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Democrats push for payroll subsidies, even for laid off workers

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  • Democrats in the House and Senate are pushing for payroll subsidies to keep paychecks flowing amid increasing unemployment.
  • Efforts led by Rep. Pramila Jayapal and Sen. Bernie Sanders aim to subsidize salary and benefits of up to $90,000 per worker.
  • The bills also include a provision to rehire workers who were laid off.
  • Visit Business Insider’s homepage for more stories.

Democrats in the Senate and House are pushing for the federal government to subsidize paychecks in an effort to put a plug on the increasing unemployment rate. 

Even workers who were laid off would be put back on the payroll if the Democrats’ legislation becomes law. The effort by Democrats comes after the unemployment rate hit 14.7% in April. White House Economic Adviser Kevin Hassett predicted May’s unemployment rate could hit 20%. 

While a bipartisan provision for paycheck subsidies, led by Democratic Rep. Stephanie Murphy of Florida, was included in the legislation passed last week by the House, the stimulus bill has been dismissed by Senate Majority Leader Mitch McConnell, and the president called it “dead on arrival.” 

Some Democrats argue even that provision didn’t go far enough. Rep. Pramila Jayapal, a progressive Democrat from Washington state, introduced the Paycheck Recovery Act as a standalone piece of legislation. 

Jayapal’s legislation would pay salary and benefits up to $90,000 for each worker. It would cover employees who were furloughed or laid off after March 1 if they are put back on the payroll. 

In a direct effort to lower the unemployment rate, Jayapal’s bill would automatically renew until the unemployment rate stays below 7% for three months in a row. 

“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. 

Jayapal’s legislation was praised by former Federal Reserve Chair Janet Yellen, who said the paycheck subsidy is a “smart, quick and effective way to channel aid to workers through their firms.” 

In the Senate, a group led by Sen. Bernie Sanders introduced the Paycheck Security Act, which would also provide salary and benefits up to $90,000 per worker. 

“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,” Sanders said. 

But, both pieces of legislation would likely face opposition from Republicans, who control the Senate. It’s unclear if President Donald Trump would support the effort. 

House Minority Whip Steve Scalise said it’s “incredibly tone-deaf” for Speaker of the the House Nancy Pelosi to “continue using this crisis to push these radical socialist ideas that have been consistently rejected,” according to a report by The Hill. Scalise said lawmakers should instead focus on existing relief packages “to get trillions of dollars directly into the hands of families and businesses.” 

But, paycheck subsidies have gotten support from at least one Republican. Sen. Josh Hawley of Missouri wrote in an op-ed for the Washington Post that “Because the government has taken the step of closing the economy to protect public health, Congress should in turn protect every single job in this country for the duration of this crisis. And Congress should help our businesses rehire every worker who has already lost a job because of the coronavirus.”

The Democrats’ push for payroll subsidies come after the Paycheck Protection Program, a stimulus provision that gave money to small businesses if they kept employees on the payroll, sputtered, running out of money in just two weeks.

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