Senate Bill Would Guarantee Paychecks to Laid-Off Workers for Rest of 2020 'To Avoid Another Great Depression'

Sens. Bernie Sanders, Mark Warner, Doug Jones, and Richard Blumenthal on Thursday unveiled legislation aimed at stemming coronavirus-induced mass layoffs in the United States by guaranteeing paychecks and healthcare benefits to laid-off and furloughed workers for the rest of 2020.

The Paycheck Security Act--introduced with support from senators across the ideological spectrum of the Democratic caucus, and with the notable backing of Minority Leader Chuck Schumer (D-N.Y.)--would massively expand the existing Employee Retention Tax Credit to cover wages, salaries, and benefits for laid-off or furloughed workers up to $90,000 per year.

The tax credits would be refundable and advanceable, meaning employers would not have to wait to file payroll taxes to receive the payment.

"The most important thing we can do for workers and our economy is keep as many people as possible connected to their jobs, paychecks, and healthcare."
-- Sara Nelson, Association of Flight Attendants

According to a summary (pdf) of the bill released by Sanders' office, the payroll credit would be available to "employers who have experienced at least a 15 percent drop in gross receipts compared to the same quarter in 2019." The legislation would also provide businesses with a refundable tax credit to cover operating costs like rent, utilities, and maintenance.

"We cannot continue to allow tens of millions of Americans to lose their jobs, income, and health insurance during this horrific pandemic," Sanders said in a statement. "In order to avoid another Great Depression, Congress must act boldly and aggressively to ensure that every American worker receives their paycheck and health insurance until this crisis is over."

It's unclear whether the legislation can gain enough support to pass the Republican-controlled Senate, but the idea of having the federal government cover company payrolls has won the backing of Sen. Josh Hawley (R-Mo.) and Cory Gardner (R-Colo.).

The Paycheck Security Act has been endorsed by economists, advocacy groups, and labor leaders, including AFL-CIO president Richard Trumka and Association of Flight Attendants president Sara Nelson.

"The most important thing we can do for workers and our economy is keep as many people as possible connected to their jobs, paychecks, and healthcare," Nelson said in a statement. "The best way to do that is to make it easy for employers to keep payroll running. That's what we did for aviation workers in the CARES Act, and it's what the Paycheck Security Act would accomplish for tens of millions more workers."

The Senate bill comes just days after Rep. Pramila Jayapal (D-Wash.) on Tuesday introduced the Paycheck Recovery Act in the House with 93 original co-sponsors, including a number of moderates. Instead of leveraging the Employee Retention Tax Credit, Jayapal's bill would provide businesses with direct grants through the IRS to cover the wages and benefits of laid-off and furloughed workers up to 90,000 per year.

"Mass unemployment is a policy choice, and we must choose differently by passing an urgent proposal that matches the scale of this crisis while delivering certainty and direct relief to workers, businesses of all sizes, and the economy," Jayapal said in a statement. "The Paycheck Recovery Act will end mass unemployment, put workers back on their paychecks and health care and keep businesses from closing permanently."

Jayapal fought hard for the inclusion of her paycheck guarantee proposal in HEROES Act, which passed the House last week, but was ultimately rebuffed by House Speaker Nancy Pelosi (D-Calif.). Jayapal joined several moderate House Democrats in voting against the HEROES Act in part because she said the bill would not do nearly enough to curb mass unemployment.

As The Intercept's Ryan Grim reported Tuesday, the significant support Jayapal's paycheck guarantee plan has garnered from moderate Democrats in swing districts "represents a new threat to House Democratic leadership's domination of the caucus."

"For years, Pelosi has insisted that if it were up to her, the party would go further left than it does, but that the imperatives of reelection require moderating legislation for the members she calls 'majority makers,'" Grim wrote. "But if those majority makers get out ahead of Pelosi, that rationale would evaporate, and the dictates of making and keeping a majority would militate in their direction."

"The politics of fighting on behalf of jobs is an obvious winner," Grim added.