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

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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 2019—said last week. “This coun­try doesn’t run with­out us as work­ers. So we have to think about that option as well.”

This blog originally appeared at In These Times on October 19, 2020. Reprinted with permission.

About the Author: 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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