Family First Coronavirus Response Act is an important first step in the United States’ response to the COVID-19 pandemic and the Senate should pass it immediately. There are provisions for both health spending and paid sick leave as well as income supports in the form of expanded food-assistance programs and unemployment insurance.
We summarize some of the bill’s specific provisions below, but we first want to highlight a few important loopholes, and talk about the important next steps.
The bill has some glaring exclusions. Perhaps the most problematic is the carve-out for large businesses; the bill exempts employers with more than 500 workers from its paid leave mandate. Bureau of Labor Statistics data show that 11% of workers at private-sector businesses with 500 workers or more do not have access to paid sick leave, and 48% of private sector workers work in firms with 500 workers or more. Together, that means that 6.8 million private sector workers in large firms will not have paid sick days as a result of the large-firm exemption. And this does not count the fact that workers at these firms that do provide paid sick days often do not provide enough time for workers to self-quarantine for the recommended 14 days.
The bill also makes it possible for the Secretary of Labor to exempt certain health care providers and emergency responders from its paid leave provisions, and to exempt businesses with less than 50 people. The data show that 36% of workers at private-sector businesses with less than 50 workers do not have access to paid sick leave, and 27% of private sector workers work in firms with 50 or fewer workers, together meaning that 12.8 million workers may not have access to paid sick days as a result of potential exemptions for small businesses.
Together, that means that somewhere between 6.8 million and 19.6 million private-sector workers will be left without paid sick days as a result of the firm-size exemptions in the bill. The PAID Leave Act, which will be introduced by Senator Patty Murray (D-Wash.), Congresswoman Rosa Delauro (D-Conn.), and Senator Gillibrand (D-N.Y.), would go a long way toward closing these loopholes by providing 14 emergency paid sick days and 12 weeks emergency paid family and medical leave, reimbursed in full by the federal government.
Even with its weaknesses, the Family First Coronavirus Response Act includes key first steps, and should be passed immediately.
Recall the Center for Disease Control (CDC)’s initial recommendation to reduce the spread of COVID-19: seek medical care and stay home. On the health care side, there are important provisions in the bill to provide coverage for free COVID-19 testing and there is a temporary increase in the federal match for states’ Medicaid programs. These are important first steps, but more needs to be done to ensure that patients not only have access to testing, but also have access to affordable medical care for treatment of the disease itself as well as secondary infections and potential complications.
On the CDC’s recommendation to stay home, the bill provides temporary provisions to expand paid sick leave for some workers affected by the coronavirus. This measure is a step in the right direction towards providing the paid sick leave workers do not have today and desperately need.
Tax credits are available for employers with fewer than 500 employees to better afford paid leave for their workers. Tax credits are also available for the self-employed. These tax credits for employers and the self-employed are particularly important at a time when workers at the front lines of the service sector—often lower paid workers or those who are contractors or self-employed–may have lots of contact with the public, putting them and their customers at risk if they can’t take time off, while at the same time being hammered by reductions in demand for their services. However, state and local government agencies are specifically excluded from the payroll tax credit, a glaring problem with the bill.
Other provisions in the Family First Coronavirus Response Act include:
- Emergency unemployment insurance: This follows up on the guidance on unemployment insurance from the Department of Labor that allows for an expansion in eligibility based on an employer ceasing operations due to COVID-19, workers who are quarantined, or workers who are at risk of exposure or to care for a family member. This provision in the bill provides additional funds to support a state’s UI system.
- Nutrition supplements: This provision expands nutrition assistance to help cover the costs for food for children who would have received it at school if their school hadn’t closed because of the pandemic.
- Paid family and medical leave: It allows employees of employers with fewer than 500 workers and government employers the right to take up to 12 weeks of job-protected leave under the Family and Medical Leave Act to care for a child in the event schools are closed due to coronavirus. After two weeks, employees will receive at least two-thirds of their usual pay from their employer, up to a cap of $200 per day, $10,000 total.
So, think of these bills (the Family First Coronavirus Response Act and the PAID Leave Act) as important first steps. But we need a lot more. A coronavirus recession is now imminent—we will likely lose at least 3 million jobs by the summer. But policymakers can keep this number from rising if they act quickly and decisively, with fiscal stimulus that is big and that is sustained as long as the economy needs it.
Here is a framework for what the federal government needs to do to keep the recession as short and as shallow as possible and to have it be followed by a strong rebound:
1. Finance a sizeable amount of household consumption
Individuals who see their incomes drop because of job loss or hours declines will cut spending even on necessities like food and housing. Providing support will help people maintain this spending, which will boost the economy. It will allow households to better weather the recession, helping ensure a faster bounce back when the threat of the virus is gone. The first priority is to maximize income supports that can be delivered through existing programs, including federal-government-financed expansions to unemployment insurance, food stamps, and Medicaid. The federal government should also cover the entire cost of coronavirus treatment for every individual who contracts it. Finally, the federal government should send payments directly to U.S. families. The first payment of $2,000 per adult and child, phased out for higher-income taxpayers, should be immediate. Future payments would be stepped down over time and tied to economic triggers.
2. Give substantial fiscal aid to state governments
State governments will bear a large share of the cost of the public health response to the coronavirus. Further, due to job loss and sharp declines in spending, state tax revenues will fall. Given balanced budget requirements, that will mean state spending will collapse, creating an enormous drag on the economy. A quick way to transfer resources to state governments is for the federal government to pay states’ share of Medicaid. The federal government should take on all state Medicaid spending for at least the next year.
3. Payroll tax credit to businesses to not lay off workers
Businesses should be encouraged not to lay off workers, because this will mean fewer families face the enormous income and spending shocks of job loss, and it will speed up the recovery when the threat of the virus is over. The federal government should institute payroll tax credits, starting at the end of the first quarter, for coronavirus-impacted businesses who maintain, or nearly maintain, payroll.
4. Ramp up direct government purchases of things that help fight the virus
The federal government should significantly increase their purchase of medical equipment for use in fighting the impact of the coronavirus, and finance field hospitals and testing clinics to address the crisis.
- All measures to address the coronavirus shock should automatically continue while conditions warrant it.
All measures to fight the coronavirus should automatically continue until the economy no longer needs them. Right now, no one knows how long it the economy will take to recover from the coronavirus shock, and we should not saddle these crucial provisions with arbitrary end dates. Instead, we should make sure the economy gets the support it needs for as long as it needs it by instituting conditions-based triggers to determine when they end.