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$600 boost to unemployment checks — that was meant to aid struggling families — causes confusion – AOL

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  • A $600 federal boost to unemployment payments has caused some confusion, with some people are now earning more in unemployment than they were while working.
  • Some currently employed workers say the system seems unfair, and are asking to be laid off so they can collect unemployment.
  • Some business owners are struggling to hire people and wondering if they should stay open or allow their workers to get a pay boost through unemployment. 
  • “How do I say no to employees who asked to be laid off so they can get a raise?” asked one restaurant owner.
  • Visit Business Insider’s homepage for more stories.

A federal stimulus program meant to aid the unemployed is causing confusion and frustration among some business owners, laid-off workers, and the currently employed, according to interviews.

The federal program pays $600 weekly to the unemployed, in addition to state unemployment payments. With the extra federal money, workers in more than half of US states will receive, on average, more than they were earning while employed, according to an analysis cited by the New York Times.

This is largely because the $600 boost, which is set to expire in July, was calculated based on the average weekly wage in the US. So workers earning less than the national average may end up earning more in unemployment than their regular salaries.

The federal money is an important lifeline for laid-off or furloughed workers. More than 26 million people have filed for unemployment claims since the beginning of the pandemic.

Marcus Anthony, a 48-year-old warehouse worker in Macon, Georgia, said he’s receiving $300 more weekly in unemployment benefits — for a total of $730 after taxes — compared to his regular paycheck.

He said he’s feeling conflicted about his eventual return to work.

The extra money “will undoubtedly come in handy during these uncertain times but will be missed when I’m called back to work because I make far less,” he said. “On the upside, I guess after the pandemic I hope to return to a life of normalcy with a full-time job with full benefits.”

While anecdotal stories like this are popping up, it’s unclear at this point how many people are actually receiving more in unemployment that their regular salaries.

Employed workers say they might be better off without jobs

Meanwhile, some people who remain employed as essential workers say they are feeling disappointed by a system that hasn’t rewarded them with a similar pay bump.

“I am very blessed to still be able to work both my jobs because they are deemed essential but you can understand my frustration,” said Meaghan Rhead, an employee of The Country Market grocery store in Big Sky, Montana. “If I were to become unemployed, I would absolutely be bringing home more money confined to the safety of my home than working 50-60 hours per week.” 

Miriam G., who requested that her last name remain private, said she felt initially relieved when she was spared from layoffs at the public relations firm where she works in New York City, and instead given a pay cut.

Now, she’s thinking her laid-off colleagues might be better off.

“I’m trying to decide how is the best method to go about the conversation with my management about how unemployment benefits are more supportive right now than my steady paycheck,” she said. 

She said she’s trying to remain grateful for her continued employment, but she’s also feeling over-worked and frustrated. 

“I find myself working around the clock,” she said. “The need to be productive and running at 100% efficiency has increased, so there isn’t an opportunity for slowing down. There’s no time for breaks.”

Business owners struggle to decide whether to stay open or lay off workers so they can collect unemployment

The extra $600 boost to unemployment is making it difficult for some small business owners to hire laid-off workers. 

“We have had many staff that have said at this point the best thing they can do for their family is to collect unemployment,” said Ian Lieberman, a multi-unit franchisee for Buzzy’s Taco Shop in Tampa, Florida. “When they explained their reasoning, I said I respected that, and that they would be available for rehire.”

Adam Lowe, the co-owner of Sundara Indian Cuisine in San Diego, said he “ran into a wall” trying to hire cooks for his restaurant over the past few weeks.

“Everyone I was talking to was going on unemployment and getting raises,” said Lowe, who pays cooks about $20 per hour.

“The $600 weekly payout has derailed the system,” he said.

Lowe said he has contemplated whether he should shut down his restaurant entirely — which is currently offering only take-out and delivery — despite continued demand from customers. 

