Employers are having trouble hiring. They blame the federal $600 unemployment bump

The Which Wich sandwich shop in Buford, Georgia, has more customers than its staff of four can handle, even with the owner pitching in to prepare orders.

The eatery wants to hire one or two more workers but is having a hard time finding takers for the positions, which pay between $8.50 and $10 an hour, said Zalak Thakkar, an investor in the shop. Those who send resumes, he said, don’t answer follow-up calls.

It’s hurting the store’s bottom line. The employees are overworked, and sales are down 5% to 10%, in part because customers leave when they see long lines, he said.

Why is it so hard to find workers when Georgia’s unemployment rate was 7.6% in June, more than double February’s level? Thakkar believes it’s because of the $600 weekly boost to unemployment benefits that Congress enacted in late March in response to the coronavirus pandemic. The federal supplement has provided the jobless with $15 an hour, before factoring in Georgia’s state benefits of up to $365 a week.

“If the government is paying more to stay home, why would those people be out there risking their lives, number one, number two, staying away from their families and number three, making less money?” Thakkar said.

“I don’t blame these people,” he continued. “If I were them, I’d do what’s best for my family.”

The $600 enhancement, which runs out this week, has helped millions pay the rent, buy groceries and cover other bills during the pandemic-fueled lockdowns. The generous boost was designed to keep laid-off people at home instead of out looking for work.

But it has also kept some workers on the sidelines — creating headaches for employers trying to get back up and running, even as new coronavirus surges complicate state reopenings.

Lawmakers on Capitol Hill are divided about whether to extend the benefits. Democrats say the federal boost should be extended into next year because the economy is still weak and the unemployed say they are having trouble finding positions, as well as childcare.

Republicans, however, are concerned that such generous payments may deter people from going back to their jobs, which would slow the economic recovery. They point to research, including a Congressional Budget Office estimate that found that five out of six recipients would receive more in unemployment benefits than from returning to work should the $600 benefit be extended through January.

The Senate delayed introducing a plan this week amid negotiations over a proposal that could entail reducing the benefit and possibly combining it with a return-to-work bonus.

Job offers extended and declined

Small business owners say they are having trouble convincing employees to come back or hiring new ones. Nearly one in five have had an employee decline a job offer because he or she wanted to remain on unemployment, according to a May survey by the National Federation of Independent Business Research Center.

Take Darren Holley, the owner of an asphalt paving company in Tampa, Florida, who has enough work to hire 20 people in the next few days. Holley hasn’t been able to bid on as many contracts as he’d like because he doesn’t have enough crews to do the jobs.

And though Florida’s unemployment rate was 10.4% in June, Holley said most applicants don’t show up for interviews, and temp agencies tell him they don’t have anyone to send. Recently, six people were scheduled, but only one came — an hour late.

Unemployed Floridians can make as much as $875 a week, when combined with state benefits, which is more than what Holley pays.

“Finding the people that are willing to apply and come in and that want to work, that’s the tough thing,” said Holley, adding he did not have this much trouble hiring prior to the pandemic. “The byproduct of this stimulus bill has been the depletion and the disintegration of the general labor pool.”

Jobless Americans can’t turn down positions and continue to collect unemployment benefits — unless they meet the criteria to qualify for a temporary pandemic program that Congress created to help those directly affected by the coronavirus.

But employers say that this doesn’t actually happen in practice. Some owners say they don’t have time to report those who refuse to accept an offer, while others say it’s hard to inform their state unemployment agency of employees who won’t come back.

High-paying jobs go unfilled

Not all of Walid Sukarieh’s employees returned to their former positions after he reopened his Boston eye care stores in mid-May. That’s forced him to close one location on Thursdays, although he has many more customers now.

Sukarieh is trying to hire for a job that pays more than $50,000 a year, on average, but has seen less interest than before the pandemic.

“Everybody technically is right now employed by the government in a certain way,” he said.
Some small business owners hope that Congress doesn’t extend the $600 boost, at least not across the country. Some states and industries are doing better than others, and work is available, they note.

“The economy will never get back to normal if we encourage people not to go get a job,” said Dan Crane, owner of a medical billing company in Salt Lake City, Utah, who is finding it difficult to hire for six openings.

But as the clock ticks on the $600 boost, some Americans are ramping up their job searches.

Holley is already seeing more interest. Earlier this week, he hired two people, and of the three interviews that were scheduled on Tuesday, two showed up and one called to reschedule.

“I’m expecting a flood of applicants probably Monday or Tuesday,” he said. “All of a sudden, it’s going to be ‘Are you guys hiring?'”