Will the U.S. Covid-19 Aid Package Be The Safety Net We Need? Yes and No.
By James Parrott
(This column was originally published by the New York Daily News on March 31, 2020.)
The coronavirus pandemic public health crisis broadens in expected and unexpected ways every day. The news is grim, just like the economic effects. We have never seen this scale of job loss occur so quickly. In New York City, at least 750,000 workers have lost jobs as a result of needed measures to safeguard the public’s health. Almost all of the brunt falls on low-wage hourly workers and independent contractors who don’t get paid when they don’t work. These are workers whose households rarely have more than a week or two of savings to fall back on.
Will the unprecedented $2.2 trillion Federal aid package (the Coronavirus Aid, Relief, and Economic Security, or “CARES” Act) supply the needed economic safety net? Yes and no.
True, its unemployment insurance provisions help overcome glaring gaps in that safety net. It provides a $600 weekly supplement that helps ensure most workers will have their lost earnings replaced. For the first time, self-employed workers and independent contractors, including many in the arts and taxi/Uber/Lyft drivers, will receive benefits. Workers who have to stay home to care for their children whose schools are closed are also eligible.
But the early signs aren't promising that workers and small businesses whose livelihoods were sacrificed for public health will receive this aid in a timely fashion. Unprepared to handle the avalanche of unemployment claims, the State Labor Department’s computers crashed, and under-staffed phone lines have meant that many still haven’t been able to file claims. The Labor Department is the conduit to disburse the new Federal aid; how is it going to make sure that displaced low-wage workers get much-needed relief?
A similar question can be asked regarding the U.S. Small Business Administration’s capacity to turn around emergency loan applications from the thousands of affected small businesses and nonprofits in New York. The $350 billion small business component of the CARES Act provides for loans to cover basic expenses including payroll, rent, and utilities. The loans can be forgiven for expenses paid out within the first two months. But how will the administratively challenged SBA ensure that small businesses are aided in time to stave off closing for good? In the best of times, loans might get approved in two to three weeks. Like unemployed workers, shuttered small businesses have also experienced severe website and phone access delays.
Because of those challenges, the unavoidable economic pain triggered by the pandemic likely will last longer than public health reasons require. This will heighten the likelihood of a more serious and long-lasting recession. Moreover, there are many ways in which the three federal coronavirus response bills fall short in addressing the full scope of the pandemic’s economic ramifications.
The CARES Act included a less-than-token $3.5 billion to help child care providers. The mostly ad hoc system we have in this country for providing early education and day care for young children is tenuous under the best of circumstances and, like many other sectors, has been thrown into complete turmoil by recent events. At least $50 billion is needed to maintain this fragile patchwork of centers and home-based providers, and to ensure that the children of first responders and other essential personnel are well-cared for so their parents can provide the critical services society relies on.
Don’t be misled by the strong bipartisan support for the Covid-19 response bills. Conservatives worked their will such that the bills severely limit assistance to immigrants, those without health insurance, and many low-income families. Not only are these failures mean-spirited and short-sighted but they jeopardize public health, in the same way that the widespread lack of paid sick leave was early recognized as a policy failure. Worse, as Daily News reporting shows, the city’s poorest areas have the highest rate of positive tests for the coronavirus.
The Take Responsibility for Workers and Families Act recently proposed by House Democrats addresses many of these shortcomings. Immediate action is needed to increase state and local fiscal relief to compensate for tax revenues that will be lost through the end of the year or beyond if the recession persists, and that could jeopardize essential public services desperately needed to deal with and get us out of this crisis.
Congress should return to work and put in place the economic safety-net our virus-infected economy needs to prevent temporary dislocations from becoming permanent, with assistance continuing as long as needed.