Even in the darkest hours of 2008, when the nation teetered on the edge of a second Great Depression, Congress never passed anything close to the economic stimulus plan scheduled for final approval Friday.
The Senate’s roughly $2-trillion response to the devastating economic effects of the coronavirus stands out not only for its record amount — almost 10% of U.S. gross domestic product — but in giving employers unprecedented — and untested — financial incentives to keep people on their payrolls.
Since the shutdown of large sectors of the American economy earlier this month, countless restaurants, hotels, entertainment venues and manufacturers already have laid off millions of workers or ratcheted back their employees’ hours. With that in mind, the Senate relief package includes a vast expansion of unemployment benefits to the tune of $260 billion. Currently, the amount of jobless benefits varies from state to state, but they typically don’t replace more than half or so of an employee’s wages, and then only for up to 26 weeks. In California, the maximum weekly payment is $450.
Work-sharing benefits are common in Western Europe but relatively new in the United States. The Senate plan also provides subsidies for states that don’t have such programs to develop them.“I’m hoping that this will also help firms, especially those that don’t want to take out big loans, to convince them” to retain employees and cut back hours instead, Holzer said.
“So small businesses can get liquidity now. But if they hold onto their workers, they ultimately won’t have to pay most of that money back,” said Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget. “There’s an incentive to keep your workers because, in some ways, it’s free to pay them. The federal government is kind of picking up the tab.... It’s a big deal.”
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