Biden’s $1.9 Trillion Stimulus Explained for Restaurants, Workers, Families

As the COVID-19 pandemic drags on into its second year — and as cases plateau in New York, Texas, New Jersey, and elsewhere — millions of hospitality workers remain jobless, over 110,000 food service establishments have reportedly closed, and millions of people, particularly Black folks, have been pushed past the brink of poverty. President Joe Biden, accordingly, is about to sign into the third U.S. stimulus package in a year’s time — this one coming in at $1.9 trillion — to help some of the people and institutions hit hardest by the virus.

The American Rescue Plan, as it’s known, is the first package of its kind to truly target restaurants, helping food service establishments around the country avoid closure through billions in aid. The plan could also help extricate over 16 million people from impoverishment, according to the Urban Institute, offering them thousands more in aid dollars than previous stimulus bills.

Let’s start with the good news. A key part of the bill, modeled after the so-called RESTAURANTS proposal, allocates $28.6 billion in grants to assist restaurants, food trucks, bars, and street vendors in paying their back rent, mortgages, and pretty much anything else. For cash-strapped workers and their families, stimulus payments will go out to the tune of $1,400 per person, including children. The bill also temporarily boosts the child tax credit to up to $3,600, which will be paid out in advance installments — as opposed to yearly — as a universal basic income of sorts. Congress also authorized over $22 billion more in housing assistance, and anyone who’s been laid off during the pandemic will now find that they shouldn’t have to pay anything extra to keep their employer-sponsored health insurance. And gig workers like food delivery couriers — who don’t normally qualify for state unemployment aid — will see their benefits extended through the summer’s end.

The tougher news is that the bill, which received no Republican votes, was a compromise effort among a slim Democratic majority in the Senate. That means a few more progressively minded initiatives fell by the wayside. Enhanced jobless aid will remain at $300 per week, instead of shooting up to $400, due to opposition from Sen. Joe Manchin. As a result, many out-of-work restaurant staffers in New York will continue to collect little more than the minimum wage, even after adding federal aid onto state unemployment aid.

Hospitality staffers around the country, incidentally, won’t get raises when they return to the workforce because the effort to hike the minimum wage to $15 sputtered. The rescue plan also doesn’t do much to help undocumented workers, who make up such a huge part of the hospitality industry.

Finally, many of the act’s boldest provisions, like the advance payments on child tax credits, expire this year. And even though the pandemic is still killing thousands every day, Congress didn’t move to reauthorize mandatory paid sick leave, which lapsed late last year. The benefit, which Biden sought to expand, required employers to pay for up to two full weeks of COVID-19 related leave. In the past, the U.S. government has shown itself to be quite capable of swiftly enacting longer-lasting and expensive policy changes, so it’s frustrating that it’s so tough to establish simple economic and health protections against a deadly virus in a way that doesn’t require a bitter new debate every few months.

That aside, here’s everything you need to know about the American Rescue Plan, which Biden will sign into law mere days before benefits from the last stimulus bill expire.

What do we need to know about the restaurant relief?

The bill will allocate nearly $30 billion in funds to devastated food service establishments, including bars, food trucks, and food vendors. Unlike the Paycheck Protection Program, which saddled restaurants with burdensome loans if the bulk of the funds weren’t spent on payroll, these restaurant relief dollars are grants, plain and simple. Grant sizes will generally be determined by subtracting lower 2020 pandemic-era receipts from higher 2020 gross receipts. A few quick points:

  • Over $5 billion will be set aside for smaller venues whose annual gross receipts were below $500,000, leaving $23.6 billion for everyone else.
  • Grants will be capped at $10 million for restaurant groups and $5 million for individual venues.
  • Publicly traded companies or restaurants with more than 20 locations won’t be eligible.
  • For the first 21 days, exclusive eligibility will be for establishments owned by women, veterans, or economically and socially disadvantaged groups.
  • If a restaurant has received a PPP loan on or after December 27, 2020, that amount will be subtracted from the potential grant amount.
  • Funds must be used by the end of the year.

