Highlights of the Proposed $1.9 Trillion Stimulus Package

The House of Representatives has passed its version of the proposed stimulus bill, which includes extended unemployment benefits, direct checks to individuals and more. The bill is now with the Senate, where some provisions will likely change. Democrats hope to pass the $1.9 trillion relief package by mid-March, before existing COVID-19 relief measures, such as enhanced unemployment insurance, expire.

The bill could pass a Senate vote in the coming weeks, but it may face significant challenges amid a 50-50 party split.

It’s important for employers to have an idea of what to expect. To that end, this article outlines the most relevant aspects currently known about the bill—these components are likely to change as Congress hashes out its details.

Small Business Assistance

The proposed bill intends to invest billions toward small business assistance, and even provides heavily impacted businesses with fewer than 10 employees priority with some of the funds. Here is the current funding breakdown:

  • Emergency Injury Disaster Loan program: $15 billion
  • New grant program for bars and restaurants, specifically: $25 billion
    • Eligible businesses could receive up to $10 million, using the money for payroll, rent, utilities and other expenses.
  • Paycheck Protection Program: $7.25 billion

Stimulus checks

Just like the two other COVID-19 stimulus packages passed during the pandemic, this version will also feature direct payments to Americans. This time around, eligible recipients can expect $1,400 per person ($2,800 for couples), including adult dependents—a family of four could get up to $5,600.

However, payment parameters are stricter this time around than with previous stimulus checks. The full check amount will go to individuals earning under $75,000 (or $150,000 for couples), with payments cut off entirely for individuals earning over $100,000 (or $200,000 for couples). Anyone with income between those figures will receive a reduced check.

Unemployment Aid

The proposed bill seeks to extend two previously established pandemic unemployment assistance efforts: the Pandemic Unemployment Assistance Program and the Pandemic Emergency Unemployment Compensation program. The financial assistance from these programs is currently set to expire in mid-March, pressuring legislators to act quickly.

The bill also seeks to enhance unemployment assistance payments from the current $300 per week to $400 per week. Unemployed gig workers, freelancers, contractors and others who previously qualified for aid will continue to be eligible under these programs.

Under the proposed bill, these programs and their financial aid would be extended through Aug. 29.

Housing Assistance

This proposed stimulus plan intends to set aside billions in financial aid to homeowners and renters. Here is the current funding breakdown:

  • Aid for back rent, rental assistance and utility payments: $19.1 billion
  • Aid for mortgages, utilities and property taxes: $10 billion
  • Aid to states and localities to help individuals at risk of becoming homeless: $5 billion

Paid Sick Leave

Previous stimulus packages guaranteed workers two weeks’ pay if they couldn’t work due to COVID-19-related reasons. The current proposal does not extend these benefits. However, employers that choose to continue offering this paid sick and family leave through Oct. 1 may receive a tax credit.

Minimum Wage

The proposed bill would gradually increase the federal minimum wage to $15 per hour by 2025. It would also mandate that tipped employees, youth workers and workers with disabilities all receive the full federal minimum wage. This change would affect the wages of 27 million Americans. However, this particular proposal is hotly contested, and there has been speculation that it may need to be scrapped in order to secure the requisite number of votes to pass.

Update: Due to congressional rules, this provision will almost certainly not appear in the final bill after going to the Senate.

Aid to Schools and Child Care

A significant portion of the stimulus bill involves aid to states, including schools and child care facilities. Here is the current funding proposal:

  • Aid for getting K-12 schools ready for in-person learning: $130 billion
    • Money could be used for purchasing protective equipment, improving ventilation systems and preventing teacher layoffs. However, 20% of the money schools receive must be used to address pandemic learning loss—for example, extending learning time into the summer.
  • Aid for colleges: $40 billion
    • Institutions would be required to spend at least 50% of their allocated funds on emergency financial aid grants to students.
  • Child care provider assistance: $39 billion
    • Funds may be used for payroll, rent, protective equipment and other expenses.

Tax Credits

The stimulus bill aims to provide child tax credits to more low-income families. The bill proposes $3,000 for parents of children under the age of 18—$3,600 for parents of children under the age of 6. This credit would also become fully refundable.

