How the $900 Billion Stimulus Helps — But Mostly Fails — Restaurants and Workers

Following months of political impasse and multiple legislative recesses, during which restaurant hiring tapered off, long-term unemployment more than tripled, nearly 8 million Americans fell into poverty, and deaths from the pandemic surpassed 317,000, Congress appears poised to pass a COVID-19 relief bill that any rational observer would call wholly insufficient to meet the needs of furloughed hospitality workers, distressed renters, and devastated restaurateurs, all of whom pay the salaries of the elected representatives who wantonly shortchanged them.

Unemployed cooks, servers, or other low-wage workers would receive just $1,200 per month in jobless aid per month under the new aid package. That’s just half the amount they were entitled to under the $2.2 trillion CARES Act, the groundbreaking law that kept the economy afloat last spring. In fact, an individual taxpayer could receive nearly $7,000 less in aid under the new stimulus.

What’s equally aggravating is that the battered hospitality industry, having shed millions of jobs over the past year, doesn’t receive any type of substantial targeted aid. Yet airlines, which have lost fewer than 140,000 workers — still an economic tragedy by any measure — will get a hefty $16 billion in assistance. Movie theaters and concert venues will also benefit from $15 billion in grant money.

So why did Congress seem to forget about restaurants and their struggling workers? Democrats, to be fair, spent the better portion of this past year making the case for more generous assistance, including a revenue replacement program for the hospitality industry called the RESTAURANTS Act. But Republican opposition to multitrillion-dollar relief deals forced a slimmer compromise bill. As a result, the U.S. has resorted to cutting back on help precisely when life has become harder for so many Americans.

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Here’s an overview of the bill: The $900 billion stimulus ensures that taxpayers will be able to continue collecting unemployment assistance through the early spring, averting a deadline that would have ended these programs for up to 12 million people the day after Christmas. It’s highly likely, however, that many folks will still go without aid for weeks as states work to implement the new policy. The federal government will also offer supplemental jobless aid at $300 per week for 11 weeks. That sounds nice until you realize it’s only half of the old benefit of $600 per week, which lasted four months. Stimulus checks to help the working poor or middle class have been cut in half as well, to $600.

Hard-hit tenants will be able to qualify for $25 billion worth of rental assistance, though it’s unclear how that aid will be disbursed, and an increase in funding for SNAP benefits should help poor families buy food, but only by a small margin. Businesses will receive tax credits for paid COVID-19 leave, but it appears a law requiring companies to give that time off in the first place will expire — a troubling development as the daily death count now exceeds 2,600 people.

There also appears to be little in the bill that would significantly help the undocumented workers who make up a vital part of the country’s restaurants and food supply chain. And there will be no hazard pay for grocery store employees or other frontline workers.

The Paycheck Protection Program, a framework that initially pitted struggling restaurants against fast food giants for scraps of aid, will start offering more preferential loan terms to the hospitality industry. That’s good news, but the very nature of the program, particularly its emphasis on payrolls, remains deeply flawed. It’s worth noting that the $120 billion RESTAURANTS plan, which is more tuned to the needs of the hospitality industry, could be reconsidered when President-elect Joe Biden introduces his own stimulus plan next year, but that time frame, alas, won’t work for the thousands of establishments that could close between now and then.

Ironically, the bill seems to target the well-heeled folks who regularly eat at fancy restaurants for more accessible, strings-free help than the actual restaurants. Negotiators managed to insert a three-martini lunch provision of sorts, allowing corporate America to deduct the full value of business meals, representing a backward, Reaganomics-era, trickle-down vision of charity.

What follows is a more comprehensive look at the new stimulus, a Scrooge McDuck bill that demonstrates such a callous underestimation of what Americans need to survive that it achieves a rare paradox: It’s a bipartisan piece of legislation whose ethos is unabashedly Trumpian in its cruel, counterfactual stinginess.

Will Americans receive stimulus checks?

The bill will authorize payments of $600 to taxpayers earning under $75,000, or $1,200 for couples earning up to $150,000. That’s precisely half the size of the CARES Act checks from last spring. Additional payments for children have risen from $500 to $600, but a family of two with two children would now only receive $2,400, down from $3,400 under the last stimulus bill. The new legislation, however, makes it easier for immigrant families to receive checks, per the Washington Post.

