New FGA Paper Tells Stories of Small Businesses Losing Employees to Unemployment

From the Foundation for Government Accountability.

"A new paper from the Foundation for Government Accountability (FGA) shares stories from small business owners about the challenges they face as they try to reopen for business. To combat the economic downturn created by the COVID-19 pandemic, Congress took action to increase the amount individuals can receive in unemployment insurance (UI). Unfortunately, this bonus is having predictably negative results.

The UI bonus is discouraging work and slowing recovery. Small businesses across the country report employees are asking to be laid off to receive the bonus instead of asking to return to work.

More than 140,000 businesses have permanently shut their doors due to the COVID-19 pandemic and more closures could soon be on the way. What’s worse, employers must now compete with unemployment benefits to find workers—and they’re already feeling the repercussions. Nearly two-thirds of small business owners fear that their employees will not return to work because of the pandemic unemployment boost.

The paper includes stories from a Vermont medical supply producer, a Tennessee furniture store owner, a New York retailer, an Arkansas mill, and more.

“Across the country and across industries, stories are pouring in from small business owners who cannot reopen their doors due to a government policy that makes sitting at home more lucrative than going to work,” said Victoria Eardley, paper author and senior research fellow at FGA. “As Democrats push to extend the boosted UI benefits, we need to keep these small businesses in mind. Our economy will collapse if we continue to incentivize unemployment over a return to normal.”

Read the full report here."