The Absolute Minimum That Democrats Should Demand In the Next Stimulus

The next stimulus package must include aid to state and local governments, protections for employed and unemployed workers, and investments in our democracy.

Celine McNicholas, Josh Bivens and Heidi Shierholz May 5, 2020

Your turn, Democrats. (Photo by SAUL LOEB/AFP via Getty Images)

In response to the coro­n­avirus, Con­gress has passed a series of bills allo­cat­ing more than $2 tril­lion to relief and recov­ery pro­grams. How­ev­er, these mea­sures have been insuf­fi­cient in scope and mag­ni­tude to address the sever­i­ty of the eco­nom­ic and pub­lic health cri­sis we are expe­ri­enc­ing. Fur­ther, law­mak­ers have failed to include key pro­vi­sions that would address the needs of work­ing fam­i­lies in this cri­sis. As a result of these pol­i­cy mis­steps, the relief and recov­ery mea­sures have not done near­ly enough to mit­i­gate the lev­el of pain work­ing peo­ple are expe­ri­enc­ing or to ensure that the econ­o­my can get back on track after the shut­down peri­od is over. It is crit­i­cal that Con­gress cor­rect its fail­ures in future relief pack­ages. The Con­gres­sion­al Bud­get Office (CBO) projects that with­out addi­tion­al relief, the unem­ploy­ment rate will aver­age 16% in the third quar­ter of this year. As a point of com­par­i­son, the high­est the unem­ploy­ment rate reached in the Great Reces­sion was 10%, and it reached that lev­el for only one month. CBO projects that with­out addi­tion­al relief, the unem­ploy­ment rate will aver­age 10.1% for the entire cal­en­dar year 2021.

Any addi­tion­al relief pack­age must include the following:

Addi­tion­al aid to state and local governments

While pre­vi­ous relief and recov­ery pack­ages includ­ed some aid for state and local gov­ern­ments, this aid was far too stingy and far too inflex­i­ble. The major tranche of fis­cal aid pro­vid­ed so far has been the $150 bil­lion Coro­n­avirus Relief Fund, but this only helps states meet costs direct­ly asso­ci­at­ed with pub­lic health inter­ven­tions aimed at ame­lio­rat­ing the epi­dem­ic and its effects. But the eco­nom­ic shut­down asso­ci­at­ed with the virus will cause a col­lapse of state and local gov­ern­ment rev­enues. Giv­en bal­anced bud­get require­ments for state and local gov­ern­ments, this rev­enue col­lapse will trans­late in com­ing months into extreme pres­sure to reduce spend­ing. This spend­ing cut­back will weigh heav­i­ly on recov­ery, just as pub­lic health restric­tions are hope­ful­ly lift­ed — and we should be hop­ing for as rapid a bounce­back as pos­si­ble. Between now and the end of 2021, the rev­enue short­fall faced by state and local gov­ern­ments looks to be rough­ly $500 bil­lion. This amount of fed­er­al aid is need­ed to keep state and local gov­ern­ments from turn­ing into a large drag on recov­ery, the way they did ear­ly on in recov­ery fol­low­ing the Great Reces­sion of 2008 – 2009.

Make addi­tion­al invest­ments in unem­ploy­ment compensation

The CARES Act pro­vid­ed a tem­po­rary boost to unem­ploy­ment com­pen­sa­tion, includ­ing an increase in the lev­el of ben­e­fits, an exten­sion of state unem­ploy­ment insur­ance (UI) ben­e­fits, the cre­ation of a Pan­dem­ic Unem­ploy­ment Assis­tance (PUA) pro­gram that will be avail­able to many work­ers who are not eli­gi­ble for reg­u­lar unem­ploy­ment insur­ance (like gig work­ers), and fund­ing for short-time com­pen­sa­tion (STC) pro­grams, also known as work-shar­ing, that avoid lay­offs by allow­ing employ­ers to reduce work hours of employ­ees while those employ­ees receive par­tial UI. These pro­vi­sions are very impor­tant and will help mil­lions of people.

