Because of the spread of COVID-19, government leaders like New York State Governor Andrew Cuomo have enacted social distancing measures to protect people from contracting the virus. And while these social distancing measures are necessary for public safety, they’re threatening the existence of America’s restaurant industry — which could lose 5 to 7 million jobs within the next three months. More legislative plans need to be enacted to support local restaurants.
The federal government recently passed legislation in an attempt to keep the economy afloat. Last Friday, President Donald Trump signed a $2 trillion stimulus package that would provide most adults $1,200 and an additional $500 for each child 16 or younger. And two weeks ago, the Families First Coronavirus Response Act was enacted, paying businesses with less than 500 employees paid sick leave and becomes effective April 1st.
However, neither of these plans do enough to support restaurant workers. The former policy gives barely enough money for employees in the restaurant industry to survive. In New York City it costs $1,889 per month to live in a studio apartment on average, ignoring the costs for other basic necessities. Further, the forgiveness programs intended to help small businesses only apply to businesses that plan on rehiring their staff by June — which aren’t feasible for some.
The latter bill fails to provide definite coverage for all endeavors, since larger businesses would be exempt from a tax, whereas businesses that employ fewer than 50 individuals would have to prove their hardship. In addition, more than nine out of 10 restaurants have employed less than 50 people, which means that unless Congress passes more financial relief, nearly 90% of restaurants may not survive.
With an industry of 15.3 million employees, the lack of financial relief jeopardizes an industry that heavily contributes to the American economy. As of 2019, the restaurant industry made up 4% (or $863 billion) of the U.S.’s GDP and for every dollar spent, 51% was used on restaurants.
Finding the solution to help the restaurant industry will be challenging. Some restaurants have taken action and shut down their operations entirely to counter any coronavirus exposure to their employees.
One possible solution stems from a restaurant advocacy group, The Independent Restaurant Coalition, which called on Congress to install an income replacement program that would require $440 billion to supply the wages of restaurant employees still working during the pandemic. Further, the program demands a grant that allows them to pay suppliers.
Yet, given the unpredictable nature of Congress’s ability to cooperate and get laws passed, many have turned to state governments for help. In New York, restaurant workers joined together to create R.O.A.R. (Relief Opportunity for All Restaurants), a petition that calls on Governor Andrew Cuomo to conduct a variety of economic measures that would financially assist restaurant workers. This includes the suspension of state sales and payroll taxes through the end of the year and would require business loss insurance to cover closures of hospitality businesses due to COVID-19.
Federal and state governments need to take charge and help the workers that serve the American people on a daily basis. Economists project that the restaurant industry will suffer a $225 billion loss and lay off millions due to COVID-19. It’s not enough for the federal government to keep reinstating temporary forms of relief that don’t completely protect small restaurants.
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Email Gabby Lozano at [email protected]