Stimulus Package Update: Is Time Running Out On A Possible Second Stimulus Check?

 Talks on another round of economic stimulus continued over the weekend. But time is growing short for passing another stimulus bill before the election. According to House Speaker Nancy Pelosi, who is heading up negotiations for the Democrats, a deal must be reached by this Tuesday if a bill is to pass by November 3.

That scenario is unlikely, given the distance between her and Treasury Secretary Steven Mnuchin. Pelosi is holding to her $2.2 trillion figure while Mnuchin, working on behalf of the White House, is sticking to $1.8 trillion. Despite that gap, the two sides agree on the need for another round of $1,200 stimulus checks and more enhanced unemployment benefits, as were found in the CARES Act, which expired at the end of July.

But there are significant differences in the details as well. The two sides remain at odds over language for a national strategic testing plan. As stated in a recent press release from the Speaker’s office about the latest round of revisions, “These changes make the funding a slush fund for the Administration which “may” grant or withhold rather than a prescribed, funded plan to crush the virus.”

Other outstanding issues include inadequate childcare provisions and more necessary funding for state and local governments. Also mentioned were the Child Tax Credit, Child and Dependent Tax Credit, and the Earned Income Tax Credit. Still, the Speaker expressed optimism that a deal could be reached before the election.

President Trump also expressed support for a large package last week.

Of course, the week before that, the President shut down negotiations entirely.

Current polling shows Trump is trailing challenger Joe Biden in the polls, including in states like Arizona and Wisconsin. Given the prevailing winds, he seems likely to support another round of stimulus that includes a check with his signature on it. That political calculus may change with the outcome of the election, however.

The Senate, which would have to vote on a second stimulus package, has its own ideas on how to boost the economy. It is scheduled to vote this week on its own much more limited bill. According to Senate Majority Leader Mitch McConnell, the Republican-crafted coronavirus relief proposal includes additional unemployment benefits, an extension of the Paycheck Protection Program, financial aid to schools, and more funding for testing and tracing. The $500 billion does not include another round of stimulus checks.

The considerable distance between what the Senate is proposing and what the House and the White House are negotiating makes a second stimulus that much more unlikely. McConnell promised over the weekend that the Senate would “consider” whatever deal they may reach.

The chances of a stimulus agreement by Tuesday seem, at best, remote. It should be noted that even if it were to miraculously happen, $1,200 stimulus payments and additional unemployment benefits wouldn’t reach the pockets of needy Americans until weeks after the election.

Meanwhile, consumers suffer as the economy staggers along. Job growth is slowing, and layoffs are rising. In the most recent week for which stats are available, 898,000 people filed for unemployment benefits for the first time, the highest level of new jobless claims in two months. Another 373,000 more who don’t qualify for traditional unemployment requested Pandemic Unemployment Assistance.

Households and businesses are facing difficult times. According to the Center on Budget and Policy Priorities, almost 78 million adults – 33 percent — are struggling to pay for the usual household expenses, such as food, rent, car payments, medical expenses, or student loans. That rate climbs to 40 percent in households that include children.

Longer-term prospects grow even worse if Washington fails to pass another stimulus package. Another dip in the economy would damage unemployed Americans far beyond what we’ve seen so far.

In recent months, spending made possible by stimulus checks, unemployment benefits, and paycheck protection had been propping up the economy. “If there are no unemployment benefits, then the people who were relied on to consume, they’re going to consume a lot less,” says Yeva Nersisyan, Associate Professor of Economics at Franklin & Marshall College. “And that then means firms who were selling them output will get a lot less revenue. They’ll start firing workers and so on. It becomes a vicious cycle, basically.”

Amazon employees are pushing for the company to make Election Day a paid holiday.

More than 6,400 Amazon workers have signed a petition calling for Election Day to be a paid day off, according to Amazon Employees for Climate Justice, a worker activist group. On Saturday, a few hundred people showed up in downtown Seattle to protest the company's current policy and register voters, according to the group.

"Removing barriers to voting is critical to ensure we have a voice on the issues we care about," the petition reads. It notes that many Amazon workers might have trouble voting this year because of reduced polling locations or hours and the possibility of longer-than-usual waits in lines at the polls.

A number of companies this year have given workers additional paid time off on Election Day. The list includes Apple, Coca-Cola, Facebook, Old NavyTwitter, and Walmart, the U.S.'s largest private employer. The business-led group Makes Time to Vote counts more than 1,600 members. Those companies have pledged to give extra paid time off for Election Day or to make the day meeting-free, to make it easier for workers to vote before or after their traditional work hours.

