Stimulus plan set to pass as mass layoffs hit the economy
WASHINGTON – Even in the darkest hours of 2008, when the nation teetered on the edge of a second Great Depression, Congress never passed anything close to the economic stimulus plan scheduled for final approval Friday.
The Senate’s roughly $2-trillion response to the devastating economic effects of the coronavirus stands out not only for its record amount – almost 10% of U.S. gross domestic product – but in giving employers unprecedented – and untested – financial incentives to keep people on their payrolls.
In addition to providing direct help to those who are losing their jobs and livelihoods because of the global pandemic, the bill includes novel ideas designed to encourage employers to avoid layoffs, including offering loans that could turn into grants if companies maintain enough workers, payroll mandates for large companies and expanded government help for state unemployment insurance programs.
“We’ve never in all the stimulus since World War II had direct payments to employers to retain people on their payrolls,” said Michael Bernick, former director of California’s Employment Development Department and now an employment attorney at Duane Morris in San Francisco. “This is the most aggressive employee retention effort we’ve seen – well beyond the previous efforts from the Carter administration in the 1970s through the more recent Great Recession.”
The Senate package will doubtless ease some of the immediate economic pain, but it remains to be seen whether it will be enough to send millions of suddenly unemployed workers back to their jobs and prevent massive more layoffs in the days ahead.
And there is already discussions among lawmakers for the need for another relief and stimulus package, given the sheer magnitude of economic effect and the uncertainty over how long the health crisis will last. Experts say the Senate plan is meant to cushion the blow and tide things over for a few months at most.
Since the shutdown of large sectors of the American economy earlier this month, countless restaurants, hotels, entertainment venues and manufacturers already have laid off millions of workers or ratcheted back their employees’ hours.
The Labor Department said
Thursday that in just the sevenday period ending March 21, about 3.3 million people filed for first-time unemployment claims.
That seasonally adjusted number was five times greater than any single week since recordkeeping began in 1967 – and it points to what many expect will be a dramatic increase in the jobless rate, possibly even into double digits later this spring.
In California, more than a million people have applied for unemployment benefits this month, Gov. Gavin Newsom said Wednesday.
It’s clear that Washington policymakers believe they won’t be able to prevent a lot of COVID19-related layoffs and large-scale unemployment, which for some workers will be permanent.
With that in mind, the Senate relief package includes a vast expansion of unemployment benefits to the tune of $260 billion. Currently, the amount of jobless benefits varies from state to state, but they typically don’t replace more than half or so of an employee’s wages, and then only for up to 26 weeks. In California, the maximum weekly payment is $450.
The stimulus package would add $600 a week to that cap through the end of the year and would extend the maximum length of benefits by 13 weeks.
Significantly, the Senate’s expansion of the unemployment insurance program would enable states to offer jobless compensation to workers who are not laid off, but have their hours – and thus their incomes – cut back. In some states, such workers are not currently eligible to claim unemployment.