A spa owner in Washington State was one of the lucky ones who received a forgivable loan from the Small Business Administration through the Paycheck Protection Program. Yet when she told her employees what she thought was good news, many of them became angry.
CNBC reported that Jamie Black-Lewis received two loans from the PPP, one for $177,000 and the other for $43,800, to help her two spas in Woodinville and Bothell. Black-Lewis previously had to stop paying all 35 employees and herself due to coronavirus shutdowns forcing “non-essential” businesses like spas and hair salons to close.
Black-Lewis held a virtual employee meeting to explain that everyone would start receiving paychecks again thanks to the loans, thinking her staff would be ecstatic to get their income back. Unfortunately, due to the flat $600-a-week increase in weekly unemployment benefits included in the $2.2 trillion coronavirus relief bill, it meant some of her employees would earn more being unemployed than if they were to get their jobs back.
“It was a firestorm of hatred about the situation,” Black-Lewis told CNBC of her virtual meeting with employees.
Naturally, her employees had done the math and figured this out, but because Black-Lewis was now offering them their jobs back, they would likely lose those government benefits.
“It’s a windfall they see coming,” Black-Lewis said about the increased unemployment benefits. “In their mind, I took it away.”
“I couldn’t believe it,” she added, according to CNBC. “On what planet am I competing with unemployment?”
CNBC explained how some employees would end up making more than their regular paycheck with the coronavirus relief funds. Traditional unemployment benefits usually cover about 40% of someone’s previous wages, but each state provides different benefits, as CNBC pointed out:
In Mississippi, a less-generous state when it comes to unemployment benefits, full-time workers making less than $21 an hour ($43,680 a year) would make more money on unemployment than from their job, according to an EconoFact analysis authored by economists Patricia Anderson and Phillip Levine.
In California, a “medium benefits” state, the breakeven is around $26 per hour, or about $54,000 a year.
And in Washington, a generous state, it’s $30 an hour, or about $62,000.
Pay among Black-Lewis’ employees — massage therapists, hair stylists and aestheticians — ranges from minimum wage ($13.50 an hour in Washington) up to about $60 per hour. Many work between 24 and 32 hours a week.
Black-Lewis said even workers who would earn more by returning to work were upset with her for taking such an opportunity away from lower-paid workers.
“They were pissed I’d take this opportunity away from them to make more for my own selfish greed to pay rent,” she told the outlet.
Some employees, however, have come around to tell her they understand that the business needs to survive until it can be reopened.
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