A spa owner in Washington state could not wait to tell her staff she qualified for more than $200,000 in the Paycheck Protection Program (PPP), only to be surprised when employees revealed their displeasure because they found out they would be making less than they would under unemployment.
Jamie Black-Lewis received two loans — a $177,000 loan and a $43,800 loan through PPP for her two spas — Oasis Medspa & Salon and Amai Day Spa — to go towards payroll and other business expenses.
Black-Lewis had to put the brakes on pay for herself and 34 other employees in mid-March when nonessential businesses in Washington state closed due to the coronavirus.
Black-Lewis told her staff via a virtual meeting the news about the PPP loans, expecting a good reaction, but the reaction was quite the opposite.
“It was a firestorm of hatred about the situation,” Black-Lewis told CNBC.
Employees realized they could make more money off of unemployment benefits than their usual paychecks. Their animosity is an unintended consequence of the CARES Act, the $2.2 trillion coronavirus relief package passed by Congress and signed into law last month.
The law, which is for small businesses struggling because of the coronavirus pandemic, allows for small business owners to direct most of the funds towards payroll.
Employee headcount must not go down, and salaries must remain intact. Businesses have until June 30 to re-hire furloughed or laid-off workers.
“It’s a windfall they see coming,” Black-Lewis said of unemployment. “In their mind, I took it away.”
“I couldn’t believe it,” she added. “On what planet am I competing with unemployment?”
Employers all over the country, meanwhile, are slashing their payrolls to stay afloat because their revenue has collapsed from the lack of face-to-face interaction required in some industries, like spas. U.S. weekly jobless claims reached 4.4 million among first-time unemployment filers as well.
Black-Lewis said the animosity is not unanimous among workers. Some workers want to stick around and wait until nonessential businesses can reopen. The other workers may not have a choice between unemployment and their current job since the state might find them ineligible for such benefits because Black-Lewis already offered to pay them.
“There’s a bad taste from it,” she said. “We’ll recover. But it’s just a bummer.”