Over 33 million workers have filed for unemployment benefits since the middle of March. The unemployment benefits allow the workers to survive in times of financial distress. However, the unemployment benefits presently, i.e., during the coronavirus outbreak, are proving to be more generous due to the federal contribution. Because of this, many workers are refusing to return to work amid the coronavirus, arguing that the money they are getting under unemployment benefits is more than what they used to get. Though the argument is logical, there are several reasons why you should return to work even if the unemployment benefits pay more.
Why are workers facing a choice?
Unemployment benefits are managed by each state. However, the CARES (Coronavirus Aid, Relief, and Economic Security) Act also grants a $600 weekly federal unemployment benefit to the unemployed workers.
Q2 2022 hedge fund letters database is now up. See what stocks top hedge funds are selling, what they are buying, what positions they are hiring for, what their investment process is, their returns and much more! This page is updated frequently, VERY FREQUENTLY, daily, or sometimes multiple times a day. As we get new Read More
Moreover, the CARES Act also expands unemployment benefits to the workers who do not usually qualify for unemployment benefits. These workers include self-employed, seasonal, contract, and part-time workers, as well as freelancers and gig workers. Even those who have been furloughed are eligible for unemployment benefits.
In some states, the $600 weekly federal grant is double or even triple what the states pay as unemployment benefits. Moreover, the sum of these two benefits (from the state and CARES Act) is more than what the workers made at their old jobs.
For instance, assume a state has a maximum weekly unemployment benefit of $300. With the $600 weekly under the CARES Act, the total maximum benefit would be $900 weekly. Such pay would be more favorable for anyone making less than $46,000 a year.
Thus, many workers are now facing a choice of whether they should stay at home and use the unemployment benefits, or go back to work. Many are choosing to stay at home and not return to work as they could easily meet their immediate needs without going out to work, where there is a risk of getting the coronavirus infection.
However logical this may sound, the decision of not returning to work could have unintended consequences, both for you and the economy. Therefore, even if the unemployment benefits pay more, it is important that you return to work.
Why do you need to return to work?
Discussed below are the reasons that will convince you to return to work.
You may lose unemployment benefits
One condition of unemployment benefits is that you need to continue looking for a job. Also, you should accept a suitable job if it is offered. If you don’t do so, then you may lose the unemployment benefits. The CARES Act does allow a person to turn down a job offer if they are ill, or are taking care of someone ill. However, the act does not allow a person to reject an offer because they are concerned about returning to work.
You may lose other benefits
You need to remember that your salary is not just the amount that reflects in your bank account at the end of each month. It is more than that, as it includes benefits, such as healthcare and retirement benefits. In fact, data from the Bureau of Labor Statistics says that benefit costs on average account for about 30% of the total pay package.
Though you may be able to extend your health insurance through COBRA, it could prove very expensive. Losing retirement benefits, such as a 401(k), may not have much impact in the short run, but it could prove very costly in the long run. You could miss out on thousands in contributions and earnings.
Only a temporary benefit
If you are not already aware, then it is important for you to know that the $600 weekly benefit under the CARES Act would cease on July 31, 2020. This means that after this date you will return to the usual unemployment benefits from the state.
Now, if you plan of staying at home until July, then there is a chance the job (or jobs) that you are being offered now may not be available then. There are expectations of a tight labor market through the end of the summer. The Economic Policy Institute estimates an unemployment rate of 15.6% in July. In comparison, the highest unemployment rate at the time of the Great Recession was 10% in October 2009.
Another situation you should consider is if your employer is a recipient of the PPP (Paycheck Protection Program) funds. These funds will be forgiven only if the employers use the funds for paying salaries and certain overhead expenses. In case the employer asks you to come back and you decline, then to qualify for the waiver, the employer will have to quickly replace you. This means you may not have an option to return to the job later.
Not good for your professional career
When you are working, you meet a lot of people and this helps to expand your professional network. Additionally, it helps to keep your skills fresh as well. All this helps to get a promotion in the current job, or assist in getting a higher-paying job later on.
Hopefully, this will convince you of why you need to return to work even if you make more from unemployment benefits at the moment.