SMALL BUSINESSES IN DILEMMA.
COVID-19 has come with alot of headache for small businesses especially small ones. Nowadays, employees in some startups seek to be laid off inorder to benefit from the high unemployment grants given by governments in some developed countries some governments give as high as $600 per week on top of other state benefits. Some employees that had scored converted emergence loans for small businesses are now finding themselves stuck between the terms of their loans and employees who are asking to be laid off.
Small businesses are often advised to take loans through pay check protection program(ppp) because they are fully forgivable so long as the bulk of the money goes towards. Payroll cost and there is no drop in employees salaries and head counts among other criteria. Meanwhile if workers are being paid by their employers through IPPP money, even if they aren’t going to work which could be the case for restaurants workers, they aren’t eligible for unemployment benefits and they also aren’t eligible if they voluntarily quit.
This is the main reason why some employers are in panic , they feel they may be missing out on money through unemployment where governments have added up to $600 a week to weekly benefits.This itself is a great disadvantage, states aids will last for four months while PPP loans are originally designed to take businesses over for eight weeks.
This in some states could mean that an employee is able to make more money through unemployment benefits than they would earn by remaining at a low paying job. According to an Econofact study, full time workers earning $50 per hour can receive unemployment benefits under the Cares Act that are twice what they would have earned if they were still working. Some employees at this point are finding themselves at logger heads with employees.
This situation diaprorpotionatly affects those industries that have been hit hardest by the Coronavirus pandemic. In Ohio for instance, workers can now receive $963 a week on unemployment under the CARES Act politico reports. The average weekly wage for Ohio is $980, but restaurant workers in the state typically earn less than $500 per week.
During tensed negotiations, before the passage of the $2trillion, CARES Act Republican senators claimed that unemployment benefits in the bill would cause incentives Americans not to return to work. CARES Act eventually passed with the expanded unemployment benefits in tact. Senators lawmakers have passed a dispartisian bill worth $480 billion that would replenish funds for the emergence of small businesses, leading programs established by the CARES Act. Note that the PPP ran out of its allotted $350 billion in funding in less than two weeks . The next bill did not make any changes to the $600 per week supplemental unemployment benefits.
The question is, will CARE be able to get workers to stick to their jobs without the stay at home benefit or an increment in Salary? The impact of the $600 benefit is a threat to small businesses and the state of the economy inclusive.
