coronavirus

Last week, the incoming Biden administration announced an “American Rescue Plan” to address immediate health and economic threats from COVID-19. On the economic side, the plan goes further than immediate relief and begins to address some longer-term strength and resilience concerns. Among other provisions, it would provide $35 billion for a new business finance program that support venture capital, $350 billion for state and local governments to help address budget shortfalls, $35 billion for higher education and $3 billion for the Economic Development Administration.

The relief bill passed last night falls short of assisting states that face strains on their budgets and increasing demand for assistance from their constituents. However, the bill does provide $900 billion for the first broad COVID-19 relief package to pass since the CARES Act was signed into law on March 27th. The major items in this legislation are the extension of unemployment insurance benefits, direct payments to individuals, and a new round of loans through a modified Paycheck Protection Program.

COVID-19 could affect 3.1 percent of private sector jobs due to business failure among small and medium-size enterprises (SMEs) in 17 different countries (not the U.S.), according to a new working paper from the Federal Reserve Bank of Atlanta. Findings also revealed that the fiscal cost of an intervention that narrowly targets at-risk firms can be modest (0.54 percent of GDP), while non-targeted subsidies can be substantially more expensive (1.82 percent of GDP) to achieve the same level of effectiveness.

As the pandemic turned workplaces upside down, women in particular have been negatively impacted. Women, especially women of color, are more likely to have been laid off or furloughed and the supports that working women relied on, namely school and child care, have been upended.

As the shock of the first wave of the coronavirus pandemic settled and the extent of the economic impact began to become clearer, states are developing creative and long-term plans and programs to breathe life back into their economies. States initially focused federal funds from the Coronavirus Aid, Relief and Economic Security (CARES) Act towards the urgent public health needs of responding to the unfolding crisis and to mitigating the impacts of mandatory business closures.

COVID-19 is not just wreaking havoc across the national and global economies but is specifically causing that damage in a way that widens the existing fault lines between the “haves” and “have-nots.” Further, as countries and companies contemplate the possibility of managing operations alongside the new coronavirus, rather than an entirely “post-COVID” society, there is little reason to believe the worsening economic inequality will mend without specific intervention. The problem will not be easy to solve.

The longer the pandemic lasts, the greater the jeopardy to many small businesses. A recent report from McKinsey & Company finds that the sectors most affected by the coronavirus and the least financially resilient include 1.7 million small businesses, employ 20 million workers, and earn 12 percent of U.S. business revenue.

With the nation in the midst of a recession following 128 months of economic expansion, many are asking how we will find our way out. Turning to a long-time strength for the nation and relying on our manufacturing industry is one way.

A trio of recent reports reflect the pernicious effects the pandemic is having on small businesses. Last month, a survey from the Society for Human Resource Management (SHRM) found that 52 percent of small businesses expected to be out of business within six months. SHRM President and CEO Johnny C.

The House and Senate have both passed a bill that would alter the SBA’s Paycheck Protection Program. Businesses will now have up to 24 weeks to use forgivable funds, instead of the original eight weeks. The portion of the costs that must be spent on payroll has been reduced from 75 percent to 60 percent. The bill also changes many of the original legislation’s hard deadlines from the end of June to Dec. 31.