How the $900 Billion Stimulus Helps — And Fails — Restaurants and Workers

Following months of political impasse and multiple legislative recesses, during which restaurant hiring tapered off, long-term unemployment more than tripled, nearly 8 million Americans fell into poverty, and deaths from the pandemic surpassed 317,000, Congress appears poised to pass a COVID-19 relief bill that any rational observer would call wholly insufficient to meet the needs of furloughed hospitality workers, distressed renters, and devastated restaurateurs, all of whom pay the salaries of the elected representatives who wantonly shortchanged them.

Unemployed cooks, servers, or other low-wage workers would receive just $1,200 per month in jobless aid per month under the new aid package. That’s just half the amount they were entitled to under the $2.2 trillion CARES Act, the groundbreaking bill that kept the economy afloat last spring. In fact, an individual taxpayer could receive nearly $7,000 less in aid under the new stimulus.

What’s equally aggravating is that the battered hospitality industry, which has shed millions of jobs over the past year, doesn’t receive any type of substantial targeted aid in the new stimulus. Yet the airline industry, which has lost less than 200,000 workers — still a tragedy by any measure — will get $16 billion in assistance. Live venues like movie theaters and concert venues will also get about $15 billion in grant money.

So why did Congress seem to forget about restaurants and their struggling workers? Democrats, to be fair, spent the better portion of this past year making the case for more generous assistance, including a revenue replacement program for the hospitality industry called the RESTAURANTS act. But Republican opposition to the multi-trillion dollar price tag of relief forced a slimmer compromise bill. As a result, the U.S. has resorted to cutting back on help precisely when life has become harder for so many Americans.

Here’s an overview of the bill: The $900 billion stimulus ensures that taxpayers will be able to continue collecting unemployment assistance through the early spring, averting a deadline that would have ended these programs for up to 12 million people the day after Christmas. It’s highly likely, however, that many folks will still go without aid for weeks as states work to implement the new policy. The federal government will also offer supplemental jobless aid at $300 per week for 11 weeks. That sounds nice until you realize it’s only half of the old benefit of $600 per week, which lasted four months. Stimulus checks to help the working poor or middle class have been cut in half as well, to $600.

Hard-hit tenants will be able to qualify for $25 billion worth of rental assistance, though it’s unclear how that aid will be disbursed, and an increase in funding for SNAP benefits should help poor families buy food, but only by a small margin. Businesses will receive tax credits for paid COVID-19 leave, but it appears a law requiring companies to give that time off in the first place will expire — a troubling development as the daily death count now exceeds 2,600.

There also appears to be little in the bill that would significantly help the undocumented workers who make up a vital part of the country’s restaurants and food supply chain. And there will be no hazard pay for grocery store employees or other frontline workers.

The Paycheck Protection Program, a framework that initially pitted struggling restaurants against fast food giants for scraps of aid, will start offering more preferential loan terms to the hospitality industry. That’s good news, but the very nature of the program, particularly its emphasis on payrolls, remains deeply flawed. It’s worth noting that the $120 billion RESTAURANTS plan, which is more tuned to the needs of the hospitality industry, could be reconsidered when President-elect Joe Biden introduces his own stimulus plan next year, but that time frame, alas, won’t work for the thousands of establishments that could close between now and then.

Ironically, well-heeled folks who regularly eat at restaurants appear to have received more accessible targeted help than the actual restaurants, albeit on a smaller scale. Negotiators managed to insert a three-martini lunch provision of sorts, allowing corporate America to deduct 100 percent of their business meals, representing a backward, Reaganomics-era, trickle-down vision of aid.

What follows is a more comprehensive look at the new stimulus, a Scrooge McDuck bill that demonstrates such a callous underestimation of what Americans need to survive that it achieves a rare paradox: it is a bipartisan effort whose ethos is unabashedly Trumpian in its cruel, counterfactual stinginess.

Will Americans receive stimulus checks?

The bill will authorize direct payments of $600 to taxpayers earning under $75,000, or $1,200 for couples earning up to $150,000, according to Politico. That’s precisely half the size of the previous checks. Additional payments for children have risen from $500 to $600, but a family of two with two children would now only receive $2,400, down from $3,400 last spring. The stimulus also made it easier for immigrant families to receive checks, per the Washington Post.

