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Starting Bonus for a Laundry Worker: How a Beach Town Wrestles With Jobless Benefits

Starting Bonus for a Laundry Worker: How a Beach Town Wrestles With Jobless Benefits


Starting Bonus for a Laundry Worker: How a Beach Town Wrestles With Jobless Benefits

REHOBOTH BEACH, Del. — Kelsey McGarry went back to her job at Thompson Island Brewing Company in Rehoboth Beach, Del., in April even though doing so meant that she was earning less than she would have simply by accepting unemployment insurance, which included an extra $600 per week.“I’m a go, go, go personality,” Ms. McGarry, 26, said through her face mask on June 15, sitting on the patio of the now partly reopened restaurant, a breezy space with a display of brightly colored beer cans on sale. Plus, it was flattering that she was given the chance to go back early. “It was nice to be asked back. Being here, being with everyone, it was better than being at home.”Just down the road at Jake’s Seafood House, Courtney Ewell made a different calculation. She was laid off from her job serving and managing on March 14. When her boss got a federal small-business loan, she was offered the chance to do odd-jobs around the still-closed restaurant. She passed up the chance and continued to receive unemployment benefits, though she helped repaint the place for fun — just to get out of the house.“Who is turning down unemployment insurance plus the $600?” she said.Ms. Ewell officially returned to her job this month, as Jake’s prepared to reopen and she felt confident that between it and another restaurant where she works, she could make enough in tips to outweigh the extra money.As they raced to shore up the economy in March, lawmakers approved the $600 supplement to help workers who were suddenly thrown out of a job as the economy shut down. That extra money, which expires on July 31, has become a source of debate as lawmakers, the White House and economists spar over the extent to which the enhanced benefit is deterring people from returning to work and how to balance that against the critical financial cushion it offers to displaced workers.Democrats are pushing to extend the enhanced benefit in order to continue helping workers amid double-digit unemployment. Many Republicans want to let the extra $600 expire or be scaled back, saying more generous payments will worsen unemployment.Rehoboth provides insight into that worry: Employers in the town are finding that the extra benefit can discourage workers from seeking new jobs, but not as often as one might expect. And when it does, there are generally other factors at play.The supplement is essentially a weekly bonus of $600, on top of traditional unemployment benefits, to workers who have lost jobs and filed for unemployment. That bump has allowed a large share of laid-off workers to draw more money from unemployment than they were making in their jobs. If it is expanded through the end of the year, the nonpartisan Congressional Budget Office estimates that five of six recipients will get more from the government than they would earn at work.The extra money has helped millions of Americans weather the sudden shock of losing jobs, hours and income. It has buoyed both savings and consumer spending when many largely homebound Americans have pulled back on purchases. Many economists, including those at the budget office, say the supplemental benefits are a key reason the economy has begun to bounce back — as seen in a jump in retail sales in May.There is little evidence in national economic data so far to suggest wide swaths of workers are choosing to remain unemployed. The law that created the supplemental benefit prohibits Americans from continuing to receive the money if they are recalled to their regular jobs by employers that laid them off but refuse to return. States have suspended normal work search requirements needed to qualify for unemployment insurance amid the pandemic.And many people lack the opportunity to return to work: The nation still is down nearly 20 million jobs from what it had in February, according to the Labor Department, and the number of job seekers far exceeds the number of openings.“Eventually, as the economy starts to come back to something like normal, you do want to think about relative prices” between benefits and wages, said Austan Goolsbee, now at the University of Chicago’s Booth School of Business and a former top economist for President Barack Obama. “That’s not the world we’re in.”As the economy climbs out of its recessionary hole, that calculation could start to change. The Congressional Budget Office estimates that an extended enhancement would probably lead to higher unemployment in the second half of 2020, and would almost definitely lift the jobless rate into 2021 as low earners choose to continue collecting extra benefits rather than securing work.Some economists — including several who initially championed the expanded benefit — are proposing to eliminate or phase it out. Casey Mulligan, a former chief economist for President Trump’s Council of Economic Advisers, predicted a “big increase” in employment whenever the expanded benefits run out.“The direction is clear,” Mr. Mulligan said in an email interview, “but more than the usual humility is required regarding magnitudes.”It is difficult to know how workers would react to an extension, in part because employees make decisions with the long run in mind. They know more generous benefits will not last forever, so they may try to secure jobs now. Many enjoy their jobs and want to return. For others, the unemployment insurance improves the appeal of staying home, but is just one of several factors alongside limited child-care options as schools and camps remain closed and as health concerns persist.The Rehoboth Beach-Dewey Beach area could reveal how those interactions will play out, because the resort town continues to have high demand for workers in parts of its service industry.The area experiences a huge seasonal surge in consumer demand this time of year as beachgoers descend, stoking a need for bartenders, cooks, cleaners and other workers. The demand for workers has been exacerbated by the fact that the foreign students who usually come to America for seasonal jobs remain stuck at home amid the pandemic, leaving a hole in the usual summer labor force.In much of the country, workers are plentiful given the nation’s 13.3 percent unemployment rate. So if one person wants to keep collecting unemployment rather than returning to work, that simply leaves a job open for another available applicant.Because Rehoboth needs certain — often relatively low-paid — workers to make its tourist economy run, incentives that keep would-be employees on the sidelines could be damaging.

