PAI: Hope for the best, but plan for the worst

-A A +A

PAI: Hope for the best, but plan for the worst

Fri, 05/29/2020 - 4:48pm -- tim

by Jack Hoffman Public Assets Institute Health comes first. But the next biggest risk Vermonters face from the coronavirus pandemic is loss of income. As leaders in Montpelier contemplate the best uses for $1.25 billion in federal aid from the Coronavirus Relief Fund, insuring that Vermont families continue to have money for food and shelter has to be at the top of the list.

Until last week, the weekly reports on new claims for unemployment benefits were about the only data we had on what the coronavirus was doing to the state’s economy. Now we’re starting to get more numbers:

  • Vermont’s official unemployment rate jumped from 2.4 percent in February to 15.6 percent in April. Almost 54,490 people were counted as unemployed—more than double the peak reached in 2009 during the Great Recession.
  • More than 60,000 nonfarm payroll jobs were lost in April, and they are down 65,000 since January. Vermont’s 22 percent job loss was the second worst in the country.
  • According to a new rapid-response survey launched by the U.S. Census to track the pandemic, more than 200,000 Vermonters 18 and older have either lost employment income or live in a household where another adult lost employment income. That’s more than four in 10 adults who have suffered a drop in household income.

Loss of income has hit a bigger share of low-income families than upper-income, at least on the national level. According to the new Census survey, more than half of households earning less than $75,000 a year have lost income since mid-March, but only 30 percent of those earning $200,000 or more have taken a hit. Also from the Census, 85 percent of people not working in late April and early May—just over 100 million people—said they had received no pay while out of work.

Federal emergency programs put money directly in workers’ pockets, but they are scheduled to expire soon. The Paycheck Protection Program (PPP), which provides grants to businesses that retain their employees, covers payroll expenses for only two months. The $600-a-week federal supplemental unemployment benefits end in late July. The $1,200 checks to most American adults were a help, but that was a one-time boost.

Even with the billions in federal assistance that Vermonters have received, people have queued for hours in food lines. How long will those line be in August after the $600 unemployment checks stop and the PPP grants have been used up?

The best hope, which seems evident to many people, is that Congress appropriates more aid to the states and loosens the restrictions on the money already distributed. Gov. Phil Scott is still a Republican. And while the White House may not take his call, he and other Republican governors might succeed in persuading the U.S. Senate that more federal aid, not bankruptcy, can save the states.

But given the chaos in Washington, it’s time for Montpelier policymakers to make contingency plans. If Washington fails to act, some portion of the $1.25 billion will be needed to make sure unemployed workers and their families can survive through the summer and into the fall.

Public Assets Institute May 29, 2020 Montpelier