantage of President Trump’s Aug. 14 executive order that directs the federal government to pay an additional $300 per week in unemployment benefits using excess Federal Emergency Management Agency (FEMA) funds to supplement the payments states like Pennsylvania make.

Of course, Mr. Wolf is only accepting these funds grudgingly. “By failing to put out of work Americans first and extending the extra $600 per week federal benefit that ended in July, Congressional Republicans are forcing our hand to apply for these funds,” Mr. Wolf said in a statement.

But Mr. Wolf is not the only Democratic governor accepting the money. So far well more than half the states have taken the President up on his offer. These states include Alabama, Alaska, Arizona, California, Colorado, Connecticut, Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, New Hampshire, New Mexico, New York, North Carolina, Oklahoma, Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Vermont and Washington.

Lots of blues and reds. Why? Because the president’s deal just makes economic sense and not only for residents, but for small employers as well. Take Pennsylvania for example.

Under the unemployment provisions of the CARES Act, which expired at the end of July, if I had laid off an employee making $40,000 per year she would be entitled to a weekly unemployment check not only of $573 (Pa. pays 50 percent of wages up to this amount) plus a CARES Act unemployment supplement of $600 which means that she was making $1,173 per week or $60,996 per year … for not working. Under Mr. Trump’s executive order, she’s now making an annualized $45,396. Still not a bad deal at all for doing nothing. But at least it’s comparable to the wages I’m paying.

That will make it much easier for me to hire her back. Plus, knowing that these funds will run out by the end of the year, or even sooner, is another incentive for an employee to get off of unemployment and back on the job.

But what if I’m unable to bring her back yet? Many small businesses in my state are still under lockdown (restaurants in Philly, for example, can only operate at 25 percent capacity beginning Sept 8) which means they cannot re-hire at the same levels. The president’s $300 weekly stimulus will make a big difference to their furloughed employees and help sustain them over the next few months. Otherwise, those same people may have been forced to change their situations, look for other work, even move away. That would create headaches for their small employers hoping to bring them back.

Some people, like my governor, believe that the president’s benefits will only last “weeks” and that may be true.  But many small business owners I know are hoping they’ll be well on the way to recovery within “weeks” and knowing that there’s a limit to the federal government’s largess is a strong incentive for our state’s political leaders like Mr. Wolf — who has been extremely cautious — to find a balance between growing the economy and living with the virus.

The Democrats have been pushing to extend the federal $600 per week unemployment check through January 2021. Doing that would be an enormous disincentive for employees to go back to work at a time when businesses are just beginning to recover. The president’s $300 per week federal payment will keep them close to their employers while still giving them the motivation to return to their jobs when we’re ready for them.

It’s a very fair compromise and I bet that every governor, regardless of their party, will take him up on his offer before the deadline. Mine already has.

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