News from Washington » Congressman Adam Schiff

A Better Way to Keep Businesses Afloat and Workers on Payroll


The coronavirus pandemic has left millions of Americans out of work – families are struggling to pay their bills, put food on the table and care for their loved ones. The unemployment rate has skyrocketed to almost 15%, a level we haven’t seen since the Great Depression, and many economists believe that still understates the number of people out of work. We must answer the call of these extraordinary times by thinking big and enacting bold measures that meet the scale of this crisis and help put us on a road to economic recovery, sooner rather than later.

Congress has passed legislation that has provided significant support to Americans – from a one-time payment of $1,200, enhanced unemployment benefits with an extra $600 a week, and a variety of programs to help small businesses stay open and keep workers on payroll. These have helped many of our fellow citizens but, looking at the economic data, it’s apparent that it hasn’t been enough to keep people attached to their jobs.

This piecemeal response, arrived at quickly and with bipartisan support, has simply not been enough, and I believe there is a better approach.

Along with a number of my colleagues, I am cosponsoring the Paycheck Recovery Act, which would have the federal government guarantee payroll so businesses of all kinds are able to pay the salaries of their workers until unemployment drops below 7% for three consecutive months. And this type of program has been successfully administered around the world, in places like Britain, Germany, France, Scandinavia, South Korea and Singapore.

Under this proposal, the government would provide a three-month, upfront grant to cover wages and benefits for employees. There would be a salary cap of $90,000 so that employers who were forced to shut down or have been suffering revenue losses due to the pandemic can pay their employees. The grant would also include a 25% maintenance cost so businesses can pay their rent, utilities and other operational costs to get them through this crisis, and it would be applied retroactively to March 1 so that we could cover those who may have already lost their jobs. The Treasury Department would administer the program by using quarterly payroll returns to keep the process as simple as possible.

I’ve consistently heard concerns from constituents that the Paycheck Protection Program, which currently helps small businesses, is complicated and allows banks to pick their favorites. While my office has been able to help many get through to the SBA, I’m concerned that other businesses, and their employees, are being left behind. Not only would our proposal make it simpler for businesses to open, it would prevent them from having to make the difficult choice to furlough or dismiss their employees.

Keeping employees on payroll will make it much easier to restart businesses and the economy when this pandemic abates; without it, employers will be slow to rehire as they wait and see if consumer demand picks up. Paycheck guarantee programs have proven successful in other countries that are also suffering from economic fallout due to the pandemic, and they have all seen substantially lower increases in unemployment than we have so far.

This month the House of Representatives passed the Heroes Act, a $3 trillion measure to greatly expand and extend the help we’re providing to Americans. The bill includes provisions to create a new, refundable tax credit to keep workers on payroll, a helpful step, but not as far as I had hoped. It would also make a number of important changes to PPP in order to give businesses more flexibility and time to use the loans provided by the SBA. These are important steps, but I continue to believe we have more work to do to get workers rehired and keep them on payroll through this crisis.

Mass unemployment is a policy choice and we should choose differently. We have the resources to keep Americans on payroll, businesses afloat and millions of American families protected from financial ruin. If we do not think big and act big now, we will likely face increased hardship and a much slower recovery when this pandemic is over.