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Labor Unions and Small Business Advocates Applaud Jayapal's Paycheck Guarantee Plan to Stave Off Economic Collapse

"Mass unemployment is a policy choice," the congresswoman said. "We can and should choose differently."

House Judiciary Committee member Rep. Pramila Jayapal (D-Wash.) questions Acting U.S. Attorney General Matthew Whitaker during an oversight hearing in the Rayburn House Office Building on Capitol Hill February 8, 2019 in Washington, D.C. (Photo: Chip Somodevilla/Getty Images)

With at least 17 million Americans out of work and economists estimating that more than a quarter of small businesses in the U.S. are at risk of imminent shutdown amid the coronavirus pandemic, Rep. Pramila Jayapal on Friday called on the federal government to take bold and immediate action to ensure working Americans receive their paychecks for the duration of the crisis.

The Washington state Democrat, a co-chair of the Congressional Progressive Caucus, introduced the Paycheck Guarantee Act to allow both large and small businesses across the country to continue paying 100% of their employees' salaries of up to $100,000 annually—a plan similar to those that have been enacted in Denmark, the Netherlands, and the U.K. since the pandemic forced businesses around the world to shut down.

Jayapal introduced the legislation as the official unemployment rate in the U.S. hit 13%, the highest it's been since the Great Depression. 

"Mass unemployment is a policy choice," the congresswoman said. "We can and should choose differently."

Under Jayapal's proposal, any company that's suffered losses during the pandemic could be eligible for a grant covering three months of its base payroll, including salaries and benefits for employees. The companies could renew the grants after three months if the pandemic and business closures continue. 

The plan would also disincentivize layoffs or furloughs, with only companies that keep all their employees on staff during the crisis eligible for the grants.

Jayapal said the proposal would "put the brakes on mass layoffs and economic decline" and "would enable a speedier and smoother recovery."

The plan has already been endorsed by labor unions including the American Federation of Teachers, Unite Here, and the SEIU. The small business advocacy group Maine Street Alliance, which has raised concerns about the delayed relief businesses have been offered via loans through the Paycheck Protection Program (PPP), called the Paycheck Guarantee Act "exactly the type of program we need" to stave off an economic meltdown—with working people as the hardest-hit victims—during the pandemic.

"The financial devastation of COVID-19 to small businesses and working people has been stunning, and threatens to upend our entire economy," said Amanda Ballantyne, director of the Main Street Alliance. "We applaud Representative Jayapal's leadership in developing the Paycheck Guarantee Act, which provides a bold and workable solution that addresses the true severity, scope, and potential duration of the financial crisis that small business owners and their employees are facing right now." 

Progressives on social media also applauded the legislation as both pragmatic and "humane."

According to the Washington Post, Jayapal has gotten a positive response regarding the legislation from Senate Majority Leader Chuck Schumer (D-N.Y.) and is planning to speak with House Speaker Nancy Pelosi (D-Calif.) about the proposal in the coming days. The legislation has been endorsed by the Congressional Progressive Caucus and already has several co-sponsors in the House, according to Vox. 

Americans for Financial Reform said Jayapal's legislation is necessary to provide small businesses with relief as federal loans have proven insufficient.

"In the absence of action along the lines outlined in Rep. Jayapal's legislation," said policy director Marcus Stanley, "the likelihood of a Great Depression scale economic catastrophe and the disappearance of large swathes of the small business sector becomes ever greater."

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