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Coronavirus unemployment relief creates conflict for small business owners

Federal aid gives some unemployed workers more than what they got in their weekly paychecks, making it hard for some businesses that are trying to reopen.

SEATTLE — Some small business owners who were able to get Paycheck Protection Program loans are now finding it tough to hire some employees back.

That is because the temporary $600 a week federal employment relief on top of state unemployment benefits adds up to more than what some workers usually bring home. 

It's an unexpected consequence of the federal stimulus package meant to help the economy recover from coronavirus. 

Locally, a spa owner in Woodinville also told CNBC that she received loans through the Paycheck Protection Program for her two locations. Part of the deal with that SBA loan is that it the majority of it has to pay for employee salary.

But some of her hourly employees were upset because they said they could make more on unemployment thanks to the federal jobless benefits.

It's also difficult for others who are trying to bring back staff, even without help from those loans.

"It was incredibly hard for us to staff up with the cooks," Kurt Huffman, founder of ChefStable, based in Portland, which had to lay off about 720 employees across 24 different food and beverage companies.

ChefStable found that some didn't want to come back right away.

"They were just simply saying, I started getting my $600 check from the government on top of my state check. I'd have to take a huge pay cut to come back to work," Huffman said. 

For Huffman, the federal CARES Act is making a difficult time even more complicated, though he doesn't blame the staff.

"They're doing the smart thing, right, work is hard, and we don't have widespread testing right now. So, you know, I can understand that people feel concerned," Huffman said.

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The $600 a week boost to unemployment benefits is temporary and only available through the end of July. 

"The $600 a week enhancement was intended at a federal level to try to get people further toward full wage replacement," said Nick Demerice, Public Affairs Director for the Washington state Employment Security Department. 

Washington state, the maximum weekly benefit amount is $790. The minimum is $188.

With the CARES act relief on top of that benefit, people who make $62,000 a year in annual wage would get the same amount of money on weekly unemployment as they would if they were working, according to Employment Security Department. 

"For some individuals making less than $60,000 a year, this would actually mean that they would take home more in a week than they would if they were working full time," Demerice said.

The agency's website allows people to calculate an estimate of what their benefit might be.

Huffman says the federal relief puts employers in a difficult position.

"This is an unintended consequence of the policy. I think the policy is a bad policy, not because I'm opposed to people getting money, but because I'm opposed to being put in a situation as an employer, where I have to fight the government to employ people," Huffman said.

Huffman does not anticipate fully reopening restaurants until Aug. 1 at the earliest.

"I'd rather eat two, three more months of rent, but have a really healthy environment that we can open back up into," Huffman said.

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