A recent University of Chicago-Notre Dame study suggested that a decline in poverty earlier this year could be attributed to the $1,200 stimulus checks and an expansion of jobless benefits, which beneficiaries largely used on vital purchases like food or rent. After many of these benefits started to expire in late July, 7.8 million Americans — a disproportionate number of them Black people — joined the ranks of the poor, per that same report.

It’s unlikely these halved stimulus checks will suffice for Americans who are months behind on their rent or credit card payments. That’s a particularly particularly pressing issue for many hospitality industry staffers and the the larger group of 6.7 million Americans who now work part time because their hours have been cut or because they can’t find full-time jobs.

Will folks who are about to run out of unemployment benefits get an extension on aid?

Yes. Nearly 4 million Americans have remained unemployed for over six months, but state unemployment benefits, which pay out a percentage of a worker’s previous wages, typically run out after 26 weeks. Last spring, Congress passed Pandemic Emergency Unemployment Compensation (PEUC) to extended the length of those state programs, but the policy was set to expire the day after Christmas, as was another program called Pandemic Unemployment Assistance (PUA), which offers aid to delivery workers, freelancers, and other so-called gig workers who aren’t traditionally eligible for jobless assistance.

The current bill renews both of those aid programs for 11 weeks, but getting states to update their aid systems could result in weeks of missed checks, according to labor advocates interviewed by Politico. That means a large number of Americans could go without any source of income whatsoever for the better part of January.

Regardless of the federal stimulus, many workers in New York should continue to receive uninterrupted unemployment anyway thanks to a separate Extended Benefits program linked to high jobless rates.

Will there be any extra jobless aid, like those weekly $600 checks from the spring?

Yes, but that unemployment bonus isn’t as generous this time around. An extension of Federal Pandemic Unemployment Compensation, whose $600 payments ended in late July, will now offer most out-of-work restaurant staffers just $300 per week. The benefit will last for eleven weeks, five fewer weeks than with the CARES Act. Translation: a former cook that received $9,600 in supplemental jobless payments last spring and summer would only take in $3,300 over the new benefits period. That amount won’t even come close to bringing scores of Americans, especially those with children, back from the brink of financial disaster.

Consider this: That same cook who earned, say, $35,030 per year during the Before Times, would collect $336 per week on regular state unemployment. That would then rise to $636 with the supplemental bonus, working out to $15.90 per hour. Those hourly figures are important because even though they’re higher than the local minimum wage of $15, they still fall short of the living wage of $17.99 for Manhattan, which is what a childless single person needs to afford food, medical costs, housing, and transportation.

A single parent would need even more to get by, precisely, $32.91 per hour, according to MIT’s living wage matrix. The old $600 benefit, which Democrats wanted to extend, would have brought residents with children much closer to that number — and indeed well above what they’d have earned on the job, a fact that should focus more of society’s attention on the problem of low food service wages. For now, austerity will remain a reality for throngs of jobless Americans.

What type of rental assistance and eviction protections will taxpayers have access to?

The new stimulus extends the Centers for Disease Control eviction moratorium, which was set to expire at the end of December, until January 31. That’s not much of a reprieve, and it doesn’t give much time to President-elect Biden to introduce his own plan after he takes office later next month. Negotiators also agreed to provide $25 billion worth of assistance to distressed renters, to be distributed via the states, prioritizing unemployed and low-income renters. That aid surely won’t suffice for many.

It’s not clear how each state will allocate the rental assistance funds. But hypothetically, if one assumes equal distribution and at least 17.3 million applicants — given the country’s 10.7 million unemployed people and 6.6 million part-time workers who can’t find full-time jobs — each recipient would only get about $1,445. That’s barely enough to cover a month’s worth of rent in large swaths of New York City.

What happens to mandatory paid sick leave, which is supposed to expire?

This one’s a bit tricky. The Families First Coronavirus Response Act required employers to pay up to two-weeks of time off for COVID-19 illness or exposure, but that benefit is set to lapse at the end of December. The expiring benefit applied to small businesses with fewer than 500 employees and was essential in giving paid time off to restaurant industry workers. A study by Health Affairs found that the federal paid sick-leave policy reduced the number of new cases by roughly 400 per day, per state.

