Facing a cliff: Is this the end of pandemic support and relief? - Generocity Philly

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Dec. 4, 2020 4:42 pm

Facing a cliff: Is this the end of pandemic support and relief?

83 million people are still struggling with basic needs. The number of small businesses has fallen by 3.3 million. And by Dec, 31, all the help the CARES Act offered ends.

(Photo by Eliza Diamond on Unsplash)

Updated to add the paragraph about DeVos's announcement on Friday after the original story was published. (12/7/20 at 4:55 p.m.)
By December 31, almost all of the safety net support put in place earlier in the pandemic is set to expire.

The question now is will a lame-duck Congress pass another stimulus package before the end of the month. “Some fiscal support now would really help,” Jerome Powell, the Federal Reserve chairman, testified before Congress, adding that the history of economic crises suggests Congress usually passes too little stimulus.

The number of local and state governments who have had to slash their budgets, small businesses who can’t turn a profit, nonprofits who are facing drastic revenue declines and individuals who are barely holding on is staggering.

According to the Center on Budget  and Policy Priorities, recently released census data showed that 83 million people are still struggling with basic needs while about 26 million adults admitted their households were food insecure — up from 8 million pre-pandemic. The number of small businesses fell by 3.3 million or 22% between February and April 2020, a historic drop according to The Stanford Institute for Economic Policy Research.

Now many are facing a support cliff as they await word about another federal rescue package to help them survive a pandemic that has stubbornly lasted far longer than expected.

Small business

The $349 billion Paycheck Protection Program is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act and offered forgivable loans for employers with the goal of keeping people employed.

The nonprofit sector is the nation’s third-largest private employer, with 1.3 million nonprofits employing nearly 12.5 million people — about 10% of the total number of people working in the private sector.  And like small businesses across the country, they too are shedding jobs. More than 1.6 million nonprofit jobs have been lost between March and May of 2020, according to the John Hopkins University 2020 Nonprofit Unemployment Report.

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Small businesses including nonprofits have until December 31 to spend their Paycheck Protection Program (PPP) proceeds.

Unemployment insurance

As unemployment escalated, Congress responded with several programs that boosted support for more traditional claimants and extended support to gig workers who were not normally eligible.

According to the Century Foundation, as many as one in four workers received a payment from one of the newly created  programs. A recent study showed that because of the expanded unemployment benefits, Americans who did lose their job stayed healthier and more secure.

Now 12 million workers will see their CARES Act unemployment benefits expire December 26.

Housing

The Center on Budget and Policy Priorities reported that an estimated 12.4 million adult renters (one in six)  were behind on rent. A federal moratorium was enacted by the Centers for Disease Control and Prevention in September to slow the spread of COVID-19.

The National Low Income Housing Coalition estimates as many as 19 million people in 6.7 million households are at risk of being evicted when the moratorium ends on December 31.

Local and state government

Revenue research shows that about 50 cents of every nonprofit dollar comes from billing for services, and 33 cents comes from government contracts and grants. Only about nine cents of each dollar come from individual donations. This means the health of local and state government revenues is critical for the survival of the nonprofit sector.

According to a forecast from the Tax Policy Center, “(State) tax revenues are expected to fall $34 billion short of pre-COVID-19 forecasts in fiscal year 2020, and $80 billion short in fiscal year 2021.” Without more federal aid, these governments will most likely need to make painful cuts to schools, police and health and human service program budgets.

The CARES Act provided $150 billion for state and local governments which they have until December 30 to spend.

School loan debt

Under the CARES Act, federal student loan debt payments were automatically suspended, and interest was not allowed to accrue. Now about 21 million people face making student-loan payments again.

Focus groups conducted by Pew Charitable Trusts showed that “economic shocks — including job loss, unexpected health problems, and natural disasters — were the biggest barrier to (student loan) repayment. Many said they wanted but were unable to make payments. Some even took another job to make up the difference, which may no longer be an option for many borrowers.”

Education Secretary Betsy DeVos on Friday, December 4 announced an extension of the moratorium on federal student loan payments until January 31.


Generocity is one of 22 news organizations producing Broke in Philly, a collaborative reporting project on solutions to poverty and the city’s push toward economic justice.

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