A spring Census Bureau survey suggested that those stimulus checks were absolutely crucial to the livelihoods of low-wage Americans. A recent University of Chicago-Notre Dame study showed a decline in poverty earlier this year was largely due to the $1,200 stimulus checks and an expansion of jobless benefits, which beneficiaries largely used on vital purchases like food or rent. After many of these benefits started to expire in late July, 7.8 million Americans — a disproportionate percent of them Black people — joined the ranks of the poor, per that same university report.

So it’s unlikely these halved stimulus checks will suffice for Americans who are months behind on their rent or credit card payments. That’s a particularly particularly pressing issue many hospitality industry staffers and the the larger group of 6.7 million Americans who now work part time because their hours have been cut or because they can’t find full-time jobs — an increase of 2.3 million since before the pandemic.

Will folks who are about to run out of unemployment benefits get an extension on aid?

Yes. Nearly 4 million Americans have remained unemployed for over six months, but state unemployment benefits, which pay out a percentage of a worker’s previous wages, typically run out after 26 weeks. Last spring, Congress passed Pandemic Emergency Unemployment Compensation (PEUC) to extended the length of those state programs, but the policy was set to expire the day after Christmas, as was another program called Pandemic Unemployment Assistance (PUA), which offers aid to delivery workers, freelancers, and other so-called gig workers who aren’t traditionally eligible for jobless assistance.

The current bill renews both of those aid programs for 11 weeks, but getting states to update their aid systems could result in weeks of missed checks, according to labor advocates interviewed by Politico. That means a large number of Americans could go without any source of income whatsoever for the better part of January.

Regardless of the federal stimulus, many workers in New York should continue to receive uninterrupted unemployment anyway thanks to a separate Extended Benefits program linked to high jobless rates.

Will there be any extra jobless aid, like those weekly $600 checks from the spring?

Yes, but this unemployment bonus of sorts isn’t as generous this time around. An extension of Federal Pandemic Unemployment Compensation, whose $600 payments ended in late July, will now offer most out-of-work restaurant staffers $300 per week — half the old amount. The benefit will last for eleven weeks, five fewer weeks than with the CARES Act. So a former cook who earned $9,600 in supplemental jobless payments last spring would take in $3,300 over the new benefits period. That won’t even come close to bringing scores of Americans, especially those with children, from the brink of financial disaster.

That same cook who earned $35,030 a year — the city average — would collect $336 per week on regular state unemployment. That would then rise to $636 with the supplemental bonus, working out to $15.90 per hour. Those hourly figures are important because even though they’re higher than the local minimum wage of $15, they still fall short of the local living wage of $17.99 for Manhattan, which is what a childless single person needs to be able to afford food, medical costs, housing, and transportation.

A single parent would need even more to get by, precisely, $32.91 per hour, according to MIT. The old $600 enhanced benefit, which Democrats wanted to extend, would have brought local residents with children much closer to that number — and indeed well above what they’d have earned on the job, a fact that should focus more of society’s attention on the larger problem of low wages in food service jobs. For now, austerity will still be a reality for throngs of jobless Americans in New York and across the country.

What type of rental assistance and eviction protections will taxpayers have access to?

The new stimulus extends the Centers for Disease Control moratorium on evictions, which was set to expire at the end of December, until the January 31. That’s not much of a reprieve, and it doesn’t give much time to President-elect Biden to introduce his own plan after he takes office later next month.

Negotiators agreed to provide $25 billion worth of assistance to distressed renters, to be distributed via the states, prioritizing unemployed and low-income renters, but that aid still likely won’t suffice for many. If one assumes at least 17.3 million applicants — given the country’s 10.7 million unemployed workers and 6.6 million folks who are employed part-time for economic reasons — that would only work out to $1,445 per person. That’s barely a month’s worth of rent in many areas of New York City.

What happens to mandatory paid sick leave, which is supposed to expire?

This one’s a bit tricky. The Families First Coronavirus Response Act required employers to pay up to two-weeks of time off for COVID-19 illness or exposure, but that benefit is set to lapse at the end of December. The expiring benefit applied to small businesses with fewer than 500 employees and was essential in giving paid time off to restaurant industry employees and other frontline workers whose jobs don’t typically compensate workers when they’re out sicks. A study by Health Affairs found that the federal paid sick-leave policy reduced the number of new cases by roughly 400 per day, per state.

