Oregon restaurant: Stimulus keeps people unemployed

Taxpayers Association of Oregon


This week the Wall Street Journal featured a guest column by Portland restaurant entrepreneur Kurt Huffman who owns ChefStable LLC which partners with some of Portland’s most known restaurants (OX, Lardo, Beer O’ Clock, more). Huffman has had to lay-off 700 employees during the outbreak. When it came time to begin hiring them back he ran into the most unexpected problem — the stimulus checks to his employees were paying better than the job they had!   This is true on average for most states in America (see chart below).

You can read Kurt Huffman’s Wall Street Journal excerpt below:

We started making the calls last week, just as our furloughed employees began receiving weekly Federal Pandemic Unemployment Compensation checks of $600 under the Cares Act. When we asked our employees to come back, almost all said, “No thanks.” If they return to work, they’ll have to take a pay cut.

The starting wage for a line cook in one of our restaurants is $15 an hour. These cooks receive at least $1 an hour in tips, so at a minimum they make $16 an hour, or $640 before taxes for a 40-hour week. The overwhelming majority of our laid-off cooks qualified for Oregon unemployment compensation of 1.25% of their annual gross wages weekly, or $416 in our example. The extra $224 a week provides a strong incentive to return to work.

But as of this week, that same employee receives $1,016 a week, or $376 more than he made as a full time employee. Why on earth would he want to come back to work?

This has had the perverse effect of making it impossible for us to hire enough people even for our limited takeout and delivery business at a time of rapidly rising unemployment. It will be an even bigger problem once we are allowed to reopen our dining rooms. And it will persist at least until July 31, when the unemployment bonus expires. I’d have to offer my cooks $25.40 an hour to match what the government is paying them not to work.

The Trump administration is talking about setting a timeline for when the country can “open for business.” For my business, Congress has already locked down that date. We plan to open our dining rooms on Aug. 1, once the government stops paying people $15 an hour, on top of standard unemployment compensation, to stay home.

(full article here)

— This is no small matter.  This New York Times chart shows that the imbalance impacts most states:

— This article represents 31 straight days of virus/shutdown articles by the Taxpayer Association of Oregon.  If you value that help out below…

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