Amazon is not on that list. However, Jaci Anderson, a company spokesperson, said that workers could request extra time off if they needed it.

"We have supplied all of our employees with information on how to register to vote, details of their local polling locations, and how to request time off to vote. In all 47 states with in-person voting, employees that lack adequate time before or after their scheduled workday to vote can request and be provided excused time off," she said, adding that the exact amount of time off varied depending on state law.

The company also noted that managers have been directed to approve time-off requests related to voting.

However, some workers expect to face extra hurdles when voting this year. In some states and counties, a consolidation of polling locations and a shortage of poll workers have led to confusion and long waits in some locations. At the same time, high interest in the election is already leading to record turnout in some states with early voting, exacerbating logistical problems heading into Election Day on November 3.

Warehouse workers, who are paid hourly, may not feel like they have the luxury to use the existing time off for voting. "We're forced to choose between voting and making ends meet," a worker said in AECJ's press release.

The petition calls for Amazon to set an example, and notes that a paid holiday on Election Day would allow some 600,000 workers to vote worry-free. Amazon has more than 1.3 million workers spread across its warehouses and Whole Foods, making it the U.S.' second-largest private employer.

"History has shown us that when workers speak out, Amazon is willing to listen," Victoria Liang, a former Amazon software developer, said in a statement.

A separate petition from Color of Change is also targeting Amazon as well as other large employers to make Election Day a paid holiday.

How did people spend their stimulus checks? It’s not what you think.

Here’s what you need to know.

Stimulus Checks

If you guess how Americans spent their $1,200 stimulus checks, your answer might look something like this: food, housing, utilities, and personal care. In other words, people spent their stimulus checks on necessities. However, you would only be partially correct. According to new data from the New York Federal Reserve, only 29% of Americans spent their stimulus checks on consumption. Here’s the breakdown:

  • Consumption: 29%
  • Savings: 36%
  • Debt Repayment: 35%

Let’s examine the details.

    Consumer Spending

    The Cares Act—the $2.2 trillion stimulus package that Congress passed in March—was intended to stimulate the economy through stimulus checks. Interestingly, more than two-thirds of survey respondents spent their stimulus checks on savings and debt repayment—not on consumption. For the first stimulus checks, individuals who qualified received up to $1,200 (or $2,400 for married or joint filers) and an additional $500 for each dependent child under age 17. However, the data shows that consumer spending was not the primary use of stimulus payments. Of the 29% of Americans who spent their stimulus checks on consumer spending:

    • Essential spending: 18% spent on necessary living expenses
    • Non-essential spending: 8% spent on hobbies, leisure, and vacation
    • Donation: 3% donated to charity

    Savings and Debt Repayment

    According to the data, 35% of survey respondents saved, rather than spent, their stimulus check. That’s six percentage points higher than those who spent on consumption. Why such a relatively higher savings rate? There could be several reasons, according to the Fed, including continued uncertainty about the duration of the Covid-19 pandemic, social distancing rules, restrictions on in-person shopping, and “delayed rent payments (which economists count as consumption).”

    Another 36% of survey respondents spent their stimulus checks on debt repayment. Debt repayment may include paying off student loans, mortgages, credit card debt, auto loans, or personal loans, for example.

    Stimulus checks and unemployment insurance

    How did people who get unemployment benefits spend their stimulus checks?

    • Consumption: 29%
    • Savings: 23%
    • Debt Repayment: 48%

    Those who received unemployment benefits reported spending approximately 24% on essentials. The reason for the relatively lower savings rate and higher essential consumption rate can be explained by the lack of income during the Covid-19 pandemic. That said, the higher debt repayment at 48% shows people spent their stimulus checks on improving their personal finances, rather than on non-essential spending.

    Second stimulus checks

    Will there be a second stimulus check? While there is no guarantee of second stimulus checks, the Fed asked respondents how they planned to spend a second stimulus check. The data is even more striking:

    • Consumption: 24%
    • Saving: 45%
    • Debt Repayment: 31%

    This data suggests that Americans mostly plan to save their second stimulus checks, and spending could decrease. Nearly half say they will save their second stimulus check, which means they would not spend it to boost the economy.

    The coronavirus pandemic has put millions of Americans out of work. But many of those still working are fearful, distressed, and stretched thin.