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Job seekers wait to be interviewed during a Virgin Hotels job fair in Chicago, Illinois, U.S., on Wednesday, Nov. 5, 2014. The U.S. Department of Labor is scheduled to release initial jobless claims figures on Nov. 5. Photographer: Daniel Acker/Bloomberg via Getty Images

A representative of Virgin Hotels talks to job seekers about what type of job they’re pursuing before being interviewed during a Virgin Hotels job fair in Chicago, Illinois, U.S., on Wednesday, Nov. 5, 2014. The U.S. Department of Labor is scheduled to release initial jobless claims figures on Nov. 5. Photographer: Daniel Acker/Bloomberg via Getty Images

Job seekers wait to be interviewed during a Virgin Hotels job fair in Chicago, Illinois, U.S., on Wednesday, Nov. 5, 2014. The U.S. Department of Labor is scheduled to release initial jobless claims figures on Nov. 5. Photographer: Daniel Acker/Bloomberg via Getty Images

A job seeker waits to be interviewed during a Virgin Hotels job fair in Chicago, Illinois, U.S., on Wednesday, Nov. 5, 2014. The U.S. Department of Labor is scheduled to release initial jobless claims figures on Nov. 5. Photographer: Daniel Acker/Bloomberg via Getty Images

NEW YORK, NY – SEPTEMBER 17: People attend a jobs fair at the Bronx Public Library on September 17, 2014 in the Bronx Borough of New York City. According to the U.S. Bureau of Labor Statistics, the national unemployment rate fell to 6.2% as of June, 2014, though the Bronx borough is still suffering through 10.8% unemployment. (Photo by Andrew Burton/Getty Images)

A vendor waits to set up his roadside stall in New York on October, 13, 2014. New claims for US unemployment insurance benefits fell last week to their lowest level in more than eight years, the Labor Department said. AFP PHOTO/Jewel Samad (Photo credit should read JEWEL SAMAD/AFP/Getty Images)

Job seekers fill out applications during the Eagle Ford Shale Job Fair at the American Bank Center in Corpus Christi, Texas, U.S., on Wednesday, Oct. 29, 2014. The U.S. Department of Labor is scheduled to release initial jobless claims on Oct. 30. Photographer: Eddie Seal/Bloomberg via Getty Images

NEW YORK, NY – SEPTEMBER 17: People attend a jobs fair at the Bronx Public Library on September 17, 2014 in the Bronx Borough of New York City. According to the U.S. Bureau of Labor Statistics, the national unemployment rate fell to 6.2% as of June, 2014, though the Bronx borough is still suffering through 10.8% unemployment. (Photo by Andrew Burton/Getty Images)

A job seeker arrives to speak with recruiters at the Career Choice Inland Empire Career Fair in Ontario, California, U.S., on Wednesday, Sept. 10, 2014. The U.S. Department of Labor is scheduled to release intial jobless claims figures on Sept. 11, 2014. Photographer: Patrick T. Fallon/Bloomberg via Getty Images

NEW YORK, NY – SEPTEMBER 17: People wait in line outside to attend a jobs fair at the Bronx Public Library on September 17, 2014 in the Bronx Borough of New York City. According to the U.S. Bureau of Labor Statistics, the national unemployment rate fell to 6.2% as of June, 2014, though the Bronx borough is still suffering through 10.8% unemployment. (Photo by Andrew Burton/Getty Images)

Job seekers wait in line to speak with recruiters at the Career Choice Inland Empire Career Fair in Ontario, California, U.S., on Wednesday, Sept. 10, 2014. The U.S. Department of Labor is scheduled to release intial jobless claims figures on Sept. 11, 2014. Photographer: Patrick T. Fallon/Bloomberg via Getty Images

Kim Thy of the New York City Police Department (NYPD), right, speaks with job seeker Eric Swasey of Manhattan at Choice Career Fairs’ New York career fair at the Holiday Inn Midtown in New York, U.S., on Tuesday, May 13, 2014. The U.S. Department of Labor is scheduled to release initial and continuing jobless claims data on May 15. Photographer: Craig Warga/Bloomberg via Getty Images

Ryan Cronauer, center, hands his resume to Tracy Malechek, left, a sous chef at Gramercy Tavern, at a career fair held by Union Square Hospitality Group at the Jazz Standard in New York, U.S., on Saturday, July 19, 2014. The U.S. Department of Labor is scheduled to release initial jobless claims figures on July 24. Photographer: Michael Nagle/Bloomberg via Getty Images

Job seekers line up outside at Choice Career Fairs’ New York career fair at the Holiday Inn Midtown in New York, U.S., on Tuesday, May 13, 2014. The U.S. Department of Labor is scheduled to release initial and continuing jobless claims data on May 15. Photographer: Craig Warga/Bloomberg via Getty Images

