As the spread of COVID-19 continues, the United States and its various jurisdictions are issuing orders to stay at home and refrain from having close contact with other individuals. The immediate results are obvious – business is slowing, consumers are spending less and some businesses are forced to close doors. It seems like every day, at least in California, a mayor is issuing an executive order with a single objective in mind: flatten the curve.
But the reach of these orders extend far beyond the health and safety of individuals –
The local moratoriums on evictions, both commercial and residential, will curb immediate and long-term homelessness by providing residents and small business owners a grace period of sorts. This allows the individual or business up to 6 months, in some cases, to recover from the virus, return to work or obtain new employment; or in the case of businesses, to restructure, strategize, and once more, become profitable.
Federally, the stimulus package expected to be signed into law by early next week, would provide small businesses and individuals an opportunity to find some normalcy in this strained economic environment. The bill, in many respects, is a way to reinvest into the economy and its people by providing an opportunity of relief for small businesses and workers. While it would ultimately provide the healthcare industry the resources it needs to combat the virus and protect healthcare employees fighting this battle on the frontlines, the stimulus package would also provide relief for businesses. It would make businesses of less than 500 employees eligible for small business loans that could ultimately convert to SBA grants, eliminating the expectation of having to pay it back. However, this loan would not be without conditions – businesses would only be eligible for the conversion if they refrain from employing retrenchment strategies, capable of economically affecting their employees, throughout the duration of the crisis.
From a public policy perspective, the creation of a $350 billion small business fund creates job security, both immediately and in the long-term. The loan avoids the common-practice of salary cuts and layoffs we’re already experiencing; avoids bankruptcy and closures; incentivizes employers to keep long-term employees and sustain an established workforce; illustrates good faith on behalf of the employer and incites morale and employee loyalty; and avoids future costs of rehiring and training unseasoned staff.
The aforementioned factors ultimately curb the incessant rise of the national unemployment rate which has now increased by 30%, gravely disturbing the previous record of 3.5% in 2019.
As of today, more than 3 million Americans have applied for unemployment. These, and others already on unemployment could expect their checks to increase up to $600 per week for up to four months, allowing those unable to work or otherwise financially burdened by the crisis to afford essentials and potentially a similar lifestyle, allowing them to spend more at restaurants and retail stores, further feeding into the economy.
Fortune 500’s and other big businesses have been paving their own roads for consumer protections amidst the crisis – companies such as Bank of America are becoming proactive in protecting their customers against overdraft fees, late fees, and delayed payments. Last week Bank of America announced it would defer mortgage and loan payments for customers directly impacted by the novel virus, whether economically or physically. Other banks such as Chase, Citi, PNC and more followed suit. These safeguards place many Americans in a far more favorable position in the face of recession.
The combined efforts of federal, state and local governments, communities, and private businesses proactively suppress the threats of a crippling recession and mitigate the potential long-term effects of this global crisis.