This Can't Help the Recovery

[pb4uski]

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Originally Posted by Starsky Somehow Wall Street and the Bankers get away with it all the time. Try living on $31,200 a year. (before taxes)

DS lives on less.... and saves to boot.

[Starsky]

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Originally Posted by pb4uski You're wrong on both counts. Ignorance is bliss. First, you wrote: The fact is that there is no deduction from employee's paychecks for UI... so you're just plain wrong on that. Second, in all my years of doing employee salary reviews, I never and have never even heard of an employer considering UI when deciding salaries. UI is a pretty low-cost benefit in many cases. IME pay is determined based on corporate wide merit raise guidelines, budgets, level of employee's current pay in relation to the pay range for that position, employee performance, etc.... UI isn't really a significant factor. I had many lower pay clerical level employees in my department and UI never came up nor did it come up when we did our budgets... it is so de minimus as to be irrelevant.

Perhaps you'd like to address the substance of my comments.

[copyright1997reloaded]

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Originally Posted by Starsky Somehow Wall Street and the Bankers get away with it all the time. Try living on $31,200 a year. (before taxes)

Plenty of people.

p.s. the federal tax burden on filers making $30K was negative because of refundable credits (looking at IRS 2017 data).

Can you live on 30K per year? https://www.nationaldebtrelief.com/t...-year-yes-can/ Quote:

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Think You Couldn’t Live On $30,000 A Year? Yes, You can! November 20, 2013 by National Debt Relief happy familyDo you believe you just couldn’t live on $30,000 a year? Well, you could. For that matter, many families do. In some cases it’s because that’s how much they earn after taxes. In others it’s because they choose to live on that $30,000 so they can save the rest for retirement, to buy a house or pay for their children’s college education.

Also note the $600 is per person, if you have two adults in the same situation that is $1200/week.

I just looked back at my 2019 spending. If I take out "blow that dough" categories (things like vacations, season tickets to baseball, two ski passes,...) (before taxes) is about $2K/month.

[Starsky]

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Originally Posted by copyright1997reloaded Plenty of people. p.s. the federal tax burden on filers making $30K was negative because of refundable credits (looking at IRS 2017 data). Can you live on 30K per year? https://www.nationaldebtrelief.com/t...-year-yes-can/ Quote: Also note the $600 is per person, if you have two adults in the same situation that is $1200/week. I just looked back at my 2019 spending. If I take out "blow that dough" categories (things like vacations, season tickets to baseball, two ski passes,...) (before taxes) is about $2K/month.

Good for you. Wouldn't work for me, or 99% of the people around here. Funny how the median income is about $63K in the U.S but the average income is about $90K. Someone's getting paid...

I think the point is being missed here that the spending multiplier effect means that giving money to the most needy will help our economy the most, regardless of what they spend it on. The fact they spend it is the important thing. If you look at what happens to GDP as the percentage of spending vs savings goes up, you can see what drives our economy - all those people with no savings who will be getting $600 checks. Try it for yourself:

https://www.omnicalculator.com/finan...ing-multiplier

[cathy63]

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Originally Posted by pb4uski ... The other group is lower income... but in their case they are sitting on the sidelines and being paid MORE than what they would be earning if they were working full-time... so they have a disincentive to return to work... in fact, in that one case where their boss said that she got funding and could put them back on payroll they were pissed about it. It's just odd to me that you don't get the difference.

(not really addressing pb4uski here, this was just the handiest quote as I was reading along)

When they were debating the CARES Act, Congress wanted to set the limits for unemployment benefits based on what people were earning while working. However, numerous states have unemployment systems that simply cannot handle anything that complicated. It's not just NJ with it's famous call for COBOL programmers; many states have systems where it would take from months to years to implement an adder from the feds that was anything other than a flat rate, and some states said they would not be able to do it at all. So in order to get around that and put more stimulus money in more peoples' pockets, Congress went ahead with the flat $600 amount.

The bump only lasts until the end of July, and it's not just the $12/hr min wage employee in AZ who would have gotten $240/wk in unemployment and is now getting $840. It's also my family member, the white collar worker who was making $100K/yr and would have gotten that same $240 and is now getting $840 instead. He's grateful for the extra $600/wk, but he's definitely not better off than when he was working.

No stimulus program is perfect and some people are going to benefit more than some other people think is fair. Just like the extra $600 unemployment, plenty of people are collecting an extra $1200 check for a family member who has died, or an extra $500 for a child who's now over 17. Sometimes moving faster is better than waiting until everything can be made perfect.