The bill also seeks to expand the earned income tax credit for individuals without children. The maximum credit would be nearly tripled under the stimulus proposal, and eligibility would be expanded—the childless tax credit eligibility age would be reduced to 19 years of age, down from 25.

Aid to states, local governments, tribes and territories

The proposed bill would provide billions in financial assistance to states, local governments, tribes and territories. It’s currently unclear whether there are specific usage requirements tied to this assistance, or whether funds may be used however the entities deem fit. Here is the current funding breakdown:

  • Aid to state and local governments: $325.5 billion
  • Aid to tribes and territories: $24.5 billion

Summary

Again, these proposed figures are subject to change as Congress continues its debate over specific policy aspects. Some aid amounts are wildly above what some legislators deemed appropriate, signaling a contentious battle ahead.

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44% of Americans Without “a Good Job”

The below article gives a very interesting perspective to the supposed drop in national unemployment. Of particular note — how do we really know when we are doing better in this realm based on how we are currently keeping score? One hour a week means you are not unemployed? -Paul

“Gallup defines a good job as 30+ hours per week for an organization that provides a regular paycheck. Right now, the U.S. is delivering at a staggeringly low rate of 44%, which is the number of full-time jobs as a percent of the adult population, 18 years and older. We need that to be 50% and a bare minimum of 10 million new, good jobs to replenish America’s middle class.”

“If you perform a minimum of one hour of work in a week and are paid at least $20 — maybe someone pays you to mow their lawn — you’re not officially counted as unemployed in the much-reported 5.6%. Few Americans know this.”

http://www.gallup.com/opinion/chairman/181469/big-lie-unemployment.aspx

(copy/pasted full article below as well)

The Big Lie: 5.6% Unemployment

by Jim Clifton

Here’s something that many Americans — including some of the smartest and most educated among us — don’t know: The official unemployment rate, as reported by the U.S. Department of Labor, is extremely misleading.

Right now, we’re hearing much celebrating from the media, the White House and Wall Street about how unemployment is “down” to 5.6%. The cheerleading for this number is deafening. The media loves a comeback story, the White House wants to score political points and Wall Street would like you to stay in the market.

None of them will tell you this: If you, a family member or anyone is unemployed and has subsequently given up on finding a job — if you are so hopelessly out of work that you’ve stopped looking over the past four weeks — the Department of Labor doesn’t count you as unemployed. That’s right. While you are as unemployed as one can possibly be, and tragically may never find work again, you are not counted in the figure we see relentlessly in the news — currently 5.6%. Right now, as many as 30 million Americans are either out of work or severely underemployed. Trust me, the vast majority of them aren’t throwing parties to toast “falling” unemployment.

There’s another reason why the official rate is misleading. Say you’re an out-of-work engineer or healthcare worker or construction worker or retail manager: If you perform a minimum of one hour of work in a week and are paid at least $20 — maybe someone pays you to mow their lawn — you’re not officially counted as unemployed in the much-reported 5.6%. Few Americans know this.

There’s no other way to say this. The official unemployment rate, which cruelly overlooks the suffering of the long-term and often permanently unemployed as well as the depressingly underemployed, amounts to a Big Lie.

And it’s a lie that has consequences, because the great American dream is to have a good job, and in recent years, America has failed to deliver that dream more than it has at any time in recent memory. A good job is an individual’s primary identity, their very self-worth, their dignity — it establishes the relationship they have with their friends, community and country. When we fail to deliver a good job that fits a citizen’s talents, training and experience, we are failing the great American dream.

Gallup defines a good job as 30+ hours per week for an organization that provides a regular paycheck. Right now, the U.S. is delivering at a staggeringly low rate of 44%, which is the number of full-time jobs as a percent of the adult population, 18 years and older. We need that to be 50% and a bare minimum of 10 million new, good jobs to replenish America’s middle class.

I hear all the time that “unemployment is greatly reduced, but the people aren’t feeling it.” When the media, talking heads, the White House and Wall Street start reporting the truth — the percent of Americans in good jobs; jobs that are full time and real — then we will quit wondering why Americans aren’t “feeling” something that doesn’t remotely reflect the reality in their lives. And we will also quit wondering what hollowed out the middle class.

Jim Clifton is Chairman and CEO at Gallup.
OPINION
February 3, 2015