How­ev­er, much more must be done. For exam­ple, the undoc­u­ment­ed immi­grants who make up 5% of the U.S. labor force are cur­rent­ly exclud­ed from these pro­grams, which is not only a human­i­tar­i­an dis­as­ter, but also a pub­lic health dis­as­ter. With­out these ben­e­fits, undoc­u­ment­ed immi­grants who are employed and get sick have every incen­tive to keep work­ing rather than quar­an­tine. And undoc­u­ment­ed immi­grants often work in essen­tial occu­pa­tions, includ­ing in key ele­ments of the food pro­duc­tion sup­ply chain. (For exam­ple, rough­ly half of all farm­work­ers are undoc­u­ment­ed immi­grants). The 1.6 mil­lion migrant work­ers employed with tem­po­rary visas are also vul­ner­a­ble because they have a pre­car­i­ous immi­gra­tion sta­tus that is con­trolled by their employ­ers: If laid off they lose work autho­riza­tion and become deportable, yet many will not be able to return home because of trav­el restric­tions and bor­der clo­sures. As a result, they should be able to access UI and have their work autho­riza­tion extend­ed dur­ing the nation­al emergency.

Unem­ploy­ment com­pen­sa­tion cov­er­age should also be expand­ed to include new entrants to the labor mar­ket who don’t have any work his­to­ry, (for exam­ple young peo­ple fin­ish­ing high school and col­lege) or stu­dents who had jobs dur­ing the school year but lost them when cam­pus­es shut down or who would have worked dur­ing the sum­mer but now can­not. Fur­ther, none of the tem­po­rary pro­vi­sions to boost unem­ploy­ment com­pen­sa­tion because of the coro­n­avirus cri­sis should be allowed to expire at an arbi­trary date, as they cur­rent­ly do. Giv­en the enor­mous uncer­tain­ty around how the next weeks and months will unfold, arbi­trary end-dates make lit­tle sense. The next relief and recov­ery bill must include trig­gers that allow these pro­grams to phase out slow­ly and only as eco­nom­ic con­di­tions war­rant. This is crit­i­cal giv­en that the unem­ploy­ment rate is like­ly to be over 15% when the addi­tion­al $600 per week in com­pen­sa­tion is set to expire at the end of July 2020, and is like­ly to be over 10% when PUA pro­gram eli­gi­bil­i­ty sun­sets at the end of 2020. These pro­vi­sions should not be allowed to ful­ly expire until the employ­ment-to-pop­u­la­tion ratio for adults between the ages of 25 and 54 is with­in two per­cent­age points of its Feb­ru­ary 2020 lev­el. Fur­ther, addi­tion­al funds should be allo­cat­ed for the admin­is­tra­tion of unem­ploy­ment com­pen­sa­tion programs.

Pro­tect work­ers’ paychecks

Shoring up the gaps in the cur­rent pol­i­cy plans we’ve cho­sen to fight the eco­nom­ic shock caused by the coro­n­avirus is the high­est pri­or­i­ty at the moment, and many ele­ments of these cur­rent plans are extra­or­di­nar­i­ly valu­able — like the major expan­sions of the unem­ploy­ment insur­ance (UI) sys­tem men­tioned above. How­ev­er, it is far from clear that this is the only eco­nom­ic shut­down we will have to under­take to fight the cur­rent epi­dem­ic — or future ones. We could well see major swathes of the U.S. econ­o­my need­ing to re-enter a state of hiber­na­tion for peri­ods of time in the com­ing fall or win­ter if the virus begins spread­ing rapid­ly again. Giv­en this, a more-trans­for­ma­tive plan to rapid­ly let mon­ey flow to work­ers through the pay­rolls of their cur­rent employ­ers can allow this hiber­na­tion to hap­pen with much less eco­nom­ic pain and anx­i­ety for work­ers. Over time and with much invest­ment, lots of this work could be done near-exclu­sive­ly through an unem­ploy­ment insur­ance sys­tem that is per­ma­nent­ly enhanced and kicks on auto­mat­i­cal­ly at scale when a large cri­sis hits. But until that type of world-class UI sys­tem is built, hav­ing a pay­roll pro­tec­tion plan that can allow parts of the econ­o­my to shut down while seam­less­ly keep­ing work­ers paid and firms in busi­ness is some­thing pol­i­cy­mak­ers should explore. Plans by Rep­re­sen­ta­tive Jaya­pal (D‑Wash.) and a Sen­ate plan co-spon­sored by Sanders (I‑Vt.), Warn­er (D‑Va.), Jones (D‑Ala) and Blu­men­thal (D‑Conn.) are exam­ples of this type of pay­roll guar­an­tee, mod­eled on plans from oth­er coun­tries (like Den­mark and the Unit­ed King­dom) that moved in this direction.

