Small businesses are now having to compete with high unemployment benefits in order to keep workers

Unemployment insurance is an important part of the job system. It provides a cushion for people who have been laid, that is until they can find something better. This system is sometimes prone to abuse, however. In places where unemployment benefits are high, some people may be discouraged from looking for work.

This is why providing an extra $600 per week for unemployment benefits was bound to be a disastrous policy. With an extra $600 to state’ s unemployment benefits, for some people, unemployment is simply paying more than having a job.

It should not come as a surprise that some workers are asking to be laid off.

$600 per week. That’s what the federal government is now offering to people who’ve lost their jobs because of the coronavirus…

But the extra money can create some awkward situations. Some businesses that want to keep their doors open say it’s hard to do so when employees can make more money by staying home.

“We basically have this situation where it would be a logical choice for a lot of people to be unemployed,” said Sky Marietta, who opened a coffee shop along with her husband, Geoff, last year in Harlan, Ky

… Even though she had customers, Marietta reluctantly decided to close the coffee shop just over a week ago.

“The very people we hired have now asked us to be laid off,” Marietta wrote in a blog post. “Not because they did not like their jobs or because they did not want to work, but because it would cost them literally hundreds of dollars per week to be employed.”

With the federal government now offering $600 a week on top of the state’s unemployment benefits, she recognized her former employees could make more money staying home than they did on the job.

With businesses starting to reopen, there is a huge possibility that most of them will face difficulty rehiring, with workers preferring to stay home and receive high unemployment benefits instead of going to work. It does not help that these benefits last up until December.