The new Unemployment payments have begun, and they are making some workers jealous. No matter how much your unemployment benefit claim is currently, all unemployed workers will be getting a $ 600 additional weekly payment for the next 4 months. That is equivalent to $ 15 dollars an hour for a 40 hours a week on top of whatever benefit they were receiving before this increase.
On a national level, the average state gives out around $ 463 dollars a week for unemployment per claim. That number just increased by $ 600. So $ 1,063 a week, or approximately $ 55,000 a year if you want to look at in annually. The additional benefit alone is worth $ 10,800 to those who are unemployment during the whole period ($ 600 X 18 weeks.) There is a lot of incentive for lower earners to stay unemployed; at least until the additional benefits wear off, if they ever do. More helicopter money.
For many essential workers, minimum wage or slightly above is the going rate. Let’s use the example of somebody making $ 18 an hour though. That is $ 720 a week, $ 12,960 while working until the additional benefit is set to wear off, or approximately $ 37,000 annualized that they will earn while working during the virus while the the unemployed will make noticeably more because the government just increased their benefit on top of what their payout would have been from unemployment prior to this decision. I’d probably be rooting for my job to lay me off too if I had those options to choose from.
Now it’s probably better to have a non essential job which furloughed you with the option to come back once they can begin to work again. You get time off, to be with your kids, learn a language, learn an instrument, sleep in, garden, read books,home projects etc. It’s like a trial run at retirement. Income is coming in, and just the ‘to-do’ list to take care of.
This is not good policy. It just isn’t. I understand they had to do something, do it fast, and they aren’t done yet, but this is not the precedent you want to set. Benefits are usually designed to help maintain their lifestyle, not improve it. This will create additional dependency on the system and entitlements, both of which just puts this country into more debt. The debt will have to be dealt with at some point.
If you are concerned with the amount of money being printed, or loose policy passing that feels like they just threw spaghetti at the wall to see what sticks, feel free to give me a call. We can talk about ways to possibly protect your portfolio’s purchasing power while the money machines are turned on.
Phillip Connors Investment Adviser (303) 770-3030 http://www.valuefinancial.com
Seeking Value 