    A quarter of U.S. workers say they have even considered quitting their jobs as worries related to the pandemic weigh on them, according to a new poll by The Associated Press-NORC Center for Public Affairs Research in collaboration with the software company SAP. A fifth says they have taken leave.

    About 7 in 10 workers cited juggling their jobs and other responsibilities as a source of stress. Fears of contracting the virus also was a top concern for those working outside the home.

    The good news is that employers are responding. The poll finds 57% of workers saying their employer is doing “about the right amount” in responding to the pandemic; 24% say they are “going above and beyond.” Just 18% say their employer is “falling short.”

    That satisfaction seems largely related to physical protection from the virus, which the overwhelming majority of workers considered very important. Still, at least half also say it is very important for their employers to expand sick leave, provide flexibility for caregivers and support mental health, and workers report less satisfaction with efforts in these areas.

    Lower-income workers were especially likely to have considered quitting — 39% of workers in households earning less than $30,000 annually versus just 23% in higher-income households.

    John Roman, a senior fellow at NORC at the University of Chicago, said those findings likely reflect fears of exposure to the virus among those who can’t work from home. Hourly wage workers are also less likely to feel an attachment to a job, making them more likely to search for safer work, he said.

    “This is perhaps the most surprising finding,” Roman said. “The people who can least afford to lose their jobs are leaving jobs in higher numbers. But it fits with the story that they feel unsafe health-wise.”

    While 65% of remote workers say their employers are doing a good job protecting their health, just 50% of those working outside the home say that.

    The pandemic is weighing heavily on women and people of color, who are most likely to work in essential jobs they can’t do remotely.

    Fifty percent of women call the pandemic a major source of stress in their lives, compared to 36% of men. Sixty-two percent of Black workers and 47% of Hispanic workers say it is, compared to 39% of white workers.

    Jamelia Fairley, a single mother who works at a McDonald’s in Florida, said managers initially told her to make masks out of coffee filters and hairnets. Although she now gets protective gear, she said workers often have to serve customers who refuse to wear masks.

    “I feel like they should provide us with better protection by having the masks be mandatory, not just for us but for customers,” said Fairley, who has seen her weekly hours cut nearly in half and has joined a strike to support raising Florida’s minimum wage to $15 an hour.

    Federal labor figures point to a trend of working-age women, particularly Black and Hispanic women, increasingly dropping out of the labor force amid a child care crisis caused by school and daycare closures.

    Many top companies have responded with an array of programs, from increased leave to stipends for child care or tutors, but those benefits are not reaching the vast majority of America’s workers.

    Only about 1 in 10 say their employers are providing child care facilities, stipends, or tutoring services. Only 26% say employers are providing extended family leave.

    Nearly 7 in 10 workers consider flexibility for caregivers very important. Fewer than half — 44% — said their employers were doing a good job of that, though just 18% rated employers poorly; another 37% called the response neither good nor bad.

    Sarah Blas, a single mother of six in New York, said she has dropped a third of her projects at a non-profit since her children started going to school remotely because some of them have severe asthma.

    “It’s soul-crushing,” said Blas, though she is grateful that her employer has allowed her to scale back. “There’s even more work to do now, and I literally have to say no because I’m home-schooling.”

    The poll finds 28% of workers report working fewer hours since the pandemic hit, which could be because they are juggling responsibilities or because employers have cut back their hours. Among Black workers, the number rises to 38%.

    Jeff Huffman, who works as a water infrastructure inspector in Ohio, said his company cut all his overtime hours because they have stopped sending workers out to cut water from households behind on their bills. That has left him struggling to pay child support and worried about giving a proper Christmas to his school-age sons, who live with him every other weekend.

    Huffman, who has asthma and worried about virus exposure, said he has applied for other jobs “out of anxiety and stress.” Huffman said he is disappointed that the company has failed to reach out to give “a little gratitude for the hard work we are doing under all this stress.”

    “They really just haven’t checked in to see how we are doing. I just feel like it’s all about money,” Huffman said.

    The poll shows pandemic-related support varies by company size. Workers at companies with fewer than 100 employees were less likely than those at larger companies to praise how their employers have handled many responsibilities during the pandemic.

    Juan Mercado, the truck driver for a company that employs more than 1,000 people, said his employer has offered to counsel, protective equipment, expanded sick leave, and paid time off to care for sick relatives.

    “That gave us the confidence to continue working because otherwise, I would probably say I don’t want to go,” said Mercado, 67, of Corpus Christie, Texas.

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