U.S. House Representative Nancy Pelosi (C) and Representatives Kevin McCarthy (L) and Steny Hoyer show the bill to the press after the House of Representatives passed the $ 2 trillion bill at the U.S. Capitol in Washington, DC on March 27, 2020 Dollars had passed
The unprecedented 3.2 million increase in unemployment insurance claims is just an indication of the almost complete downturn in the US economy. Congress then passed the largest stimulus package in US history. The bill extends unemployment benefits to more workers, including self-employed and independent contractors such as gig workers, who are normally not entitled to unemployment.
Time will tell if this $ 2 trillion injection, known as the CARES Act, will succeed.
The United States is not alone. Governments around the world are working overtime on key stimulus programs to ward off the Covid-1
9 economic disaster. We see many opportunities to structure an economic stimulus package and many potential beneficiaries. But what kind of incentive best helps workers?The challenges are unique in the United States: 57% of the workforce is paid either hourly or independently. Decades ago, many hourly workers would have been in stable manufacturing jobs with reasonable benefits. However, manufacturing jobs have declined over the past 30 years as the number of jobs in the hospitality and service sectors has increased, where irregular and part-time hours with few benefits are common. People in these unstable, low-wage jobs have rarely been on sick leave. They are also most likely to lose their jobs if no one is allowed to go to restaurants, bars, hotels, cafes, or concerts for an extended period of time.
The challenges are unique in the United States: 57% of the workforce is paid either hourly or independently.
This means that an economic stimulus package aimed at employees must take into account sick leave, income support and additional benefits as well as the needs of the newly unemployed. The US House of Representatives passed a law to provide temporary paid sick and family vacation, additional direct funding for health, food security, and unemployment programs, and free coronavirus testing. This law was quickly passed by the Senate and incorporated into the law.
No sooner had this $ 100 billion package passed the Senate than leaders of both sides immediately had to work on an expanded third package. The focus is on small businesses, individuals, hospitals and health centers. A key feature of the package is direct cash payments to eligible households, for which half a trillion dollars are provided.
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During the debate on the package, some senators pushed for their own suggestions in the hope of pushing a broader agenda. But the spirit of non-partisans prevailed against the point scoring, as everyone knew that time was of the essence.
Senate Majority Leader Mitch McConnell played a pivotal role in implementing the latest agreement, while Nancy Pelosi blocked a last-minute block from a single representative to adopt the measure, largely through the House of Representatives vote. Every member of Congress is well aware that this money must get into the hands of individual Americans and businesses as soon as possible.
Countries around the world are investing money in their economies to combat the effects of COVID-19. The UK government introduced the UK Coronavirus Job Retention Scheme with grants amounting to 80% of employee wages.
Australia’s stimulus package, with tax cuts and investment incentives, and relief for industries most affected by the virus, is more aimed at businesses than at workers. In an economic downturn, trainees are in a particularly vulnerable position. Unfortunately, as less experienced employees, they are too often the first to be fired. The Australian stimulus package provides a 50% wage subsidy for apprentices, but only for selected companies.
And the New Zealand government has a package to subsidize wages and support income.
Even in tiny Ireland, the government has implemented a $ 3.1 billion incentive to reform sick pay and sick pay benefits to ensure that all workers, including the self-employed, have access to funds when they contract Covid-19.
As significant as these efforts are, there is no doubt that more will follow. Governments can be expected to open their wallets and spend everything to eliminate systemic and social uncertainties and to give people the confidence to think in the short term. I would expect several rounds of government incentives worldwide to test many new and novel ideas.
The aim of stimulus packages is not to prevent a recession, but to ensure that the crisis is contained, workers are less affected and the likely recession does not become a lost decade. Every tactic that was gradually used to contain the global financial crisis was reintroduced in just two weeks.
We can expect this pandemic to rearrange society’s priorities and shape generations’ thinking. It is an age-determining event that will have countless predictable and unpredictable consequences.