Not all is lost, however. Even though it appears that employers won’t be legally obligated to offer paid leave anymore, the new stimulus bill helps out businesses that want to keep paying their employees to stay home while sick. This voluntary sick leave extension would be funded by an employer tax credit and would expire on March 31, which is still a heck of a tight deadline given that most Americans won’t be vaccinated by then.

Keep in mind that most New York City or New York State residents, including undocumented workers, are still eligible for mandatory paid sick leave thanks to strong local regulations.

What are the details of the new Paycheck Protection Program?

During the first round of Paycheck Protection funding last spring, big businesses with ample cash reserves often crowded out beleaguered restaurants and other, smaller institutions. By the time the program ended in August, about 34 percent of loans went to venues borrowing between $1 million and $10 million. The new $284 billion PPP is designed to prevent that situation from repeating itself.

To apply for this new round of paycheck loans, businesses will now have to show they have fewer than 300 employees (down from 500) and that revenues have declined 25 percent over the previous year. Loans will again be capped at 2.5 times monthly payroll costs — or 3.5 times payroll for bars and restaurants — but with a new limit of $2 million. And to avoid a scenario where Taco Bell or McDonald’s franchises snap up all the money, publicly traded companies won’t be eligible, according to Republicans on the House Small Business Committee, CNBC reports.

To qualify for full forgiveness, meaning that the loan effectively becomes a grant, restaurants and other businesses will have to meet strict qualifications, showing that they used at least 60 percent of the proceeds on payroll — while maintaining staffing levels. The rest of the funds can be spent on rent, utilities, protective equipment, outdoor dining build-outs, or interest on mortgage payments.

Will restaurants actually be able to benefit from these loans?

It depends. By the time the paycheck program expired in August, over $133 million was still available to borrow, while the lodging and food-service industries, which took disproportionate hits to their businesses during the pandemic, only claimed about 8 percent of the funding. That reality drives home a larger truth, which is that the very nature of the program is poorly suited for restaurant relief. If you don’t use this program correctly, what would’ve been a grant becomes an expensive loan, with interest. That’s the last thing a small, cash-strapped restaurant needs to deal with.

There’s also something distinctly contradictory about a program that aims to get folks back on the job — not really a priority for restaurants operating on takeout-only — while unemployment aid and local shutdown mandates are supposed to let staffers safely shelter at home without going broke.

The good news is that if you can’t hire back folks because they don’t want to work, or if you can prove that you had to reduce staffing because of government-ordered closures, your loans will still convert into grants. So if you play your cards right, this program should help your business stay afloat for an extra month or two, something that has benefited scores of small bars and restaurants. Then again, you’ll still need to find a way to spend 60 percent of any funds on your (now smaller) staff.

What about the RESTAURANTS Act?

It is not a part of this bill. The $120 billion plan, which was incorporated into the HEROES Act — a bill that the Democrat-majority House of Representatives passed but that the Senate effectively ignored — would have constituted a viable means of saving thousands of restaurants. The program would have allocated grants to restaurants not based on payrolls, like the PPP, but based on the difference between their 2019 and 2020 revenues.

Will individuals be able to access more funds for food aid soon?

Theoretically. Democrats were able to secure $13 billion in food aid, including for Meals on Wheels, for school programs, and for a 15 percent increase in SNAP benefits, according to Vox. Until that recalibration goes into effect, single-member households on SNAP are limited to a paltry $204 in monthly food assistance, while couples can receive up to $374.

Will workers be able to sue if they get COVID-19 on the job?

Yes, but that could change. Lawsuit liability shields could prevent people from suing their employers for COVID-19 exposure, injury, or death, with likely exceptions to be made for gross negligence or willful misconduct. If President-elect Biden introduces a stimulus plan of his own, it’s expected that current Senator Majority Leader Mitch McConnell would seek to institute these so-called business protections.

Liability protections could be a big issue in the larger food world. Over 43,750 meatpacking and food processing workers in 530 facilities have tested positive for coronavirus, and at least 184 have died after infection, Civil Eats and Eater reported in August. A wrongful death lawsuit against Tyson alleges that a plant in Waterloo, Iowa, ignored safety concerns, forced sick employees to continue working, and established a betting pool on how many workers would fall ill.