[cathy63]

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Originally Posted by pb4uski You're wrong on both counts. Ignorance is bliss. First, you wrote: The fact is that there is no deduction from employee's paychecks for UI... so you're just plain wrong on that.

There are states where employees pay the state portion of unemployment insurance via withholding. PA and NJ are the two where I've run into this. I don't know if there are any others. I found this out because I was surprised once when I was reviewing a remote employee's pay stub with her and saw the deduction. I asked HR about it and that's when I learned our people in these two states paid their own UI.

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Second, in all my years of doing employee salary reviews, I never and have never even heard of an employer considering UI when deciding salaries. UI is a pretty low-cost benefit in many cases. IME pay is determined based on corporate wide merit raise guidelines, budgets, level of employee's current pay in relation to the pay range for that position, employee performance, etc.... UI isn't really a significant factor. I had many lower pay clerical level employees in my department and UI never came up nor did it come up when we did our budgets... it is so de minimus as to be irrelevant.

Agreed. In the aforementioned conversation with our HR person, it turned out that the Federal part of unemployment was less than $50/employee/year and it was the same for every employee no matter how much they earned. State taxes work differently, and at least in CA they were based on how many people from our company had claimed unemployment the previous year. They were still pretty low though, and totally a non-factor in salary planning. We literally spent more on holiday parties than on unemployment insurance every year.

[pb4uski]

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Originally Posted by Starsky Perhaps you'd like to address the substance of my comments.

I didn't necessarily disagree with the substance of your comments.... just the erroneous justification for them.

[pb4uski]

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Originally Posted by cathy63 There are states where employees pay the state portion of unemployment insurance via withholding. PA and NJ are the two where I've run into this. I don't know if there are any others. I found this out because I was surprised once when I was reviewing a remote employee's pay stub with her and saw the deduction. I asked HR about it and that's when I learned our people in these two states paid their own UI. ...

Learn something new every day. Looks like there are 3 states that tax employees:

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Typically, only employers pay SUTA tax. However, employees in three states (Alaska, New Jersey, and Pennsylvania) are subject to state unemployment tax withholding. If you have employees in any of these three states, you will withhold the tax from their wages and remit the tax to the state. Employees will not handle this tax themselves.

For PA:

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A 0.06 percent (. 0006) tax on employee gross wages, or 60 cents on each $1,000 paid. Employee withholding contributions are submitted with each quarterly report.

or $19.20 for $30k of earnings

For NJ:

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Employers must continue to withhold employee SUI taxes through December 31, 2019 from employee wages earned up to the SUI taxable wage base of $34,400 at the worker SUI rate of 0.425% (includes the 0.0425% Workforce Development and Supplemental Workforce Fund surcharge).

or $127.50 for $30k of earnings

[copyright1997reloaded]

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Originally Posted by Starsky Good for you. Wouldn't work for me, or 99% of the people around here. Funny how the median income is about $63K in the U.S but the average income is about $90K. Someone's getting paid... I think the point is being missed here that the spending multiplier effect means that giving money to the most needy will help our economy the most, regardless of what they spend it on. The fact they spend it is the important thing. If you look at what happens to GDP as the percentage of spending vs savings goes up, you can see what drives our economy - all those people with no savings who will be getting $600 checks. Try it for yourself: https://www.omnicalculator.com/finan...ing-multiplier

The $63K median income is household, we were talking about per worker. So comparing $600 plus state unemployment (which averages $378 per week) = 978/week PER WORKER. In a two adult household, this would yield $50,856 * 2 = $101,712 annualized.

I'm quite aware of spending multipliers, I was an econ major (honors, magna cum laude).

Your statement "Wouldn't work for me, or 99% of the people around here." actually emphasizes *my* point. In some areas of the country (HCOL), the $600 adder isn't much of an issue. In other areas of the country (LCOL), it might severely distort incentives. THAT IS THE POINT.

Finally, median vs average. Yes, the average for income stats will be higher than the median. This is because of the long tail in terms of income distributions. Just a relatively small number of data points will cause this. Here is a chart of income distribution (2017), average INDIVIDUAL:
https://upload.wikimedia.org/wikiped...ted_States.png

So you need to go beyond your worldview of thinking the country is like you, or "99% of the people around here" and ascertain what happens in the real world, where TWO THIRDS of people in the United States make less than what the average state unemployment + $600 bonus would provide.

[FIREd_2015]

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Originally Posted by Markola I personally know government employees working 12 hour days and weekends right now.

And those people should continue to get paid but every other government employee who is sitting at home doing nothing should have their paychecks cut to $600/wk plus their state UI. They would get to keep their benefits (healthcare, etc) because they are still government employees just with a temporary pay cut. This would be fair but of course it'll never happen. Since they are still on the payroll they would be called back the moment they are needed so there would be no loss/delay in government services. It's not like these people are going to go out and get another job since the entire country is shut down so they can't use the argument that they would go find another job because they can't.

