Labor Day and Paying for the Pandemic
I hope you enjoy your Labor Day weekend, whether you'll be working through it or have the day off. This weekend marks the end of summer in Minnesota, the last days of the state fair, and many schools are coming back into session.
Although it isn't in session, the legislature has a "working group" which just had its final public hearing yesterday.
The "Frontline Worker Pay Working Group" was established to recommend to the legislature how to disburse $250,000,000 of federal money to "frontline workers." In developing its recommendation, the working group is supposed to consider factors including a frontline worker's increased financial burden and increased risk of virus exposure due to the nature of their work. You can see the charge of the legislature to the working group here.
The working group must submit their proposal to the Governor and Legislative by September 6, 2021. After that point, the Governor will probably call a special session in late September or early October for the legislature to consider and vote on the legislation.
As much as you might think politicians would have no problem giving money away, it turns out that there is a lengthy list of folks who consider themselves to be frontline workers during the pandemic. Many types of workers gave testimony before the working group. After the obvious ones, like nurses, nursing home and hospital workers, and first responders, there were also teachers, bus drivers, big box and grocery store workers, sanitation workers, personal care attendants, and people who clean schools and office buildings. The list only grows from there. Many people worked and had to assume additional risks and cost to get us through the pandemic due to the mandates and shutdowns ordered by the Governor.
With the deadline on the other side of Labor Day weekend, the working group will be hard-pressed to finish in time. They know that if they decide that a large swath of workers deserve this bonus, each one may not get very much. If they decide on a smaller set of workers, the rest may be angry at being left out.
One thing that was revealed during the hearings of the Frontline Worker Working group was the number of government resources, both state and federal, paid out to Minnesotans to blunt the economic effect of the pandemic. PPP loans, the CARES Act, and Pandemic Unemployment Assistance (PUA) added to regular unemployment were just a few programs with both a state and federal component.
Many of these programs have since ended. Federal Pandemic Unemployment ends tomorrow on September 4. There is already talk about continuing some of these benefits and a debate about whether they affect the unemployed's motivation to look for work.
Minnesota is one of 22 states that borrowed billions of dollars from the federal government to cover the cost of unemployment compensation during the pandemic. Eight have since paid it back, but Minnesota is one of the 14 that haven't and are authorized to and have continued to borrow more. As of September 1, Minnesota owed about $1 Billion.
Thus far, the loans have been interest-free, but starting September 6, states with outstanding balances will begin to accrue 2.3% interest on their loans. After that, interest payments are coming due unless Congress acts to waive the interest, as it did in the Great Recession. The cost of paying those loans back will affect every business and it will increase the cost of hiring new employees and labor costs generally. That means that it will show up in the cost of everything we buy.
We have a lot to think about. We aren't just talking about how to use taxpayer money anymore. We are talking about how much we are adding to the burden of future taxpayers.
If you have any questions please don’t hesitate to contact my office or me. If you have other needs, please email my Legislative Assistant, Grayson, at email@example.com.