Some Business Owners Can't Compete For Jobs With New $600 Unemployment Benefit The new federal benefit is designed to cushion the blow of the pandemic. But some businesses that want to stay open say it's hard to do so when employees can make more money by staying home.
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Bitter Taste For Coffee Shop Owner, As New $600 Jobless Benefit Drove Her To Close

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Bitter Taste For Coffee Shop Owner, As New $600 Jobless Benefit Drove Her To Close

Bitter Taste For Coffee Shop Owner, As New $600 Jobless Benefit Drove Her To Close

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DAVID GREENE, HOST:

Six hundred dollars a week - that is what the federal government is now offering to people who have lost their jobs because of the coronavirus. For many workers and employers, that money is a godsend, a way to keep food on the table while also cutting payroll costs. The extra money can create some awkward situations, though. Some businesses that want to keep their doors open say it's hard to do so when employees can make more money by staying home. Here's NPR's Scott Horsley.

SCOTT HORSLEY, BYLINE: When Sky Marietta opened a coffee shop, an Internet cafe, last year in Harlan, Ky., a lot of people wanted to work there. Nearly a hundred applied for just a handful of openings. Harlan is one of the poorest communities in the country, stripped bare of coal mines and opportunity. Sky and her husband Geoff were hoping to change that.

SKY MARIETTA: We're very committed to helping transform the downtowns and main streets in eastern Kentucky.

HORSLEY: The shop had been open for just a few months when the coronavirus hit. Marietta told her workers to wash their hands every time they used the cash register and take their temperature at the start of every shift. Eventually, she stopped letting customers into the shop, instead delivering orders to the curb.

MARIETTA: You have all these different trade-offs to make. Should we stay open? Are they say if it we're open? The same time, you know, the No. 1 people that we're serving right now are health care workers. And I feel like they don't have a lot of options, and they certainly deserve at least some coffee in this, right?

HORSLEY: But even though she had customers, Marietta reluctantly closed the coffee shop just over a week ago. With the federal government now offering $600 a week on top of the state's unemployment benefits, her former employees can make more money staying home than they did on the job.

MARIETTA: We're very committed to paying a living wage. It happens that a living wage in Harlan, Ky., is not exactly the same thing as it is in other parts of the country. We basically have this situation where it would be a logical choice for a lot of people to be unemployed.

HORSLEY: Some Republican lawmakers warned about this when the relief bill was being drafted. They noted that $600 a week amounts to $15 an hour, more than twice the federal minimum wage. On top of that, state unemployment benefits vary widely, from a maximum of $235 a week in Mississippi to $795 a week in Massachusetts. Treasury Secretary Steven Mnuchin says the administration opted for a uniform federal payment to get money out the door quickly. Many employers have welcomed the federal benefits. Knowing workers have a lifeline from the government makes even painful layoffs a little bit easier.

Cincinnati Mayor John Cranley highlighted the benefits during an emotional news conference at which he furloughed 1,700 city employees.

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JOHN CRANLEY: In fact, we are taking these dramatic steps now while the federal government is providing these dollars because it will give us the resources we need to bring you back.

HORSLEY: Some employers have always relied on unemployment as a kind of taxpayer subsidy for workers during slow periods. University of Michigan economist Betsey Stevenson says that's been common, for example, in the auto industry.

BETSEY STEVENSON: It helps the employer because, otherwise, they may feel that they need to pay people more in order to convince them to take jobs that have this tendency for temporary layoffs.

HORSLEY: But in Harlan, Ky., Sky Marietta wasn't looking for someone to cover the cost of idling her employees; she wanted them to keep working. Unfortunately, she says, the $10 to $15 an hour they'd make at the coffee shop was no match for the new jobless benefits.

MARIETTA: We have these lovely baristas. They want to work. They're hardworking individuals. But literally, this is the best possible pay of their lives they could possibly get to be unemployed.

HORSLEY: Marietta worries about what will happen to her former employees when the federal unemployment benefits run out at the end of July. Maybe by then she'll be able to reopen.

Scott Horsley, NPR News, Washington.

[POST-BROADCAST CLARIFICATION: In this audio story, we do not make it clear that Sky Marietta closed her coffee shop voluntarily so that her employees would qualify for expanded unemployment benefits.]

(SOUNDBITE OF YEARS OF RICE AND SALT'S "AMONGST YOUR EARTHIEST WORDS THE ANGELS STRAY"

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