The Impact of the Stimulus and Tax Season on Employment and Employers Trying to Hire

From: Carl Carver, Vice President

Apr 20, 2021

As the coronavirus restrictions have continued, the economic outlook continues to be “cloudy.” A triple storm of stimulus checks, unemployment benefits and tax refunds may affect millions of people who could be out of work for far longer than expected. So, how might these three storms converge to impact businesses trying to hire workers over the next five months in this already challenging COVID-19 market?



  • Currently, workers who were making $15.00 per hour are collecting 60% of their wages via unemployment benefits. This equals $360.00 per week.
  • $360.00 per week, plus an extra $300.00 per week in stimulus benefits, for a total of $660.00 net each week through September 2021.
  • Workers also get a tax break of paying no taxes on the first $10,500 (16 weeks of tax-free money).
  • This means the average person that makes $15/hr, collecting unemployment, will be earning the equivalent of a pre-tax wage of $21.50 per hour by staying home.



  • The latest round of stimulus approved on March 11, 2021 gives each person making under $75,000 per year a lump sum of $1,400 for themselves or $2,800 for couples, with an additional $1,400 for each child or dependent. This will further incentivize unemployed workers to stay home rather than return to the workforce.  A family of four will receive $5,600 in a one lump-sum payment.
  • This is equivalent to a month’s net pay for a couple making $100k per year
  • This is also equivalent to $267 in weekly net income over 5 months (equaling $8.68 pre- tax hourly wage).


Storm #3 - TAX RETURNS  

  • In the most recent data provided by the IRS, in 2018, the average tax refund for earnings in the $25,000 - $49,999 income bracket was $2,608.20.
  • That is equivalent to roughly 6 weeks of net pay for a $15.00 per hour worker.
  • This is equal to pre-tax wages of $4.04 per hour or $161.45 per week over a 5-month period.



With this triple-storm effect, it is important for business owners and hiring managers to understand the impact in finding short-term or temporary employees. 


Per week over a 5-month period:  March to September 2021

Weekly Unemployment =  $660.00

Stimulus check for a family of 4 =  $267.00

Tax Return refund =  $161.00

Total weekly after-tax income =  $1,088.00


How does all of this break down to an hourly pre-tax wage?

Unemployment: $21.50

Stimulus check: $8.68

Tax refund: $4.04 

Total: $34.22


It’s hard to for a $10.00 per hour temporary job to compete with an average hourly rate of $34.22 to stay on unemployment. Already, the level of long-term unemployment is so high that it has only been surpassed in modern history during the Great Recession.  

What does this mean for hiring managers? A company’s culture and benefits may help to retain your personnel, but to attract new reliable and capable people to add to your workforce, the wages and benefits offered must be competitive. Right now that means competing with unemployment and stimulus money even more than it means competing with other opportunities available to hourly workers, because it will “pay” to be unemployed.   

If you are working with an agency, like Lofton Staffing Services, it is important to work in partnership with your recruiter on recommendations, whether it’s increasing starting wages or changing the hiring status from temp-to-hire to direct hire. Due to these conditions, employers can expect to see fewer candidates than normal, so when presented with applicants from your recruiter – don’t wait! Applicants have been vetted, and they have already accepted the terms of the position, including pay rates. Act fast to ensure these applicants do not accept positions with competitors!


*Data provided by Employbridge.


About Lofton: Founded in 1979, Lofton Services offers clients the best of all worlds. We provide the responsive, personal service and flexibility of a small local firm while having the technology, resources, and infrastructure to deliver the benefits of the biggest players in our industry. Contact us today


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