Is the coronavirus relief deal sufficient to solve the crisis?
The House has now passed the Families First Coronavirus Response Act in a bipartisan fashion. With key support from President Trump, the Senate is likely to approve it in days. But before the Senate takes action, lawmakers must carefully consider the implications of each of the proposals for low income working families and the long term impacts on the social safety net. As businesses respond to the current situation by either laying off workers or cutting hours and wages, low income families are the most economically insecure. How well does the legislation meet their needs?
The initial impacts of the crisis will likely strain unemployment insurance. The Labor Department recently issued guidance that workers temporarily quarantined or unable to work due to the coronavirus can be eligible for unemployment benefits. The bill also calls for expanded funding for state unemployment insurance programs to handle the imminent pressure on the system. In addition, the bill sets forward paid medical and sick leave for workers who need it, and this would be funded through employer tax credits. We believe that more can be done to truly help working families.
First, unemployment insurance should be made available to workers who experience not just job losses, but a significant reduction in pay of more than 60 percent. In this case, the government should subsidize worker pay to its level prior to the first of February. This system could operate through unemployment insurance and run for a temporary time to help keep down the administrative burdens of creating a new program. This would be a targeted benefit to workers earning below $40,000 a year.
Second, emergency protected sick leave or medical leave for workers temporarily staying home from work due to the coronavirus is a strong option. Only 70 percent of private industry workers have access to paid sick leave, and less than a third of the bottom 10 percent of earners have access to paid sick leave. Similar disparities exist for medical leave. While the bill helps businesses with fewer than 500 employees offer this leave through tax credits, then it will make sense that in a crisis, the program should be fully and immediately paid for by the federal government. For employees not covered by such policies at larger firms, the option to take sick leave and medical leave that is funded by the federal government for a limited time should also be considered. This will help businesses deal with the costs right away rather than waiting for those tax credits later.
Third, the Supplemental Nutrition Assistance Program was also modified in the legislation, which appropriately allows states to increase benefits to households with children who miss school, and waives work requirements for able bodied adults without children or dependents. The bill also gives states the flexibility to provide emergency assistance to recipients up to the maximum benefit level. This could be used to address fluctuations in worker earnings due to employment disruptions. The proposed changes in the bill are needed to deal with the crisis, and will limit the inevitable disruption to the Supplemental Nutrition Assistance Program long term.
Fourth, while legislative action is not required, the Temporary Assistance for Needy Families Program is yet another safety net of crucial support to poor families with children. It requires work in exchange for benefits, but work disruptions experienced during this crisis call for states to review and temporarily relax the mandates. States already have the ability to do this without action by Congress, but there should be federal assurances that states will not be financially penalized for providing these benefits to those participants who are not working or participating in a work activity.
Finally, Medicaid as well as the Children Health Insurance Program both play important roles in ensuring that low income families are medically protected during this crisis. The bill appropriately considers measures that will allow states to better meet the new public health needs of their residents without worrying about revenues to pay for this. Beyond those efforts, states that have chosen not to expand Medicaid should consider emergency measures to extend the coverage to low income populations.
While some experts have argued that Congress did not go far enough in this bill and should simply give people more cash or cut payroll taxes, we do believe that the Families First Coronavirus Response Act is a properly targeted approach. With a few changes, enacting all these measures will ensure that low income households across the country have a buffer to deal with the brunt of the crisis as it unfolds over the next few months.
Aparna Mathur (@AparnaMath) is a resident scholar in economic studies at the American Enterprise Institute and director of the Project on Paid Family and Medical Leave. Angela Rachidi (@AngelaRachidi) is the Rowe Scholar in poverty studies at the American Enterprise Institute and was previously deputy commissioner for the New York City Department of Social Services.