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The Nightmare Facing the Poor and Working Class If There’s Not Another Stimulus

With time running out and Republicans balking at more Covid relief, U.S. workers are facing a future of financial misery.

Jeff Schuhrke

As millions of U.S. workers face unemployment, food insecurity and eviction amid the coronavirus pandemic, the limited aid provided by the federal government’s flawed CARES Act from March has long since dried up. 

Last week, following more than six months of stalled negotiations with congressional Democrats over a new economic relief package, President Trump abruptly announced he was halting talks until after the November election.

While the president quickly backtracked and is now reportedly continuing to negotiate, the federal government’s ongoing failure to pass a new relief package spells catastrophe for a U.S. working class already pushed to the brink by an economic crisis seemingly on par with the Great Depression. 

Here’s a breakdown of what the continued lack of federal help means for workers:

Significantly reduced unemployment checks

Perhaps the most beneficial part of the CARES Act was the extra $600 a week it provided to workers on unemployment — a temporary lifeline that the GOP-led Senate allowed to expire on July 31

Weekly unemployment benefits vary widely by state, ranging from $44 in Oklahoma to $497 in Washington. The $600 weekly supplement was an across-the-board benefit that ensured unemployed workers in any state maintained a decent income despite losing their jobs due to the pandemic.

The Economic Policy Institute found that the consumer spending generated by that extra $600 per week supported over 5 million jobs, and that continuing the supplement through the middle of next year would have raised U.S. gross domestic product (GDP) by a quarterly average of 3.7 percent.

After this benefit expired, rather than agree to Democrats’ demands to extend it, President Trump signed an executive order slashing it by 50 percent — allowing states to use federal funds to provide only a $300 weekly unemployment supplement. At least seven states have already exhausted these funds. 

Meanwhile, by losing the weekly $600 boost, unemployed workers saw their incomes drop by two-thirds, making it more difficult to pay the bills and afford groceries. There are currently 25.5 million workers receiving unemployment benefits. With at least 14 million more jobless workers than job openings, millions will be forced to rely on unemployment insurance for the foreseeable future — but now with a greatly reduced check.

Mass furloughs in the airline industry

Another one of the CARES Act’s most helpful provisions was the Payroll Support Program (PSP), which provided $32 billion in grants to the aviation industry for the sole purpose of keeping workers on payroll and providing benefits during the Covid-19 crisis. The aviation industry employs 750,000 workers, many of them unionized, and accounts for 5 percent of GDP.

The Senate allowed the PSP to expire on October 1, resulting in 40,000 airline workers immediately being furloughed without pay or health insurance. The industry’s unions are waging an aggressive campaign to extend the program. Without the federal government continuing the PSP, more furloughs are likely to come as passenger airlines suffer a loss in business due to the pandemic.

More layoffs at small businesses

The Paycheck Protection Program (PPP), another component of the CARES Act, offered up to $659 billion in forgivable loans to small businesses to keep workers on payroll. The program has been criticized for allocating millions of dollars to large corporations and companies connected to politicians, but it has also offered much-needed financial support to small businesses across the country.

The application deadline for PPP loans was on August 8. While the Trump administration claims the program saved 51 million jobs, economists have put that number at anywhere from only 2.3 million to 13.6 million.

Whatever the precise number, the PPP’s impact is quickly running out of steam. Borrowers say they expect to lay off workers within six months, while a National Restaurant Association survey indicates that a whopping 40 percent of all U.S. restaurants could go out of business in the coming months, leading to millions of more layoffs. 

No second $1,200 stimulus check

While Sen. Bernie Sanders and progressive Democrats have been calling on the federal government to provide a $2,000 monthly check to every U.S. adult for the duration of the pandemic, the CARES Act instead provided a one-time check of $1,200 — which excluded many undocumented immigrants and college-age adults. Economists report that the checks did virtually nothing to stimulate the economy, though they did help poor and unemployed workers partially cover a few weeks’ worth of basic expenses.

President Trump and congressional leaders have been saying for months that a second $1,200 check is on the way. But without another relief bill, even this meager financial assistance will not materialize.

An uncertain future

On October 1, the Democratic-controlled House of Representatives passed a scaled-down version of the HEROES Act, an economic relief package they originally passed in May that extends the limited aid from the CARES Act. 

Among other things, the $2.2‑trillion bill would continue the $600 weekly unemployment supplement to the end of January (making it retroactive to September 6), allocate another $25 billion for airline workers, allow small businesses to apply for a second PPP loan, send out a second $1,200 stimulus check, provide $50 billion in emergency rental assistance, and give an additional $10 billion to the Supplemental Nutrition Assistance Program (SNAP).

Over the weekend, the Trump administration countered with a smaller, $1.8‑trillion proposal that would include a $400-per-week unemployment supplement, $20 billion for airlines, another $330 billion for PPP loans, and a second $1,200 check, among other measures — but neither House Speaker Nancy Pelosi nor Senate Republicans appear ready to push this bill in their caucus.

While millions of U.S. workers are left in the lurch and mass layoffs continue to mount, Trump and Senate Republicans are instead focusing their attention on ensuring right-wing, anti-union judge Amy Coney Barrett is hastily confirmed to the Supreme Court in time for the election.

If this government doesn’t work for us, then we need to focus on the fact that it is our labor that gives all the value to this country,” Association of Flight Attendants president Sara Nelson — who famously called for a general strike to end Trump’s federal shutdown in January 2019said last week. This country doesn’t run without us as workers. So we have to think about that option as well.”

Jeff Schuhrke has been a Working In These Times contributor since 2013. He has a Ph.D. in History from the University of Illinois at Chicago and a Master’s in Labor Studies from UMass Amherst. Follow him on Twitter: @JeffSchuhrke

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