Issues & Insights

Dems Snuck A $15 Minimum Wage Into The CARES Act — And We’ll All Pay The Price

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I&I Editorial

Buried in a story about the overly generous unemployment “bonus” that Democrats added to the CARES Act is the reason why they insisted on it in the first place — and why it will drag down the recovery once the lockdown ends.

While lawmakers were hammering out the massive $2 trillion bill, a key focus of which was to keep workers connected to their jobs through a loan guarantee program — Democrats insisted on a huge increase in unemployment benefits.

The result was a $600 a week bonus. New York Sen. Chuck Schumer was right to call this “unemployment on steroids.”

Well, guess what?

“The $600 payment aligns with working full time at $15 an hour – the minimum-wage level many Democrats in Congress support,” notes the Wall Street Journal.

The Journal reports that – thanks to this bonus – workers will get an average of $978 in unemployment benefits. What’s more, “Labor Department statistics show half of full-time workers earned $957 or less each week in the first quarter of 2020.”

South Carolina Sen. Lindsey Graham had it exactly right when he said that: “You’re literally incentivizing taking people out of the workforce at a time when we need critical infrastructure supplied with workers. If this is not a drafting error, then it’s the worst idea I’ve seen in a long time.”

And, indeed, this unemployment pay raise contributed to the massive surge in unemployment claims. A Heritage Foundation report published on Wednesday finds that just this one provision will cause almost 14 million more people to file for unemployment benefits than would otherwise be the case,

But the real problem will emerge when state governments start to allow businesses to reopen their doors.

By setting the de facto wage floor at $15 an hour, Democrats will make it harder for companies to lure people back to work who were making less than that.

The Journal provides one prime example:

Tracy Jackson, 50, of Nacogdoches, Texas, started receiving unemployment benefits after losing her job as a cook at a college. Her benefits total $1,200 every two weeks, almost twice what she would earn on the job.

She wants to return to work, but being stuck at home has given her time to reflect. The extra money she receives in unemployment benefits has made her conclude she had been underpaid at her previous job, earning $10.30 an hour after five years.

“I like the college, I really do,” she said. “But they’re going to have to come with more money. If they don’t, I’m not going to be there.”

The story also quotes Joe Sheetz, CEO of the Sheetz convenience store chain, who foresees a big problem of “trying to hire outsiders who are on unemployment … Hard to compete with an extra $600 per week for hourly jobs,” he said.

Magnify this across the country and many businesses – most of the small companies – will start to realize they have two choices: boost pay, or cut back on workers, or both

Either way, the result will be to put the brakes on what otherwise would have been a mad rush to return to work once the economy opens up.  

That same Heritage study found that the $600 bonus alone will cut GDP by as much as $1.5 trillion. The study provides state-by-state breakdowns of the impact.

“The primary economic goal in helping to bridge the gap between the previously strong economy and labor market and the forced COVID-19 downturn should be to help keep workers connected to their employers,” the authors write. “The additional $600-per-week unemployment benefit regardless of income level does the opposite.“

This is terrible news. The Commerce Department reports that the economy shrank by 4.8% in the first quarter of this year. Keep in mind that before the lockdowns went into effect in mid-March, Q1 growth was heading toward 3%. The unemployment rate went from 3.5% in February to double digits in April.

The last thing the economy needs is for millions upon millions of workers to stay at home and collect overly generous benefits.

So, the bottom line is that the $600 bonus will likely spur a bout of wage inflation and provide fresh impetus to demands for a $15 an hour federal minimum wage. It will also slow the recovery, which will, in turn, hamper President Donald Trump’s reelection effort.

For Democrats, this is a political win-win. For everybody else who will suffer the consequences, not so much.

— Written by the I&I Editorial Board.

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16 comments

  • “Dems” didn’t “sneak” anything into the Bill. The terms were widely known before enactment. I remember picking up on this (as did many commentators) and lamenting it in e-Mails to friends before it went to a vote. The Republicans were simply spineless and did not want to be seen as objecting to an aid package. And we all will pay the price in the future — not just in a sluggish economy but in serious, devastating inflation.

  • You get called back to work and you don’t go you lose your benefits. Sooooo what’s the issue?

    Funny how during all if this the verbage of “unskilled” labor changed to “essential” workers. Why not pay them a living wage?

    • Generally speaking, because they are not worth the price. The fast food places are already looking at kiosk ordering, which will reduce their employee numbers. Anyone who can’t afford this pay rate will let people go permanantly. Minimum wage workers are not worth more money to an employer. Minimum wage jobs were never intended to be and are not a career position.

    • OR… they could learn a skill that pays more. This is why more companies are getting robots to do the loser work, because the losers wont work.

  • Enjoying your COVID quarantine? Want more of the same? Vote Democrat!
    Do you like government to decide your health care, like the VA? Like denying medicines to fight COVID 19? Vote Democrat.
    Do you like higher taxes, to pay for other people’s free stuff? Vote Democrat.
    Do you think illegal immigrants deserve more and better than you? Vote Democrat.
    Do you favor “news media” publishing opinion rather than fact? Keep it going, vote Democrat.
    Should politicians rule like emperors? Vote Democrat.
    Do you like criminals sprung from jail, to further commit rape, pillage and murder in your neighborhoods? Vote Democrat.
    Do you think the criminal justice should apply only to one political party? If you do, vote Democrat.
    Do you think politicians of one party should never be held accountable for their deeds or words while their opposition should be persecuted and harassed without pause? Vote Democrat.
    Do you crave a Soviet/Venezuela/Cuba/China style government that decides everything? Vote Democrat.
    Do you believe a political candidate’s political allegiance is more important than job qualifications? If so, vote Democrat.

  • No, Republicans and Democrats sneaked it in. Snuck isn’t a word you ignorant fools.

  • Trump just needs to tear the damn bill up in front of Congress! No more poison pills!

  • Dems didn’t “sneak it in.” Republicans capitulated AGAIN. Seems like no matter how we vote or whom we elect to what position…the Leftists connive and the Right surrenders and we get exactly what our “betters” decide is best for us (them) and force it on us one way or the other. The Democrats are turning us into exactly the Socialist dystopia they have envisioned and they’re doing it right under Trump’s nose.

  • The democommunist party has revealed itself as the enemy of our nation. And, the republicans who didn’t read and passed this trash are no friends, either. Term Limits and a Article Five Convention, now!

  • Enough with the “Democrats snuck” BS….the Uni-party agreed and accepted any and all pork added to this supposed aid for the American worker. That includes president Trump.

  • The Progressives didn’t “sneak” it in….they held a gun to the head of Congress and blackmailed the passing or they would have withheld the bill.

    “Never Ever Ever Let a Crisis Go To Waste!”

  • Even when they’re not in power, Dems win. There’s a reason the GOP is called The Stupid Party. What’s the point of them having the reins if they’re also going to steer us over the cliff into oblivion, financially.

    • what are forgetting is, the R’s dont really care about you, they already have their pockets lined with millions along with the D’s.

  • [print-me target="#post-%ID%"]

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