A man pushes a shopping cart across a street in El Monte, California on June 19, 2014, beneath a banner announcing a free job fair. New US claims for unemployment insurance benefits fell last week, continuing to point to a downward trend in job losses, official data released today showed. The US Labor Department said initial jobless claims fell by 6,000 to 312,000 in the week ending June 14, following three straight weeks of gains. AFP PHOTO/Frederic J. BROWN (Photo credit should read FREDERIC J. BROWN/AFP/Getty Images)

Applicants listen to an introductory presentation during a SkyWest Airlines Inc. flight attendant recruitment event in Chicago, Illinois, U.S., on Tuesday, Feb. 18, 2014. The U.S. Department of Labor is scheduled to release initial jobless claims figures on Feb. 20. Photographer: Daniel Acker/Bloomberg via Getty Images

Job seekers line up for the Recruit Military veteran job fair in San Diego, California, U.S., on Thursday, Feb. 27, 2014. More Americans than forecast filed applications for unemployment benefits last week, a sign the labor market is improving in fits and starts. Photographer: Sam Hodgson/Bloomberg via Getty Images

Job seekers wait to talk to recruiters and fill out applications at a job fair in New York, U.S., on Thursday, Jan. 16, 2014. Jobless claims decreased by 2,000 to 326,000 in the week ended Jan. 11, the least since the end of November, from a revised 328,000 in the prior period, a Labor Department report showed today in Washington. Photograph: Victor J. Blue/Bloomberg via Getty Images

Job seekers wait to talk to recruiters and fill out applications at a job fair in New York, U.S., on Thursday, Jan. 16, 2014. Jobless claims decreased by 2,000 to 326,000 in the week ended Jan. 11, the least since the end of November, from a revised 328,000 in the prior period, a Labor Department report showed today in Washington. Photograph: Victor J. Blue/Bloomberg via Getty Images

The minimum requirements for aide and caregiver employment are listed on a poster during the Fall Classic Hiring Spree event at Los Angeles City College in Los Angeles, U.S., on Thursday, Oct. 10, 2013. Economists and policy-makers have been trying to understand the reason for the prolonged period of high unemployment in the U.S.: a skills mismatch, weak aggregate demand, or wage rigidities. Photographer: Patrick T. Fallon/Bloomberg via Getty Images

Job seekers meet recruiters for New York Life Insurance Co. during an employment fair hosted by Premium Job Fairs in New York, U.S., on Tuesday, Sept. 10, 2013. The U.S. Department of Labor is scheduled to release initial jobless claims on Sept. 12. Photographer: Ron Antonelli/Bloomberg via Getty Images

Job seeker Miguel Latorre reviews his resume and paperwork during a job fair in New York, U.S., on Thursday, Aug. 22, 2013. The fewest workers in more than five years applied for U.S. unemployment benefits over the past month, indicating the labor market continues to improve. Photographer: Craig Warga/Bloomberg via Getty Images




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“How do I say no to employees who asked to be laid off so they can get a raise?” he asked.

Curt Blackwell, who owns two restaurants in central Missouri, said he has received $90,000 in forgiveable loans through the federal Paycheck Protection Program to stay afloat. The program requires that recipients spend 75% of PPP funding on payroll. 

But Blackwell said it’s hard to convince his laid-off staffers who are receiving unemployment benefits to come back to work.

“We’re probably going to have to send all that [PPP money] back because we’re not able to use it for payroll,” he said. (The National Restaurant Association has asked Congress to ease the requirements on payroll spending). 

To reopen one of his restaurants, Blackwell plans to cook and his wife will work in the front of the restaurant. He may try to hire back high school-aged workers who were unable to collect unemployment, he said.

Blackwell said he’s also worried about the profitability of his restaurant once it reopens. The dining room will likely only be able to seat 50% of capacity to maintain social distancing.

“We are confident we can’t make money doing that, much less paying employees enough to match unemployment right now,” he said. 

Some people are still trying to get access to unemployment benefits

At the same time, some people who are out of work are having trouble getting access to unemployment benefits

This includes some self-employed workers and independent contractors, some of whom have said their claims have been denied even though the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), expanded eligibility for unemployment benefits include them. 

