In the last two weeks, as coronavirus has spread throughout the country, nearly 10 million Americans have filed new claims for unemployment benefits. The headline number is unprecedented in American history—the previous high-water mark for weekly claims was 695,000 in 1982—but the figure is even more staggering in context. In the last two weeks, 3.8 percent of working-age Americans in the labor force have lost their jobs. In comparison, it took nearly two years during the Great Recession for the employment rate to drop that much.
Washington has passed more than $2 trillion in emergency relief bills to help respond to the coronavirus pandemic. But with the exception of expanded unemployment insurance, one-time checks to some households, a too-limited paid family leave policy, and some targeted aid for small businesses, the vast majority of those trillions have been aimed at bailing out large corporations—with no strings attached to encourage companies to keep workers on payroll until the pandemic passes.
Now, reports indicate that the White House and congressional lawmakers want to focus the next stimulus package around infrastructure spending. That would be a serious miscalculation.
Don’t get me wrong, I love infrastructure investment. I’ve written about it a lot (a lot) over my career. The United States has needed to be doing a lot more of it for decades. But the bulk of the unemployment claims pouring in right now are from workers in the service industry—bartenders, cooks, retail employees, hairstylists, and more. This isn’t the 1930s; you can’t just pick up a shovel and help build the Hoover Dam anymore. Your unemployed neighborhood barback is not going to start hauling bricks instead of kegs.
By all means, include some infrastructure spending in at least one of the stimulus bills that will be necessary to get the economy back on its feet. But infrastructure spending is not likely to do much to help the workers who need it most right now.
What will? Here are four ideas:
1. Pay workers—including contractors—replacement wages, right now. People didn’t start losing their jobs en masse because of a structural downturn—they’re losing their jobs because of coronavirus. When the pandemic gets back under control, there are no fundamental reasons why most people couldn’t go back to work at their previous places of employment. That’s why countries like the United Kingdom, Denmark, France, and Canada are paying employers to keep their staff on payroll, and the U.K. is even providing payments to contractors and freelancers who have seen their business decline. Republicans in Congress would probably decry this approach as “paying people not to work,” but nobody is choosing not to work right now—they are following public-health directives to save lives. Employee turnover also poses significant costs to businesses in the best of times. The more the government does to keep people on payroll, the faster the country can get back to work once the crisis has passed.
2. Provide rental assistance for households and small businesses. While the recent bill passed by Congress allows homeowners affected by coronavirus to defer mortgage payments, it offered no assistance to America’s 44 million renters. On April 1, rent came due. While some property owners have cut their tenants a break, a much more comprehensive response is needed. And while small businesses can apply for loans, they’ll be charged four percent interest—a significant added burden for businesses like restaurants and bars, where rent is among the biggest expenses. (Banks are also warning that, despite the promises made by the Trump Administration, the emergency loan program for small businesses may take weeks or longer to get off the ground.) Congress should make direct payment assistance available for household and small business renters alike, rather than relying on the kindness of individual landlords.
3. Send cash to states and localities. State and local governments are burning through their budgets to respond to coronavirus. That means the jobs and services these governments provide will be at risk of being cut in the months ahead, absent an influx of funding from the federal government. Some 674,000 state and local-government jobs in education, health care, social services, and other areas were lost in the Great Recession. Many of those jobs never came back—which has now come back to bite us, as local public-health agencies and state unemployment offices don’t have nearly enough personnel to respond to the crushing demand for services.
4. Re-open the Obamacare exchanges. Earlier this week, the Trump administration announced that it would not open the Affordable Care Act exchanges for emergency enrollments, even though it has done so in the aftermath of previous natural disasters. That is the most partisan and short-sighted move imaginable in the context of a global pandemic, which will increase demand for health-care services. As a former FEMA official said, the coronavirus pandemic is like if Hurricane Katrina hit all 50 states. The administration should act like it—and make it easier for people to get the health care they need.
And after all of that, our economy will still need long-term stimulus. Even if the U.S. public health response goes perfectly and the coronavirus pandemic is contained within the next few weeks—and there’s no reason to expect that it will—the economy won’t get back on its feet without help. Last week, job postings were 15 percent lower than in the same week in 2019, according to Indeed’s Hiring Lab. Supply chains are going to be tied in knots for months as countries around the world slowly come back online.
This is where infrastructure spending should come into play—and the good news is House Speaker Nancy Pelosi seems to be moving in that direction. Infrastructure spending boosts job growth and private-sector output in the long run. Such investment should also be designed to last, with dedicated funding streams for clean energy, energy efficiency, resilient infrastructure, and school construction—projects that will benefit Americans for generations to come. Another slug of money for states should be included in long-term stimulus, too, including money earmarked for public colleges and universities, which saw their funding slashed in the last recession. And it’s never too soon to begin planning for the next pandemic by patching the biggest hole in our social safety net and at last providing universal paid sick and family leave.
The coronavirus pandemic is highlighting the inequalities in our society—and in our politics—as few crises ever have. But it’s also showing us where we need to urgently repair our social fabric. The next coronavirus response bill should address the needs American workers have now, not the ones they’ll need when the danger of the virus recedes.
Kristina Costa served in the Obama White House and was a policy advisor for Hillary Clinton on the 2016 campaign. She is currently a McCourt Scholar at Georgetown University and an advisor at Fenway Strategies. Even her indoor cat is getting cabin fever.