Updated June 24, 2020

Is it harder to exercise while wearing a mask?
A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.

I’ve heard about a treatment called dexamethasone. Does it work?
The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.

What is pandemic paid leave?
The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.

Does asymptomatic transmission of Covid-19 happen?
So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.

What’s the risk of catching coronavirus from a surface?
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.

How does blood type influence coronavirus?
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.

How many people have lost their jobs due to coronavirus in the U.S.?
The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.

What are the symptoms of coronavirus?
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.

How can I protect myself while flying?
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)

What should I do if I feel sick?
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.

Rob Marshall, owner of the Atlantic Oceanside Dewey Beach Resort a few minutes down the road from Rehoboth, said the headache was real. He was having so much trouble hiring cleaners and the other workers necessary to service his 60-room hotel that he initially expected to spend most of June running at half capacity on the weekends.The extra $600 makes it hard to find new hires who were working somewhere else at the time of the layoffs, he said. They are under no obligation to apply, making it difficult to complete the usual seasonal hiring ramp-up.“It does make the government a competitor,” he said. “A lot of people want to get out and want to come to the beach — and we want to have them. The problem is that we don’t have the staff.”He has managed to blunt the impact. By taking some rooms offline during weekdays for cleaning, recruiting high school students and giving one laundry worker a starting bonus to compete with the unemployment insurance expansion, he is running at 70 percent to 90 percent capacity on the weekend.That isn’t enough to turn a good profit, and he is scrambling to hire for more reasons than just expanded unemployment insurance. Some of his employees have been nervous to go back out of concerns over virus exposure, and in the case of his new laundry worker, child care was also an issue.“She wanted to work, and the day care opened up this week,” he said in mid-June. Delaware moved to Phase 2 of its reopening plan on June 15, allowing restaurants to run at fuller capacity and some other businesses to restart.Many Democrats who favor extending the benefit say they would tie it to economic conditions, phasing it down as unemployment falls. Some Republicans, including Representative Kevin Brady of Texas, the top Republican on the Ways and Means Committee, favor replacing the supplement with a “bonus” payment for unemployed people who go back to work — an idea that has gained traction with White House officials, who have also expressed reluctance over extending the benefits.Business leaders around the nation have echoed the White House’s concern. The Federal Reserve’s latest Beige Book, a survey of anecdotal reports from companies across America, highlighted worries that fear of the virus, issues with child care and unemployment insurance would keep people from returning to work, including in the Dallas and San Francisco districts.Those barriers may prove less economically crippling than they seem. Frontline Source Group, a staffing company in Dallas that participates in the Beige Book, did see a wave of people turn down jobs because of unemployment insurance. The company managed to fill all of the open spots after interviewing other applicants, according to Bill Kasko, the chief executive.Many economists warn that the bigger risk is removing benefits too early, leaving people who cannot find new work with more limited financial cushion, based on assumptions about work disincentives that check out only sporadically.Ms. Ewell’s boyfriend is an example of how the benefits can play out differently than one might guess based on cold equations. He works at a cook at another local restaurant, and went back in May even though it meant that he was leaving a lot of money on the table.“I told him don’t do it,” she said. “He was making double” with the extra $600 per week, she said. “But he’s a workhorse — he couldn’t not be at work.”

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