It’s not enough.
I found myself saying that all the time last week as I tracked the damage COVID-19 has inflicted on the economy and the response of business leadership. The human cost is rising and frightening; you can be perfectly healthy, sheltered and wise in your behavior and still be suffering from this contagion. A week ago, it was still news that this convention or that meeting was canceled. Now, the openings are the exceptions. It’s like a dam burst, and a flood of layoffs is upon us.
The immediate reaction from businesses and their trade groups was to do what they are programmed to do — ask for a government bailout. Aside from union leaders, there was precious little advocacy of help that goes directly to people.
The restaurant people kicked things off, asking for things such as a suspension of the payroll tax and forbearance on their loans.
It’s not enough.
The hospitality and airline industries petitioned Congress for aid packages but were relatively mute on commitments to their own furloughed workers. In Chicago, foundations and wealthy families pooled funds, initially more than $8 million, to assist local business organizations that, in turn, can send the money to worthy small businesses.
Again, it’s not enough. Business does need support, because the credit markets have seized up, and many small operations may be unable to just reopen once the crisis has passed. Your favorite boutique or coffee shop might not make it. But the emphasis has to be on workers now being directed to file for unemployment online, the offices having been closed.
Gov. J.B. Pritzker needs to call a special legislative session to increase unemployment benefits. As a condition of federal help, private employers who can swing it should guarantee a month of salary and benefits for those on furlough and put them on a rehiring list.
For those who can’t make that pledge, how about industry-specific relief funds, seeded with donations? The money could be managed through trade associations who, just like their members, need to step up and consider new ways to address this crisis.
People need help now. They don’t need paperwork and confusing and overlapping grant rules and foundations making decisions in their own sweet time.
If the private sector can pick up a month of some personnel costs, Congress should be able to provide, whether in grants or loans, help for another couple of months. But that’s a crapshoot, as the aid must be targeted to covering payrolls, not replacing profits. Banks, who got so much of the largess in the federal bailout for the 2008 financial crisis, need to forgive loan payments.
There’s a growing realization that even in the best-case scenario, the economy that survives the coronavirus may look a lot different. Those tech startups built on hopes and a sales pitch to venture capitalists? Some are finished. All those gleaming new buildings proposed for Chicago’s Fulton Market? They’ll be on hold because the funds behind them suddenly have their own problems and can’t bear the risk.
Investors will be cautious now for some time. On the neighborhood level, Rachel More Gigliotti, operations manager of Tortello, 1746 W. Division St., was on the mark when she said in a Facebook post, “Look around you now, look around your neighborhood, your community, and your workplace ... and recognize that this immediate shutdown of dine-in restaurants without a plan to subsidize these businesses or their staff is going to change everything you currently see around you.”
Economists, normally oriented toward consensus and cautious optimism, are struggling with this because models for past crises don’t apply here. But they recognize what’s at stake.
The team at Northern Trust, led by Chief Economist Carl Tannenbaum, wrote last week, “The American response to the spreading crisis has been entirely insufficient. The process has been hindered by a delayed recognition of the scale of the challenge, which led to delays in the design of appropriate responses. It isn’t surprising that the White House and Congress began on somewhat different tracks, but the magnitude of the occasion should prompt much more rapid coalescence. Markets have been anxiously awaiting a resolution.”
Before Illinois’ own stay-at-home order, Diane Swonk, chief economist at Grant Thornton, tweeted Thursday, “The shutdown of California is a stunning development. This takes the upfront losses we are going to endure to a whole new level. Congress needs to get its act together, yesterday.”
Amen to that. And a few more “amens” wouldn’t hurt.