Include strong work­er protections

The coro­n­avirus pan­dem­ic lays bare the long-stand­ing fail­ure of exist­ing laws to pro­tect work­ers and the lack of pow­er far too many work­ers have in the work­place. Weak work­er pro­tec­tions cost thou­sands of work­ers’ lives each year and are now leav­ing essen­tial work­ers unpro­tect­ed on the job dur­ing this cri­sis. As a result, work­ers con­tin­ue to be required to work with­out pro­tec­tive gear. Sick work­ers con­tin­ue to lack access to paid leave. And, when work­ers try to speak up for them­selves and each oth­er, they are fired. Work­ers are dying as a result.

Pol­i­cy­mak­ers must include enhanced pro­tec­tions for all work­ers per­form­ing essen­tial work dur­ing this cri­sis. These work­ers must have the right to a safe work­place and full access to per­son­al pro­tec­tive equip­ment (PPE) as well as pro­tec­tions ensur­ing that they can speak up with­out fear of retal­i­a­tion if their employ­er is not pro­vid­ing the required PPE. Final­ly, Con­gress should include enhanced pro­tec­tions for work­ers who become sick as a result of work­place expo­sure. Under no cir­cum­stances should work­er pro­tec­tion laws and reg­u­la­tions be waived or put on pause.

Invest in our democracy

An essen­tial com­po­nent of any addi­tion­al relief and recov­ery pack­age must be addi­tion­al invest­ments to pro­tect our right to vote. Law­mak­ers must act now to estab­lish safe, alter­na­tive vot­ing meth­ods — like vote-by-mail — espe­cial­ly before November’s gen­er­al election.

The CARES Act includ­ed $400 mil­lion in elec­tion secu­ri­ty grants” to pre­vent, pre­pare for, and respond to the coro­n­avirus domes­ti­cal­ly for the 2020 fed­er­al elec­tion cycle. This is far less than fair elec­tion advo­cates argued was nec­es­sary to pro­tect our elec­tions dur­ing the pan­dem­ic. The Bren­nan Cen­ter for Jus­tice, for exam­ple, released a plan call­ing for a $2 bil­lion invest­ment to ensure that the 2020 elec­tion is free, fair, acces­si­ble, and secure.

As more states explore alter­na­tive ways of cast­ing bal­lots, Con­gress must pro­vide resources respon­sive to the mag­ni­tude of the chal­lenge. A fail­ure to pro­vide suf­fi­cient invest­ments to safe­guard elec­tions would amount to the most suc­cess­ful effort at vot­er sup­pres­sion and dis­en­fran­chise­ment since the end of the Recon­struc­tion peri­od fol­low­ing the Civ­il War. We must demand invest­ment in our democ­ra­cy infra­struc­ture and more vot­ing options.

This is only a small list of the poli­cies addi­tion­al leg­is­la­tion must include to ensure that relief and recov­ery invest­ments help work­ing fam­i­lies and those most impact­ed by this cri­sis and that the recov­ery fol­low­ing the coro­n­avirus shut­downs is rapid and broad-based. More must be done to pro­vide relief to those who have expe­ri­enced job loss as well as the loss of employ­er-pro­vid­ed health insur­ance. Sig­nif­i­cant invest­ments — includ­ing large-scale hir­ing of pub­lic employ­ees — must be made in test­ing and con­tact trac­ing. Safe­ty net pro­grams must be shored up to meet the scale of the eco­nom­ic cri­sis fac­ing us, includ­ing food assis­tance pro­grams like Sup­ple­men­tal Nutri­tion Assis­tance Pro­gram (SNAP) and Women, Infants, and Chil­dren (WIC), rent and mort­gage relief mea­sures, guar­an­teed paid sick time to all work­ers, and guar­an­teed health care to all essen­tial work­ers. Fur­ther, to avoid ampli­fy­ing com­ing job loss­es and to main­tain nec­es­sary pub­lic ser­vices that under-resourced com­mu­ni­ties rely on, relief must be pro­vid­ed for the U.S. Postal Ser­vice to ensure their abil­i­ty to con­tin­ue oper­a­tions. The pri­or relief and recov­ery pack­ages have failed to pro­vide suf­fi­cient relief to those most impact­ed by this cri­sis. Addi­tion­al recov­ery pack­ages must cor­rect this fail­ure while we still have an oppor­tu­ni­ty to mit­i­gate the rapid­ly grow­ing pain work­ing fam­i­lies are expe­ri­enc­ing at this moment and will con­tin­ue to endure with­out com­mand­ing action by Congress.

This was first post­ed at the Eco­nom­ic Pol­i­cy Insti­tute.

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