The numbers make the case for a paycheck guarantee

We have now lost more American lives to COVID-19 than we lost during the entire Vietnam War. There are over 1.2 million cases in communities across the country – and no sign of slowing. More than 30 million people have filed unemployment claims in just the last six weeks alone. And with the unemployment rate hitting 15 percent—devastation not seen since the Great Depression—after 20.5 million jobs were lost in April alone, it is clear we’re now facing a nearly unprecedented level of economic distress.

Mass unemployment at this kind of scale is a policy choice—and a bad one. The urgency of this crisis demands that we choose differently like so many other countries have already done to great success. The Paycheck Guarantee Act is the only solution that allows workers the certainty of continuing to get their paychecks, even as they wait to be able to safely return to work. It would also allow workers to continue receiving health care benefits—all while keeping public and private sector employers of all sizes afloat. It’s more affordable than current efforts, and it’s widely supported by the American people.

We know that a Paycheck Guarantee Act is the linchpin of any successful plan to reopen the economy. If the economy reopens too soon, we are likely to see new spikes in COVID-19 cases, which will mean more deaths and a longer period of economic recovery. A guaranteed paycheck would also save lives in the event of future waves of infection by incentivizing employers to adhere to public health recommendations rather than bringing their workers back too soon.

Here’s how it works: the federal government would provide employers with a three-month grant to cover wages for employees up to a salary cap of $90,000, prorated based on revenue losses due to COVID-19. The money would flow straight from the IRS rather than relying on a network of banks that are far too often not connected to communities of color, the unbanked or many small businesses. It would be retroactive to March 1, incentivizing employers to rehire laid off workers and putting much needed resources into the hands of workers.

This isn’t just an economic plan, it’s a public health plan too. Our priority must be to beat the virus. But to achieve this critical goal, we need people to stay home until we have strong testing and contact tracing in place — and during that time, people need the certainty of their paychecks to pay rent and put food on the table so that they aren’t forced to return to work before it’s safe.

To date, we have spent more than $660 billion on the Paycheck Protection Plan, or PPP. That program was well-intentioned and included some good elements but it relies on overwhelmed and outdated systems that have proven to be inadequate to deliver the scale of relief we need in this moment.

In contrast, a new analysis by Mark Zandi, Chief Economist at Moody’s Analytics, finds that the Paycheck Guarantee Act would provide greater and faster relief at a lower cost: $654 billion to cover payroll for 36.4 million workers over six months. He also estimates that two-thirds of the program’s benefit would go to workers in the bottom two income quartiles—getting resources where they’re needed most.

It’s clear that with the Paycheck Guarantee Act, we would cover more people for a longer period of time and for less money than we’ve already spent on the PPP. 

It’s no wonder that recent polling shows a paycheck guarantee that provides grants to businesses to keep workers employed is, by far, the most popular solution.

The Data for Progress and Tufts Coronavirus tracking poll has tested support for a range of policy responses over the course of the past three weeks. Grants to businesses to keep workers on the payroll has consistently been the most popular option. In fact, nearly 80 percent of people support it.

As part of another recent survey, Data for Progress also tested two different proposals. First, when they asked voters if they would support grants to businesses to keep workers on payroll, they found overwhelming, bipartisan support for it. Voters supported it by a 67 percentage-point margin. Democrats backed it by 72 percentage-points and Republicans backed it by 66 percentage-points.

Next, when Data for Progress asked voters if they support the specific components of the Paycheck Guarantee Act, such as the three-month paycheck guarantee for 100 percent of worker salaries up to $100,000, they again found overwhelming bipartisan support. Voters supported this by a 50-percentage-point margin, Democrats supported it by a 61-percentage-point margin and Republicans did so by a 41-percentage-point margin.

From price-tag to public opinion, the numbers make the case for the Paycheck Guarantee Act. It’s no wonder so many other countries such as Britain, Germany and Denmark have implemented similar programs with great success.

Now is the time for bold, efficient and effective proposals that get employers and employees targeted relief quickly. As the House and Senate craft our next relief package, it is critical that it includes a paycheck guarantee.

Every single day that passes without the kind of relief offered by this proposal means another round of layoffs, another small business shuttered and another family devastated. We must meet this moment with proposals that match the scale of this crisis. Our future depends on it.

Congresswoman Pramila Jayapal is the United States Representative for Washington’s 7th District and the Co-Chair of the Congressional Progressive Caucus.