This may be due to the fact that in some states, unemployment benefits systems have been unable to process claims for these groups until this week, according to reports

Chris Roadarmel, a single father of two and the owner of a DJ and karaoke business in Michigan City, Indiana, said he has applied for unemployment benefits every week for the last month and has been denied each time. He provided evidence of those denials to Business Insider.

“This government help was supposed to help displaced self-employed workers but I haven’t seen it,” Roadarmel said.  

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Economy

The US will need to spend trillions more as economy takes until 2022 to fully recover: CNBC survey – CNBC

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The economy could take one to two years to rebound to full strength and the Federal Reserve and Congress, having already committed historic sums to fight the coronavirus pandemic, will have to commit trillions more, according to respondents to the CNBC Fed Survey.

With the Federal Reserve’s balance sheet already at an unprecedented $6.45 trillion, the 36 respondents see it rising on average to $9.8 trillion. The additional trillions will be added by the end of the current quarter, the respondents expect. Congress, having already committed about $2.5 trillion, is seen putting in an additional $2 trillion.

“My guess is that the virus itself will largely disappear within a year, but that the structural social and economic impacts will be with us much longer,” John Kattar, chief investment officer at Ardent Asset Management, wrote in response to the survey.

Jack Kleinhenz, chief economist for the National Retail Federation, said, “The policy response has been appropriate, but policy takes time to work its way into the economy and targeted sectors. … Many small businesses stand at risk.”

Despite the massive relief, respondents still see the unemployment rate rising to 19%, hitting that level in August. It’s expected to decline only gradually, to 11% by December and to 7% by the end of 2021. That would leave it at about double the rate before the crisis.

Second quarter of 2022

“With spiking unemployment and rising business closures … the prospects of a sharp rebound (is) far outweighed by the more realistic prospect of a longer-term structural disruption,” said Lindsey Piegza, chief economist at Stifel.

A 33% plurality believes the economy won’t be fully restored until the second quarter of 2022. But 19% believe it will be back by year-end and another 19% believe it can happen even earlier, highlighting a wide range of views about the speed and strength of a recovery.

“During the pandemic, production and consumption have been largely deferred and not lost,” wrote Rob Morgan, director of market strategy at US Energy Advisors. “This leads me to believe the economy will experience a V-shaped recovery beginning in the third quarter 2020.”

On average, respondents see gross domestic product falling by 24% this quarter, followed by a rebound of 4.7% in the third quarter and another strong quarter in the fourth. It won’t be enough to make back the losses in the first half. For the full year, GDP is forecast to decline by 5%.

Mark Zandi, chief economist at Moody’s Analytics, said a vaccine is essential for the economy to gain traction. “Until then, any recovery will remain something of a slog, characterized by halting growth and high single-digit unemployment. And even then, the economy won’t be in full swing and fully recovered until mid-decade.”

The Fed funds rate is seen remaining at zero for the rest of the year and rise to 1.9% in 2021. The Federal Reserve concludes its two-day policy meeting on Wednesday. Answers for CNBC’s Fed Survey from investors and economists were collected Thursday to Saturday. 

The S&P is forecast to finish lower on the year at 2,844 than Monday’s close, and rise to 3,141 next year for a 9% gain by the end of 2021.

 “I think the risk markets are anticipating a faster return to normalized economic conditions than we are likely to see,” says John Ryding, chief economic advisor at Brean Capital LLC.

Among the risks: Respondents place a 61% probability on a second round of contagion in the fall and winter.

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White House reportedly considering another round of stimulus checks – Atlanta Journal Constitution

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As the U.S. economy slowly reopens, Americans across the country are still grappling with job loss, furloughs and economic uncertainty. To combat the continued financial struggles some are facing, a White House official says the administration is “studying carefully” another $1,200 payment to citizens.

White House economic adviser Kevin Hassett told the media the administration is determining whether to provide those who qualify another round of stimulus checks, according to NBC News reporter Geoff Bennett. The additional financial support could be included in a phase 4 deal.

 

No word on when the package would be presented the House, but, with the virus still looming, House Majority Leader Steny Hoyer told the media Tuesday that the House will no longer come back next week after speaking to House physician, according to a tweet by Politico congressional reporter Sarah Ferris

 “We made a judgment that we will not come back next week,” Hoyer told reporters.