Added: This would actually go a long ways to solving the local and state budget shortfalls.

[rk911]

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Originally Posted by FIREd_2015 And those people should continue to get paid but every other government employee who is sitting at home doing nothing should have their paychecks cut to $600/wk plus their state UI. They would get to keep their benefits (healthcare, etc) because they are still government employees just with a temporary pay cut. This would be fair but of course it'll never happen. Since they are still on the payroll they would be called back the moment they are needed so there would be no loss/delay in government services. It's not like these people are going to go out and get another job since the entire country is shut down so they can't use the argument that they would go find another job because they can't. Added: This would actually go a long ways to solving the local and state budget shortfalls.

+1

[Markola]

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Originally Posted by FIREd_2015 And those people should continue to get paid but every other government employee who is sitting at home doing nothing should have their paychecks cut to $600/wk plus their state UI. They would get to keep their benefits (healthcare, etc) because they are still government employees just with a temporary pay cut. This would be fair but of course it'll never happen. Since they are still on the payroll they would be called back the moment they are needed so there would be no loss/delay in government services. It's not like these people are going to go out and get another job since the entire country is shut down so they can't use the argument that they would go find another job because they can't. Added: This would actually go a long ways to solving the local and state budget shortfalls.

Even in a far-fetched scenario where a person could somehow get unemployment insurance while not being unemployed and keeping their benefits, what good would it really do for a state budget’s bottom line to put a state employee on two forms of public assistance? Seems like this proposal is a theoretical shell game that would only help at the margins.

[FIREd_2015]

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Originally Posted by Markola Even in a far-fetched scenario where a person could somehow get unemployment insurance while not being unemployed and keeping their benefits, what good would it really do for a state budget’s bottom line to put a state employee on two forms of public assistance? Seems like this proposal is a theoretical shell game that would only help at the margins.

I think you misunderstood my post. The government workers are still employed and hence don't qualify for UI. My suggestion was their pay should be reduced to whatever they would qualify for under their state's UI and then add $600/wk to it.

[JohnRM]

I don't understand why they don't start some kind of make-busy program such as the WPA- Of course there would have to be social distancing etc. for that too.

[pb4uski]

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Originally Posted by JohnRM I don't understand why they don't start some kind of make-busy program...

but, but, but.... for many of them that was their full-time job pre-COVID.

[rk911]

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Originally Posted by JohnRM I don't understand why they don't start some kind of make-busy program such as the WPA- Of course there would have to be social distancing etc. for that too.

stay tuned. if this shutdown goes on much longer you may just see that.

[2177V]

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Originally Posted by Tekward I'd hate to be hiring right now. More business will struggle: "More than 26 million Americans have filed new claims for unemployment benefits in recent weeks, and a lot of them will now be bringing home much more money than they did while they were actually working." Millions Of Americans Are Now Making Far More Money Being Unemployed Than They Did When They Were Actually Working

My business has 6 independent contractors which was affected by the sheltered in place. When my business re-open, I expect my revenues will be 50% so I only need 3 independent contractors.

We are like a family and fortunately when I explained this plan to them, only 3 needed to come back soon while the other three can wait. I did not have to chose by senority.

The three who can wait are married and had other sources of other income. The three who cannot wait are single and had no sources of other income.

My business is lucky since the business had sufficient cash reserves so I do not have to borrow money from SBA unless the shelter in place go past September 1. However, it is still painful to see my cash reserves, that I saved over the years, evaporating in a few short months.

They better lift the shelter in place soon. I am upset that young people are partying at the beach and this may delay the lifting of the shelter in place. I feel like I am paying for them to party.

[PatrickA5]

I told my SIL who's 60 who works part time and makes $7.25/hr about the extra $600 per week. I thought she'd be thrilled, but she's on SS disability and she's afraid that getting unemployment would trigger some kind of audit of her disability payments.

Oh well, I tried.

[harley]

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Originally Posted by JohnRM I don't understand why they don't start some kind of make-busy program such as the WPA- Of course there would have to be social distancing etc. for that too.

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Originally Posted by rk911 stay tuned. if this shutdown goes on much longer you may just see that.

I hope so. The fire road up the mountain to my favorite camping spot could use some work.

[gwraigty]

Sorry to interrupt the argument and name-calling, but are people confusing the $2,400 stimulus payment, which isn't taxable, with the $600 extra unemployment per week, which is taxable? I think I have that straight...