Whether this aid will actually be fairly distributed, even with the 21-day period for disadvantaged owners, is a more complicated question. The bill states that the administrator — the Small Business Administration — will award grants equitably, but on a first come, first served basis, something that could give larger restaurant groups a natural leg up in the process. The program also doesn’t appear to allocate specific funds for hard-hit regions like New York or other major cities. One also wonders whether whether the $25 billion in funding — down from the initial ask of $120 billion — will be sufficient for every restaurant that wants aid. It won’t be.

If we assume every low-revenue restaurant applying needs $250,000, the $5 billion set aside for that group should take care of at least 20,000 restaurants, which isn’t too shabby. By contrast, it would take less than 5,000 restaurants requesting $5 million to hit the limit on the remaining $2 billion. For context, there were nearly 700,000 restaurants throughout the country in the years before the pandemic.

Or here’s another point of reference: If you look at the difference between April 2019 and April 2020 revenues across the industry — including for venues that are excluded from the program — you get a $33 billion gap. That’s for a single month, even though the restaurant relief provisions, with $28 billion in funds, are designed to help food service establishments bounce back from an entire year.

Speed will be of the essence when awarding grants, as restaurants across the country have been operating under the strain of limited capacity for about a year now. A New York Hospitality Alliance Survey showed that 92 percent of surveyed restaurants could not pay their full rent in December. At least 1,000 restaurants have closed in New York and over 110,000 have shuttered nationwide, according to the National Restaurant Association. The bill does not announce a start date for restaurant relief.

How big are the stimulus checks?

It depends. Americans earning less than $75,000 should get a check for $1,400, and joint filers should receive a $2,800 check. Under previous stimulus packages, however, individual taxpayers who earned up to $99,000 would still receive a partial benefit; under the current aid bill, those smaller benefits phase out much more quickly. If you earn above $80,000, or if your joint tax return is above $160,000, you’ll no longer qualify. Still, at these salary limits, most hospitality workers should receive a check when they go out sometime later this month.

Taxpayers with children should receive $1,400 per dependent, up from $600 under the previous stimulus. That means a couple jointly earning $125,000 with three children should receive about $7,000.

How much will folks receive under the new child care tax credit?

Parents will receive a credit of up to $3,000 per child in 2021, or up to $3,600 for a child under 6. That’s up from the current level of $2,000. Those amounts would apply to families jointly earning under $150,000, or heads of households earning under $112,500. The credit is now fully refundable, meaning that filers should receive the full benefit even if they have no tax liability. A single mother with two children, one under 6, should receive $6,600 under this program, or $2,200 more than previously.

The bill would also send out the tax benefit in the form of monthly checks — from late July until the end of December — versus via a once-a-year tax reduction. Those checks would equal half the benefit, with the rest coming during the following year’s tax season. That could mean up to $300 per month per child. This particular benefit should noticeably improve the financial situation of hospitality workers who are parents — folks who’ve seen their income plummet — as it effectively sets up a form of universal basic income. For the working poor whose savings have been tapped by the cruelty of the pandemic, a regular benefit starting this summer is entirely more useful than seeing a reduction in taxes a year from now. The enhanced tax credit and payment system expire at the year’s end, but Democrats are sure to argue for an extension.

What type of supplemental checks will jobless folks receive?

Jobless workers will continue to collect the $300 weekly enhanced Federal Pandemic Unemployment Compensation (FPUC) checks that they’ve been receiving since the beginning of the year. That benefit, which was set to expire March 14, will now continue through the first week of September. Biden initially proposed $400 and extending the checks until the end of September, but Sen. Manchin fought back that effort, arguing that the more generous benefit would have discouraged folks from going back to work (a claim that studies have disputed). As part of the resulting compromise, workers won’t owe taxes on the first $10,200 of unemployment benefits from last year. A tax expert told CNET that such a tweak would not have a meaningful impact on the poorest workers; folks with a higher income could benefit, however.