While the new stimulus checks are being considered, some Americans have not yet received the first round of checks. The IRS began cutting stimulus checks in mid-April. As of this week, about 90 million people have seen the economic bump in their accounts, according to economic news site Market Watch

 The hope is that the checks, which average about $1,200 a piece, will encourage spending and quell the financial pressure to pay essential bills as the COVID-19’s impact has shuttered manufacturing plants, retail stores and limited business hours for dozens of companies.

»MORE: The US is reopening but ‘normal’ is still a ways off

The IRS had distributed about 88.1 million stimulus checks as of April 17 and paid out $157.96 billion, according to statistics released April 24. That’s more than half of the $290 billion put aside for direct payments to individuals in the $2.2 trillion bill called the CARES Act.

Consumer confidence is still low

The Conference Board Tuesday reported that its consumer confidence index tumbled in the month of April, as millions lost their jobs and others feared for the current and future work conditions. 

The Conference Board said Tuesday that its confidence index plunged to a reading of 86.9, down from 118.8 in March. The index is composed of consumers’ assessment of present conditions and expectations about the future. 

 The present conditions index dropped from 166.7, to 76.4, a 90-point drop that was the largest on record. The expectations index, based on the future outlook, improved slightly from 86.8 in March to 93.8 in April.

The numbers in the present conditions index “reflects the sharp contraction in economic activity and surge in unemployment claims,” said Lynn Franco, senior director of economic indicators at the Conference Board.

Kathy Bostjancic, chief U.S. financial economist at Oxford Economics, said the confidence declines were worrisome because “consumers’ downbeat views about future income prospects can restrain consumer spending and the overall economy.”

Consumers drive about 70% of all economic activity in the U.S.

Many economists believe the country has already entered a recession that will be the largest economic disruption since the Great Depression of the 1930s.

The Associated Press contributed to this report.


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Goldman Sachs explains why stocks can keep rising even as a record-sized recession beckons – Business Insider

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  • Markets may continue to look past negative coronavirus news, especially if projections continue to show that the economy is expected to rebound after the pandemic, a Monday note from Goldman Sachs said.
  • An analysis of GDP forecasts from the bank found that investors tended to discount the next two years of macroeconomic performance.
  • Thus, metrics that focus only on growth over the next year “will overstate current valuations, given the large rebound expected beyond this year,” Zach Pandl, a cohead of global FX and EM strategy, wrote in the note.
  • Read more on Business Insider.

Markets may continue to look past negative coronavirus news, especially if projections continue to show that the economy is expected to rebound after the pandemic, according to Goldman Sachs.

An analysis by the bank using changes to gross-domestic-product forecasts found that investors typically discounted at least the next two years of macroeconomic performance, a Monday note said.

That means that metrics that focus only on growth over the next year — such as multiples based on 12-month earnings expectations — “will overstate current valuations, given the large rebound expected beyond this year,” Zach Pandl, a cohead of global foreign-exchange and emerging-markets strategy, wrote in the note.

While the coronavirus-induced recession is set to be the deepest contraction in modern history, it’s also likely to be the shortest, Pandl said. Many economists expect that, after a dip in 2020, GDP will rebound in 2021 and 2022. By early April, consensus GDP forecasts incorporated a virus hit, down 4% this year. But forecasts are for 4% growth in 2021 and 3% in 2022 — an unusual pattern, Pandl said.

Read more: Goldman Sachs recommends investors buy ‘quality at a reasonable price.’ Here’s are the firm’s top 10 stock picks that fit the bill.

That means that more disappointing data in the near term may not weigh heavily on markets, as activity is expected to snap back “relatively quickly,” Pandl wrote. “The depth of the downturn matters much less than the duration of the recovery,” he said.

Goldman’s analysis came amid a stock-market recovery from March 23 lows. As US states weigh relaxing strict lockdown measures designed to curb the spread of COVID-19, stocks have slowly gained on optimism that the economy will soon reopen. From March 23 to Monday’s close, the S&P 500 gained about 29%, but it was down about 15% from all-time highs in February.

Still, many economists disagree that any rebound after the coronavirus pandemic will be a quick one. Instead of the sharp V-shaped recovery that Goldman is suggesting, many expect a rebound to take a softer U shape.

Read more: The manager of the best small-cap fund of the past 20 years explains why he’s betting big on a consumer recovery — and shares his top 4 stock picks in the struggling sector

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