Not all is lost, however. Even though it appears that employers won’t be legally obligated to offer paid sick leave anymore, the new stimulus bill helps out businesses that want to keep paying their employees to stay home while sick. This voluntary sick leave extension would be funded by an employer tax credit and would expire on March 31st — which is still a heck of a tight deadline given that most Americans won’t be vaccinated by then.

Keep in mind that most New York City or New York State residents, including undocumented workers, are still eligible for mandatory paid sick leave thanks to strong local regulations. That paid local leave policy is for anywhere from five to 14 days, depending on the size of the employer, annual revenues, and whether a worker is out for COVID-19.

What are the details of the new Paycheck Protection Program?

During the first round of Paycheck Protection funding last spring, big businesses with ample cash reserves often crowded out beleaguered restaurants and other smaller institutions. By the time the program ended in August, about 34 percent of loans went to venues borrowing between $1 million and $10 million. The new $284 billion PPP is designed to prevent that situation from repeating itself.

To apply for this new “second draw” round of paycheck loans, businesses will now have to show they have fewer than 300 employees (down from 500) and that revenues have declined 25 percent over the previous year. Loans will again be capped at 2.5 times monthly payroll costs — or 3.5 times payroll for bars and restaurants — but with a new limit of $2 million. And to avoid a scenario where local Taco Bell and McDonald’s franchises snap up all the money, publicly traded companies won’t be eligible, according to Republicans on the House Small Business Committee, CNBC reports.

To qualify for full forgiveness, meaning that the loan effectively becomes a grant, restaurants and other businesses will have to meet strict qualifications, showing that they used at least 60 percent of the proceeds on payroll, and while maintaining their staffing levels. The rest of the funds can be used on rent, utilities, protective equipment, or building outdoor dining spaces, or interest on mortgage payments.

Will restaurants actually be able to benefit from these loans?

It depends. By the time the paycheck program expired in August, over $133 million was still available to borrow, while the lodging and food-service industries, which took disproportionate hits to their businesses during the pandemic, only claimed about 8 percent of the funding. That reality drives home a larger truth, which is that the very nature of the program is poorly suited for restaurant relief, and that if you don’t use this program correctly, what would’ve been a grant becomes an expensive loan, with interest. That’s the last thing a small, cash-strapped restaurant needs to deal with.

There’s also something distinctly contradictory about a loan program that aims to get folks back on the job — not really a priority for restaurants operating on takeout and delivery only — while unemployment aid and local shutdown mandates are supposed to let restaurant staffers safely shelter at home without going broke.

The good news is that if you can’t hire back folks because they don’t want to work, or if you can prove that you had to reduce staffing because of COVID-19 closures, your loans will still convert into grants, per the original program rules. So if you play your cards right, this program should help your business stay afloat for an extra month or two, something that has benefited many small New York bars and restaurants. Then again, you’ll still need to find a way to spend 60 percent of any funds on your (now smaller) staff.

What about the RESTAURANTS Act?

It is not a part of this bill. The $120 billion plan, which was incorporated into the HEROES Act — a bill that the Democrat-majority House of Representatives passed but that the Senate effectively ignored — would have constituted a viable means to saving thousands of restaurants. The program would have allocated grants to restaurants not based on payrolls, like the PPP, but based on the difference between their 2019 and 2020 revenues.

Will individuals be able to access more funds for food aid soon?

Theoretically. Democrats were able to secure $13 billion for food aid, including for Meals on Wheels, for school food programs, and for a 15 percent increase in SNAP benefits, according to Vox. Single-member households are currently limited to just a paltry $204 in monthly SNAP aid, while couples can receive up to $374, depending on their income. The Hill specifies that the new stimulus bill doesn’t actually expand eligibility for the program.

Will workers be able to sue if they get COVID-19 on the job?

For now, most likely yes, but that could change. Lawsuit liability shields could largely prevent people from suing their employers for COVID-19 exposure, injury, or death, with likely exceptions to be made for gross negligence or willful misconduct. If President-elect Biden introduces a stimulus plan of his own, it’s expected that Senator Majority Leader Mitch McConnell would seek to institute these so-called protections for business.

Liability protections could be a big issue in the larger food world. Over 43,750 meatpacking and food processing workers in 530 facilities have tested positive for coronavirus, and at least 184 have died after infection, Civil Eats and Eater reported in August. A wrongful death lawsuit against Tyson alleges that a plant in Waterloo, Iowa, ignored safety concerns, forced sick employees to continue working, and established a betting pool on how many workers would fall ill.

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