So a New York City waiter earning the city median of $31,780 a year would qualify for roughly $305 per week on regular state unemployment, which would then go up to $605 thanks to the supplemental checks. That’s the equivalent of $15.13 an hour, barely above the minimum wage. That’s still well below living wage in Manhattan, which is $21.77 for single folks without children. If the $400 limit had been adopted, and had it been allowed to run through the end of September, that could’ve meant an extra $3,700 or so per jobless worker over the course of the benefits period (notwithstanding the potential tax benefit).

Will gig workers like food delivery drivers get an unemployment extension?

Yes. The Pandemic Unemployment Assistance program, which provides assistance to freelancers, food delivery workers, ride-hailing service drivers, and others who don’t always qualify for normal state unemployment assistance, will be extended until the end of August. In New York, however, undocumented residents make up the bulk of the delivery workforce; they are ineligible for these benefits.

Is there any mandatory sick leave like in the first relief package?

No. Mandatory paid COVID-19 sick leave lapsed at the end of the year during the peak of the winter surge. That left millions of hospitality workers vulnerable to loss of income if they fell ill with the virus. Biden’s initial proposal would have reinstated that policy and expanded upon it, boosting required paid leave from two weeks to 14 weeks, offering up to $1,400 per week.

The American Rescue Plan won’t require any mandatory paid leave; it will instead extend and expand optional tax employer credits that will reimburse businesses that choose to give leave. Those tax credits will expire in September. To be clear, residents of New York City already have strong protections in this regard, and should be able to take off and earn their full pay when out sick, regardless of immigration status. But in other areas of the country, as the pandemic rages on, sick leave has transitioned from being an affirmative right for vulnerable and underpaid employees to an optional administrative burden for employers.

What type of health insurance protections will laid-off cooks, waiters, and other workers benefit from?

This is a key area in which the Senate substantially added onto the protections of the House bill. Employers will soon have to pay the full cost of an ex-employee’s COBRA premium through the end of September. Under the House bill, an employer’s obligation was for 85 percent of the premium. This measure should go a long way toward protecting the health of unemployed hospitality workers, as the average monthly premium for family COBRA plans is over $1,700, according to the Kaiser Family Health Foundation.

The bill would also temporarily increase subsidies for the Affordable Care Act and cap the amount that policyholders would have to pay, limiting that amount of 8.5 percent of one’s income, down from 10 percent.

What type of housing assistance does the bill include?

As unemployed restaurant workers struggle to pay rent and stay in their homes, another tranche of rental assistance and other programs will come in handy — when those funds are actually delivered. The American Rescue Plan provides roughly $22 billion to the states for assisting tenants with rental costs, arrears, and home energy costs. Another $5 billion will go toward emergency rental vouchers, while another $5 billion goes toward homeless prevention.

The billions in housing aid are in addition to the $25 billion in housing aid under the last stimulus, the bulk of which hasn’t been allocated to residents in New York and elsewhere. Those funds are currently held up in the Empire State budget process, the Wall Street Journal reported earlier in March. Put more succinctly: It’s anyone’s best guess when struggling New York residents behind on their rent and possibly facing eviction will be able to see any of these funds.

What type of food aid is there in the relief bill?

Supplemental Nutrition Assistance Program benefits rose by 15 percent in the December stimulus package, up to $234 per month. That aid will now last a few more months, through the end of September, instead of expiring at the end of June. States will also be able to continue with the Pandemic-EBT, which provides free or reduced lunches to the families of children whose schools are closed.

What happened to the $15 minimum wage and the proposed elimination of the tipped minimum wage?

It’s complicated, but the short version is that those proposals, found in an earlier House version of the bill, failed to pass a crucial parliamentary test necessary for passing the larger package with a simple majority. So even though restaurant workers have seen their tips decline as they enforce public health protocols like mask wearing, even though the Centers for Disease Control and Prevention recently found that areas opening for on-premises dining exhibited higher infection and death rates 11 weeks later, even though states like Texas and Mississippi are fully ending mask mandates and increasing dining to 100 percent capacity, those workers won’t get a mandatory government raise, temporary or permanent, as they start working more shifts and exposing themselves to more harm.

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