By Adam E. Block, PhD
On December 7, the New York Times reported the story of Meliza Mercedes, who spent years scrimping and saving to get a place of her own for herself and her three year old daughter. In March she lost her job at Macy’s and lives with her mother. Years of savings are now gone.
This story is embodied New York City, but not unique to it. It is the story of 2020, the story of the working poor in America, Democrat and Republican during a once in a century crisis. From the single mother in a one bedroom Chicago apartment who must oversee remote school for her kindergartner and 2nd grader simultaneously by day and go to her job as a home health aide at night, leaving no time for sleep to the married couple working together in a pork plant in Missouri where COVID-19 spread like wildfire, with limited PPE, and virtually no regulation to ensure safe working conditions. Neither family can afford to have a parent quarantine for two weeks because that would mean not putting food on the table, falling behind on rent, or being unable to pay for gas or for bus fare.
Democrats and Republicans agree that providing assistance in a crisis is exactly what government is designed to do. One-time Republican party leader Senator Mitt Romney, said, “COVID-19 has created a crisis, and in a crisis, people expect Congress to act… I don’t like spending money we don’t have, but the time to borrow money—maybe the only time to borrow money—is when there is a crisis, and this is a crisis.” So, there is clear bipartisan agreement for action. Today. The only question is exactly what Congress should do. Fortunately, just as physicians have learned over the course of 2020 how to improve treating COVID-19 and preventing its spread, we have learned what helps working Americans and what does not from the stimulus in the Cares Act.
Here are three key things we have learned:
1) Giving people $1,200 dollars kept food on many tables and the heat on until the winter frost thawed. We need more direct checks. More money would help struggling Americans for longer, especially in winter when expenses are higher as colder weather keeps our activities indoors. The stimulus helps those with the lowest wages the most because they have the least in savings and have fewer local safety net options, but also because they know how to make stimulus money go the furthest. School districts across the country have had to shutter as we’re seeing spikes in cases – right in the middle of the holidays – meaning that many children kept from a warm, safe place that provides a hot meal. The essential families and workers across our country need direct stimulus checks now.
2) The enhanced unemployment benefits were a vital safety net and should be renewed. While unemployment has declined since its peak last spring, it was 17.5 percent in the Bronx in October, devastating for those in the service industries and will be worsening as the weather limits outdoor dining and other activities that shifted venue. Because of coronavirus, businesses were forced by local government to close, resulting in millions of workers in primarily service industries being laid off. Many of these unemployed workers had been employed for ten or twenty years at the same place. These people want to work and are trying desperately to find new jobs. Unemployment insurance supplement has allowed many of the households dependent on these incomes to continue to pay their bills through the crisis and not spiral into severe debt and food or housing instability. I also believe we need to do more to keep families and individuals in their homes. Just like how unemployment insurance keeps families afloat in times of crisis, we need a greater housing safety net, like a federal emergency rental assistance program, to support families on the brink of forced eviction and homelessness.
3) The original Payroll Protection Program (PPP) failed to prioritize the workers and businesses hit hardest by the pandemic. Small business loans to support businesses through a temporary crisis by providing funding to permit them to meet expenses including salary, rent, and utilities at a time of limited revenue was a good idea. However, the implementation of these programs did not achieve the intended results. This is because they systemically funded businesses owned by wealthy Americans whose companies had the legal, accounting, and banking support to get funding, and many of these businesses were not experiencing any COVID-19 related hardships. Banks distributing the new grants and loans gave first priority to the largest small businesses with best infrastructure for getting this funding, even though these were exactly the institutions that should have had lowest priority The New York Times recently reported that billionaire Ted Turner’s steakhouse and world famous attorney David Boies’ law firm, a firm that bills $1,000 per hour, received $10 million in funding. The American Law found that seven firms out of the top 200 also received $10 million. NFL quarterback Tom Brady’s company received $1 million. Meanwhile, true small businesses like independently-owned restaurants, retailers, and services like barbers, manicurists, and dry cleaners in the Bronx and throughout the country watched in horror as their businesses dried up overnight due to a deadly, invisible virus. And these businesses were too small and too disconnected from Washington, DC, to access the funds that were really meant for them.
Eight months after the first loans were distributed, we know how to fix these issues in the program. Just as our frontline healthcare workers in the Bronx, New York City, and all over the country are constantly learning to improve care for COVID-19 patients, Congress has the same responsibility to improve its performance based on data. The Heroes Act, passed by the House in October, makes needed adjustments to the PPP program; it focuses on the smallest businesses requesting loans of less than $250,000 as well as companies hit hardest by COVID-19 experiencing revenue losses of 25 percent or more. In addition, it earmarks funds for minority owned small businesses, which have received a disproportionately small proportion of the PPP funding to date.
All members of Congress have the same broad mission: use government to support the American people in a once-in-a-century crisis to ensure American families have a warm, safe place to sleep, access to quality education, and enough to eat. The recent bipartisan proposal does some of this. The Heroes Act’s passed by the House in October does all of this. Congress does not need to wait for new members in January or for President Elect Biden to help Americans. Congress must act now.
Adam E. Block, PhD is currently an Assistant Professor of Public Health in the Division of Health Policy and Management at the School of Health Sciences and Practice at New York Medical College. He is a health economist with deep experience in the hospital, health plan and government sectors. He has research interests in how individuals make decisions in health care markets and his research activities focus on patient selection of hospitals, patient selection of insurance plans and diffusion of innovation in the market, as well as evaluations of medical technology.
Prior to joining New York Medical College in 2017, he worked developing contracting models for value based purchasing for a major hospital system and has worked extensively performing financial analysis and evaluation of medical management programs for a large Medicaid managed care plan. Dr. Block spent several years developing the legislation on the Affordable Care Act as an Economist at the Congressional Joint Committee on Taxation and subsequently wrote regulations and regulatory impact analyses for key parts of the Affordable Care Act.