Unemployment could pay more wages than having a job after rule changes

Montgomery County Job Center
Montgomery County Job Center

Federal changes to unemployment could mean some Ohioans put out of work by the coronavirus pandemic could make more money on unemployment than applying for open jobs with essential businesses, or than they did before getting laid off.

The CARES Act passed by federal lawmakers in response to the health crisis adds $600 a week to state unemployment benefits from April through July.

Ohio unemployment currently pays roughly half of what someone earned before losing his or her job, with maximum limits based on income and household size.

The average unemployment claim pays $380 a week, meaning that worker made $760 a week — $19 an hour if employed full time — before getting laid off.

With the additional $600 federal payment, those workers will make $220 more each week than they did before losing their jobs or than they would taking another job at the same pay rate. The state has also waived requirements that they seek work during the state of emergency.

“The CARES Act is well intended and will provide the support many people need to get through the pandemic,” said Ohio Lt. Gov. Jon Husted in response to questions from this newspaper.

“I believe most people want to work to improve their lives and contribute to making the world a better place,” he said. “For some, the benefit package does create a perverse incentive not to work. But for many more who need their employer-funded health care and other benefits, continuing to work will be a better choice.”

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U.S. Sen. Rob Portman, R-Ohio, voted for the CARES Act to replace lost wages to low- and medium-income workers amid the crisis after getting assurances from the U.S. Secretary of Labor that states will make sure people aren't taking advantage of the system.

“We are concerned about unemployment serving as a disincentive for individuals who have been laid off to get back to work when the economy reopens,” said Portman spokeswoman Emmalee Kalmbach.

The office of U.S. Sen. Sherrod Brown, D-Ohio, provided a statement saying, “Brown believes that unemployment benefits should generally be higher so families can still afford to support themselves when they have a lapse in employment. These are extraordinary times and families need this additional assistance to get by and feed their families.”

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It’s unclear when out-of-work Ohioans will start getting the extra $600 weekly payments, according to Ohio Department of Job and Family Services spokesman Bret Crow. He said it will be retroactive to the date someone became eligible.

“We don’t have a date certain yet but we’re working as fast as we can to make the changes in our system to be able to accommodate that,” he said.

Federal funding is also supporting a state program meant to prevent layoffs by allowing companies to reduce hours and supplementing worker pay with partial unemployment benefits, including the $600 a week.

Greg Lawson, research fellow at the conservative Buckeye Institute, said he understands that lawmakers are trying to help people and stabilize the economy at the moment, but he hopes changes like the higher benefits don’t become long-term.

“This is one of those things we are going to have to roll back once we get back to normal times,” he said.

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Using federal funds to incentivize people to stay out of the workforce could slow the spread of the disease and keep people safe, especially older workers being told to stay home but wondering how they will make ends meet without another job.

But it also makes it harder for those companies that are hiring to fill positions deemed “essential” during the crisis.

Ohio has paid out $124.3 million in unemployment benefits to 195,878 claimants since March 15 as coronavirus fears and state orders have shuttered businesses such as restaurants and retail establishments.

But the pandemic also has created jobs in businesses such as grocery stores and distribution centers. Husted said in a news conference Wednesday that the state website tracking job openings had more than 33,600 listings from 478 employers.

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"We have screened this system. This system only includes businesses that we know are not just essential, but critical to the supply chains of serving you during this difficult time," Husted said. "If you are in a position that you can fill one of those jobs, or you know someone who can, please send them to (coronavirus.ohio.gov/jobsearch)."

Featured companies on the website Thursday included Lowe’s Home Improvement, Walmart and Amazon. Amazon alone said it’s hiring 4,600 jobs and says wages are currently $17 per hour, including a $2 an hour raise through April.

U.S. Rep. Mike Turner, R-Dayton, said the CARES Act “is designed to provide necessary and temporary relief for individuals and families suffering due to coronavirus.

“This employment disruption has resulted from a pandemic crisis, not an economic failure. The expectation is that once this pandemic passes, our economy will return. We will continue to respond to issues arising from this pandemic as it evolves.”

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