Nam Y. Huh/AP Photo
Chicago resident Nelis Rodriguez, who has worked at the same restaurant for 21 years, recently applied for unemployment benefits.
This article is part of our Prospect Debate, “Two Options for Crisis Response for Workers.”
Another 2.1 million workers filed for unemployment last week. That brings the total for job losses over the past 70 days to more than 40 million, as the unemployment rate continues to rise rather than stabilize. Not since the Great Depression has the United States seen such high levels of unemployment. Nearly a quarter of our entire workforce is unemployed.
A public-health crisis has sparked an economic crisis, and it is incumbent on Congress to respond in a manner that matches the scale of that crisis. The relief bills that have passed and been signed into law have not yet stanched mass unemployment—in fact, unfortunately, they weren’t designed to.
We can fix that now by quickly moving to a policy solution that many other countries have successfully put in place since the pandemic hit, one that takes workers off of our strained unemployment system and puts them back on payroll as they wait to be able to safely return to work.
The Paycheck Recovery Act, H.R. 6918, is that path forward. And it’s a path forward that has broad, bipartisan, bicameral support in Congress, with 99 co-sponsors in the House including one dozen frontline members who were elected in swing districts. My colleagues agree that this is a proposal that will save jobs, save businesses, and help the economy recover while we weather this public-health crisis. It is a proven policy solution that is already highly effective in other parts of the world, from Germany and Denmark to Singapore and South Korea. It’s also supported by major labor groups across America, small- and big-business owners, Nobel Prize–winning economists, a former Federal Reserve chair, and the public.
The Paycheck Recovery Act is pro-worker and pro-business, valuing work and the productive relationship between workers and employers.
This legislation is pro-worker and pro-business, valuing work and the productive relationship between workers and employers. It keeps people connected to their paychecks through direct grants to businesses that cover the full wages of those earning up to $90,000 as well as a percentage of operating costs for the businesses. Importantly, it seeks to immediately reduce the unemployment rolls by allowing employers to rehire workers who were laid off or furloughed as early as March 1.
The Paycheck Recovery Act scraps the Paycheck Protection Program’s (PPP) Hunger Games–style system of allowing banks to pick winners and losers—a system that has left far too many small and minority-owned businesses behind. Instead, this plan gets relief to all businesses of all sizes, including small businesses, nonprofits, and state and local governments.
The Paycheck Recovery Act is not just an economic recovery plan, it’s a public-health plan too. At a time when at least 27 million people have lost their health care simply because they lost their job during a pandemic while working in a country that still fails to guarantee universal health care, this legislation also covers the costs of returning workers to their insurance and other employer-sponsored benefits. Additionally, in order to beat the virus, we must keep people home. To keep people home, we must make sure they get their paycheck and don’t feel pressured to return to work before it’s safe. This bill gives employers that flexibility until testing, contact tracing, and isolation protocols are in place.
While this plan is effective in ending mass unemployment, it’s also cost-effective. Mark Zandi, chief economist at Moody’s Analytics, finds that after accounting for cost savings gained by not putting workers on unemployment insurance or Medicaid, the Paycheck Recovery Act will cover more than 36 million workers while costing less than what we’ve spent on two rounds of PPP loans, which have not been able to stem the tide of job losses.
Some have suggested that we simply expand the existing unemployment system. During negotiations around the CARES Act, I was proud to fight alongside other House Democrats to secure the largest expansion of the unemployment system in decades—an additional $600 of jobless benefits per week. We must continue the expansion of the unemployment insurance system, but target it only to the most vulnerable, while also passing the Paycheck Recovery Act. I see three important reasons for this.
First, we must protect jobs and stabilize the economy by keeping worker-employer relationships. Americans are proud to work. They want to keep their jobs and have the certainty of keeping their paychecks, seniority, and benefits they’ve earned. They don’t want to navigate multiple different safety-net systems to get relief either. Moreover, the uncertainty of finding a job is even greater among workers of color, who face enormous discrimination in the workplace. They are often the first fired, last hired, and most likely to face long-term unemployment consequences. Business owners are looking for a different path too. After building their shops from the ground up and training workers, they don’t want to fire their team, put employees on unemployment, and then have to rehire a whole new workforce.
At a time when 27 million people have lost their health care, this legislation covers the costs of returning workers to their insurance and other employer-sponsored benefits.
Second, we must relieve the tremendous pressures we are seeing on unemployment systems that weren’t built to handle this unprecedented devastation. The real unemployment rate will continue rising—from 25 percent to 35 percent and higher if we don’t act. In fact, new data from the Bureau of Labor Statistics shows just how bad it has gotten in many states. Nevada now has an unemployment rate of 28 percent, Michigan is now at 23 percent, and the unemployment rate in 43 states is now at its highest level in over four decades. Additionally, many people haven’t even received the relief they’ve filed for so far. Too many are being pushed onto safety-net systems like Medicaid and food stamps, and too many are falling through the cracks.
Finally, simply expanding unemployment doesn’t ensure that employers, especially small and minority-owned businesses as well as nonprofits, can stay afloat until it’s safe to reopen. Put another way, it doesn’t save jobs, it doesn’t protect businesses, and it doesn’t give employees the certainty that they’ll have an employer to return to after the crisis. That means we’ll not only fail to end mass unemployment today but tomorrow too. Our economy will take much longer to recover and we will suffer the costs because of it.
The Paycheck Recovery Act offers a better path forward. It honors our workforce and our employers. It keeps workers in their jobs, preserves their health care and benefits, and reserves the unemployment system for those who need it the most. It also gives businesses a fighting chance to survive the crisis.
Ultimately, mass unemployment is a bad policy choice. It’s also a preventable one. I’m proud that bipartisan momentum continues to build behind a proposal that stops mass unemployment, protects jobs, and provides economic stability for workers and businesses. It’s not too late, but we must act now for the good of our people, our health, and our economy.
