COVID-19 has impacted every single one of us in one way or another.
For those who are parents, we have needed to transition into teachers and tutors while continuing to meet the obligations of our jobs. For those who have fallen ill or have a family member who has fallen ill, you may have needed to take time from work to care for them. And for those whose workplaces have taken a huge financial hit due to COVID, you may have been laid off due to financial shortfalls.
Businesses are fighting. They are fighting to stay alive. Unfortunately, too many of them are being hit by the effects of the COVID-19 pandemic.
As we approach the sunset date for the enhanced unemployment benefits created under the CARES Act, many are calling for an extension of the $600 per week supplemental federal benefit. While this did prove effective for the 25 million Americans who would have otherwise struggled to pay for food and rent, unemployment payments are only a stopgap measure and will fail to revive the economy in the long-term.
In early June, the Congressional Budget Office (CBO) estimated that extending enhanced unemployment benefits through to January 2021 would mean five in every six claimants would earn more from unemployment payments than from work. The CBO noted that this measure would have a good effect on short term consumer spending, but not long term.
Rather than pay people to not work, we should pay employers to help them retain their workers. Republican Sen. Josh Hawley of Missouri has proposed that the United States replicate the strategy of the United Kingdom to protect workers, rescue businesses, and safeguard the labor market from total collapse. Hawley has proposed that 80 percent of wages for all private businesses be covered immediately by Congress. Not all wages, only up to the national median wage of $19.14.
Small and medium-sized businesses are struggling to bring back workers, particularly workers who earn lower wages. For good reason, those lower wage workers prefer a guaranteed income of $600 per week over returning to a job where their hours may vary week-to-week, potentially resulting in a check less than $600.
The $15 billion/week being spent on unemployment enhancement benefits could be better used to help pay businesses and provide much-needed relief to small and medium-sized businesses. Retention of staff, even during an extended furlough, is always cheaper than having to hire and train an entirely new staff; it will also assist in the recovery of local economies across the country.
Yes, Hawley’s plan is ambitious. But, money going to businesses who truly need it the most will help repair the labor market and lift people out of unemployment.
During the partial reopening in June, we saw a record 4.8 million jobs added in the first half of the month, according to the Bureau of Labor Statistics. However, as cases spike across the US, especially in California, we are already seeing Gov. Newsom and Mayor Garcetti impose restrictions and closures again. Thus, it’ll be even more necessary for the survival of our local economy that businesses be financially able to retain their staff through the lockdown and that employees receive a reliable wage.
It’s critical to our future economic health that we think about the long term now, shortsightedness is to blame for this disaster in the first place. As it’s evident that the unemployment enhancement is going to have detrimental long-term effects, it’s important that we push for the government to cover 80 percent of wages, especially as we’ve seen its efficacy in protecting the working class in other countries.
We have the opportunity to protect the jobs of millions of workers and save the local businesses that are critical to the continued health of our economy.
Stuart Waldman is president of the Valley Industry and Commerce Association (VICA), a business advocacy organization based in Van Nuys that represents employers in the San Fernando Valley at the local, state, and federal levels of government.