Corona III Programs in Need of Rx

Update 428: Corona III Programs in Need of Rx
Implementation Snafus and Consequences

Following the grim vital statistics wrought by the coronavirus are numbers revealing a secondary affliction reaching millions more. Every day brings news of another round of tens of thousands of layoffs, furloughs, shift cuts, even wage cuts.

The federal fiscal responses to the economic crisis enacted by Congress and signed last month by the president, vast and varied, have run into implementation problems with consequences for workers. On Friday, we continue with a look at prescribed fixes for Coronas I-III in a Corona IV already under discussion.

20/20 Vision hosts a Progressive Action Network call this Friday, 4/10 at 11:30am ET with Reps. Mark Pocan (WI) and Jamie Raskin (MD) on wage continuity proposals to address the economic fallout of the coronavirus. 




American workers are hurting. 3.3 million Americans filed initial unemployment claims for the week ending March 21, shattering the previous high of 692,000 in 1982. A week later, that number doubled to 6.6 million. For many, job loss means losing health insurance and other benefits when they may be most important. “Essential” workers remain employed but are at increased risk of exposure with little in the way of hazard pay or protection. 

While many rightfully focus on risks to the macroeconomy, far too few policymakers pay attention to workers on the front line. Here, we examine affected workers — those with reduced hours, furloughed, laid off, or working on the frontlines — and how the current workplace benefit system is inadequate to the moment. 

Employment Status and Return to Quo

Per Moody’s Analytics, nearly 80 million jobs in the United States are considered “at risk” due to the coronavirus — more than half of all jobs in the nation’s economy. Businesses both large and small are adapting to rapidly changing economic circumstances. Some companies are reducing work schedules and wages; others are going further and furloughing their employees. Many are undertaking mass layoffs and shutting down completely and indefinitely. 

More than 80 percent of Americans are living under shelter-in-place orders; travel is halted, dining out is largely prohibited, and non-essential retail is closed. Workers are sidelined. But not all workers are affected equally.

  • Pay Cuts and Part-time Status: Pew found that 27 percent of American adults say someone in their household has been forced to take a pay cut due to the COVID-19 pandemic. Young people and those with low levels of educational attainment endure pay cuts at higher rates than their counterparts. Last Friday, the BLS released sobering data. 5.8 million Americans now report working part-time for economic reasons — a 32 percent increase, or 1.4 million workers, just in March 2020. (The BLS survey uses March 12 as a reference point, so that number is surely higher today.) 
  • Furlough: For non-essential and shuttered businesses, furloughing workers can be the least damaging option. Furloughs are temporary layoffs, usually with a set date to reassess or re-employ workers. Companies furlough employees to cut payroll costs immediately and minimize re-hiring costs in the future. These workers usually maintain workplace benefits like healthcare. The CARES Act allows for furloughed workers to receive their state-administered unemployment insurance benefits. 
  • Layoff: Laid-off workers are not waiting out a furlough — they are let go, and ties to their employer are largely severed. A laid-off worker would have to be formally re-hired to rejoin the workforce. Those affected lose their workplace benefits.

Despite Congress’ attempts to provide relief, small businesses simply do not have healthy capital cushions or easy access to emergency funds. Most will likely resort to layoffs as opposed to furloughing their workers. This is unacceptable and preventable. The federal government could follow the examples of the United Kingdom, Germany, Spain, and Italy by providing income continuity to workers. Such a policy would relieve businesses from payroll costs, and those businesses could secure low-cost and federally-provided credit continuity to stay open and pay overhead.

  • Hazard Pay 

The COVID-19 pandemic divides our labor force into “essential” and “non-essential” groups. Essential workers — those caring for the infirmed and elderly, harvesting our food, stocking grocery shelves, and protecting our communities — keep America’s healthcare system and economy running. These employees tend to be some of the lowest-paid members of the workforce. According to the BLS, personal care workers and in-home health aides earn an average of around $25,000 per year, while the average cashier makes just over $23,000.

Healthcare workers, in particular, cannot work from home and are at great risk of contracting coronavirus themselves. In Michigan, one of the hardest-hit states, healthcare workers are testing positive or self-isolating with symptoms at nearly 12 times the rate of the general populace. Over 2,200 healthcare workers in the state’s two largest healthcare systems have either tested positive for the virus or are self-isolating. At the very least, they should receive additional compensation for the increased risk they are forced to bear.

The most highly-skilled doctors in the country are being moved into the frontlines in ICUs. Nothing in 11 years of medical school and residencies prepares a neurosurgeon for unremitting war-zone terminal triage. A brain surgeon in Detroit stated, “I am catatonic with grief after just two days in the ICU.”

Yesterday, Senate Minority Leader Chuck Schumer proposed giving all essential employees up to $25,000 in hazard pay as part of Corona IV. For many, this would amount to a raise of about $13 an hour. 

  • Benefits

Just under 50 percent of Americans receive health insurance through their employer. When workers are laid off or when their place of employment closes they lose access to their health insurance. Per the Economic Policy Institute, as many as 3.5 million Americans may have lost their employer-sponsored health insurance in the last two weeks. In normal times, losing health insurance can be the difference between life and death. During a global pandemic, this risk is only heightened.

Workers who find themselves jobless have options for staying insured, none of which are ideal. They can opt to pay for COBRA coverage or buy a subsidized ACA plan, though both are prohibitively expensive to many. Uninsured individuals who go to hospitals for medical treatment may find themselves crushed by out-of-pocket costs. The Kaiser Foundation estimates that an uninsured individual who requires hospitalization for COVID-19 will face bills totaling $20,000. For those with the most serious cases that require ventilator support, this jumps to approximately $40,000. By comparison, those with health insurance and protected by ACA out-of-pocket cost caps can expect bills ranging from $1,300 to $6,000.

Workers Afflicted if Not Infected

Unsurprisingly, the economic downturn is hitting low-income workers and small businesses the hardest. Per McKinsey and Company, 86 percent of COVID-19’s initial economic impact affected jobs paying less than $40,000 per year, and almost all (98 percent) of affected jobs paid less than the national living wage of $68,808 for a family of four. Combine this with the Federal Reserve finding that four-in-ten Americans report that they could not cover an unexpected $400 expense, and our concerns multiply. Many workers previously living on the knife’s edge of economic ruin are now either earning less and working fewer hours or are laid off and jobless. 

Workers under 40 years old have now lived through two separate and historic economic crises. Their earning potential may be irreversibly diminished. The post-COVID-19 recovery must not only be substantial but needs to focus on sustaining low-income workers and small businesses. They will be most in need when it’s time to rebuild. 

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