A big unemployment benefit versus a smaller paycheck? That's not an easy choice to make in normal times, when there isn't a contagious virus lurking outside your home. Certainly, remaining unemployed does satisfy some immediate needs. On the simplest level, you don't have to go outside and you can still pay your bills. But there are longer-term benefits -- for you, your employer, and the economy -- associated with making the tough choice to go back to work. Here are four of them.
You may regret staying home laterThe $600 supplement is a temporary benefit that expires on July 31, 2020. Starting on August 1, your benefit will return to the normal amount allowed by your state. That's probably somewhere in the range of 40% to 45% of your previous working income.
If you do choose to sit tight at home until July, you won't be the only one hitting the job market this summer. The Economic Policy Institute predicts a nationwide unemployment rate of 15.6% in July of this year. To put that in perspective, the highest unemployment rate experienced during the Great Recession was 10% in October 2009.
Passing on an opportunity to work today could leave you in dire straits later, when your employment benefit drops and jobs are hard to come by.
You may lose benefits like health insuranceYou earn more at your job than just the paycheck. Though we don't usually quantify them, healthcare and retirement benefits are worth a pretty penny. According to the Bureau of Labor Statistics, benefit costs on average account for nearly 30% of an employee's total compensation.
Health insurance will be an expensive benefit to replace. Premiums for replacement coverage will be well more than what was being deducted from your paycheck, since employers usually pass on only a portion of those costs. You'd have to extend your health insurance through COBRA, which is notoriously expensive, or purchase a plan on the healthcare marketplace under a special enrollment period.
The loss of retirement plan benefits, such as a 401(k), may not be as impactful in the short term. But it could be very expensive later on. Your savings progress will stall out, unless you are disciplined enough to keep setting money aside without those payroll deductions. Longer-term, that will cost you thousands in missed contributions and lost earnings.
You may disqualify yourself from unemploymentNormally, you are supposed to accept suitable job offers while you're receiving unemployment. You can't reasonably argue that an offer to resume a job you already had isn't suitable. But there's still a gray area. Under provisions in the CARES Act, you do qualify for unemployment if you turn down a job for a coronavirus-related reason. You might need to care for your children or a sick spouse at home, for example. In the absence of those reasons, it goes against the spirit of unemployment to decline a viable job offer.
You may put your employer in a tight spotUnder the Paycheck Protection Program (PPP), established by the CARES Act, small businesses can apply for enough money to fund eight weeks of their payroll costs. They can also use the money to pay for certain overhead expenses, including mortgage payments, rent, and utilities. These are loaned funds that will be forgiven, as long as employers meet certain requirements:
PPP recipients must keep employees on the payroll or quickly bring back employees that have been furloughed or let go.