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Darrell Berkheimer: ‘Bottom Up’ paycheck plans gain support

Darrell Berkheimer
Columnist

During the past 10 days I have been reading about two of the best “Bottom-Up Theory” approaches to help save our U.S. economy from failure. One is coming out of Washington state and the other is being proposed here in California.

U.S. Rep. Pramila Jayapal in Seattle has issued a news release on the Paycheck Recovery Act that she initiated this past Tuesday. And California lawmakers are proposing ways to provide a basic income plan directed toward low-income residents.

The Paycheck Recovery Act is being co-sponsored by nearly 100 members of Congress and has backing from several of our nation’s top economists.

With our nationwide unemployed approaching 40 million, Rep. Jayapal explained the Paycheck Recovery Act “would deliver certainty and stability by covering the full wages of workers earning salaries up to $90,000 and (by) ensuring employers can rehire those laid-off or furloughed since March 1.” She added that “it’s a public health plan, too.

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“At a time when at least 27 million people have lost their health care and 87 million are uninsured or underinsured, this legislation returns individuals to their employer-sponsored benefits, including health care.

With more than 100,000 small businesses already closed permanently, and thousands more unable to pay essential expenses, Rep. Jayapal reported the act will cover “a portion of operating costs such as rent to ensure businesses can re-open when the pandemic ends.” She said it covers businesses of all sizes, and includes non-profits and state and local governments.

Her news release reported the act “is estimated to cover more than 36 million workers and cost less than what has already been spent on two rounds of Paycheck Protection Program loans, which have failed to successfully stabilize unemployment.”

According to Mark Zandi, chief economist of Moody’s Analytics, “The Paycheck Recovery Act is critically needed to avoid job losses and support businesses of all sizes as Covid-19 continues to ravage the economy.”

And Nobel Prize winning economist Joseph Stiglitz said, “Helping businesses to keep paying their workers is the most effective way to stop millions of Americans from being laid off and protect access to health care at a time when it is especially needed.”

In a 60 Minutes interview broadcast Sunday evening, Federal Reserve Chairman Jerome Powell warned about a “prolonged recession and weak recovery” if the federal government doesn’t use all its power to support business and workers. He observed Congress should be acting to expand the historic bailout.

“The small and medium size businesses that are so important to this country, if they have to go through a wave of avoidable insolvencies … you’ve lost something there that’s more than just a few businesses, you know, it’s really the job creation machine,” Powell said.

“The people who are getting hurt the worst,” he continued, “are the most recently hired, the lowest paid people. It’s women to an extraordinary extent. Of the people who were working in February, who were making less than $40,000 per year, almost 40% have lost their jobs.”

Here in California, lawmakers have joined federal level officials in urging more aggressive financial actions — noting expanded unemployment insurance and one-time income relief payments are falling far short of what’s needed, according to a Newsweek article.

Assemblyman Evan Low, who represents the Silicon Valley area, has proposed a state version of a Universal Basic Income.

The Newsweek report also reminded us of the Stockton cityexperiment during the past year, in which 125 low-income residents are given $500 a month to spend as they see fit. Preliminary data from researchers indicates the residents are spending the money responsibly to cover basic bills and buy food — and that the cash supplements apparently are not affecting efforts to seek longer-term financial solutions.

Entrepreneur and former presidential candidate Andrew Yang has been proposing $1,000 per month payment to every adult American. Critics, of course, question whether the wealthy should be included in such payments, and cite the risks of adding to our impoverished population by generating high levels of long-term unemployment.

But to put the money where it is most needed — rather than having a universal blanket payment to every adult — one state executive suggests California mimic the federal rebate program “that gives checks to households based on income and whether people have children.”

Chris Hoene, executive director of the California Budget and Policy Center, maintains a basic income “is doable” through the state’s Earned Income Tax Credit (enacted in 2015), and the existing child tax credit.

He noted this is the first recession since the EITC was enacted. “So we now have a lever in place that we didn’t have before,” he added.

Hoene cited a 2017 EITC report, in which he participated, that recommends limiting the benefit to “individuals living in households with incomes below $25,600” — the bottom fifth of household income in 2015.

A pertinent comment came from local reader and letter writer Rich Howell of Nevada City. He attached this note to the end of my column of two weeks ago:

“In a culture where we expect people to earn their ‘daily bread,’ we have to have work available for them, work that can actually pay for life’s necessities. Even excluding the current crisis, automation is shrinking the job pool at a faster rate than new jobs can be created.”

He added our system “is flawed” when financial workers “manipulating stock values for their own personal compensation make millions, and a Walmart worker needs food stamps to survive.”

To that I must add that flaws in the financing of our public education system also cause failures in efforts to provide equal opportunities.

Darrell Berkheimer, who lives in Grass Valley, is a frequent contributor to The Union. He has seven books available through Amazon. His sixth, Essays from The Golden Throne, includes 60 columns published by The Union, plus a dozen western travel and photo essays. Contact him at mtmrnut@yahoo.com.


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