The Coronavirus Bill's Anti-Layoff Provisions

Arthur Delaney
Updated ·4 min read

The big coronavirus relief bill Congress passed this week will deliver cash payments to practically everyone in America and supercharge unemployment insurance for people who lose their jobs due to the pandemic.

But it’s also got provisions to prevent people from losing their jobs in the first place, so that their employers remain their main source of income.

The bill creates a $350 billion “paycheck protection program” that essentially pays small businesses not to lay off their workers for the duration of the outbreak. It’s supposed to work by lending money to firms to cover their payroll and other costs for eight weeks, and then forgiving the loan if the firms avoid layoffs.

It’s a huge part of the bill. The unemployment compensation, by contrast, amounts to about $260 billion, according to an estimate by the Committee for a Responsible Federal Budget, while the rebate payments to households amount to $290 billion.

Employers who lose business or are ordered to shut down because of the outbreak can also get a refundable tax credit for part of their payroll costs.

The House passed the bill on Friday in the wake of an unprecedented surge of unemployment claims. Businesses have shuttered as local governments order social distancing to limit the spread of the virus, which has infected tens of thousands and already killed more than 1,000.

Once the president signs the bill into law, even more people will be eligible for unemployment, including people who need to quit to take care of a family member or because they have to quarantine themselves.

For firms that can’t avoid reducing payroll, there’s another option besides layoffs. It’s an existing program called short-time compensation or work sharing. Instead of laying off a portion of its workers and the government replacing their wages, a firm can keep its workers, but cut their hours and let the state unemployment agency pay a portion of the missing wages.

Dean Baker, a labor economist with the progressive Center for Economic and Policy Research and a visiting professor at the University of Utah, said keeping workers attached to their employers should be a top priority.

“From the workers’ standpoint, it means they have a job to go back to and that they can continue to receive work-related benefits, most importantly health insurance,” Baker said in an email. “That’s a big deal right now, and even if you can get COBRA, we don’t want to force tens of millions of people to have to deal with their insurers right now to stay covered.”

The Coronavirus Aid, Relief, and Economic Security Act pays the full cost of short-time compensation benefits for the rest of this year. But it’s not clear how many businesses will make use of the program, as it has existed for a while and is not widely used. Not all states even have programs. Enrollment peaked in 2009 with 288,618 workers receiving partial unemployment benefits to offset their reduced hours.

It’s important for employers to avoid laying off their workers, Baker said, so that they have a ready workforce when strict social distancing is less of a necessity and business picks up.

“We will have a total disaster if, when this ends, employers try to start up and suddenly have to hire and train much of their workforce,” Baker said. “I am amazed that this did not seem to be more of a concern to Congress when they worked out their bill, although the small business loan system is pretty much along the right lines.”

HuffPost readers: Are you a business owner looking to take advantage of the paycheck protection program or short-time compensation? Tell us about it — email arthur@huffpost.com. Please include your phone number if you’re willing to be interviewed.

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This article originally appeared on HuffPost.