Now that Joe Biden and Kamala Harris are President-Elect and Vice President-Elect, we can focus on programs to get America’s economy back on its feet. The Payroll Protection Program was a good start, and while it helped, it missed the mark in many ways. What is missing are economic development programs specific to The Pandemic. Take what thousands of restaurants and bars have faced.
It’s not just the economic loss caused by closing doors, but other losses associated with being closed. In Oakland, one famous bar faced a water pipe break that would not have occurred if the establishment were open. The result: a $10,000 water bill. In another case, Radio Bar in Downtown Oakland was harmed by $25,000 worth of damage caused by looting. Their business insurance will not cover it. A GoFundMe campaign only raised just over $12,000.
And famed Ricky’s Sports Bar, home of Oakland Raiders Raider Nation has closed because shelter-in-place policies have stopped revenue, but utility bills and tax payment requests continue. On top of that, Ricky Ricardo himself passed away November 14th, leaving his wife Tina to deal with the business cash flow problem. She needs help.
These stories are not just in Oakland, or the San Francisco Bay Area, but all over America. What was done to so many businesses of this type was damage so great that they could not be helped by the Payroll Protection Program, because there was no active place to go and work in. It would not matter if a plan to reduce or eliminate Coronavirus spread was installed, because kitchens and refrigerators and light fixtures were destroyed. The Trump Administration completely ignored these problems.
Take this account from ABC News:
At the same time, many businesses, particularly those owned by minorities and women, have experienced great challenges when applying for loans. Although, under the CARES Act, money was set aside for them, a new report by the SBA’s inspector general determined that these businesses “may not have received the loans as intended,” because there was “no evidence” that the SBA had issued guidance to lenders about prioritizing minority borrowers.
Hence, many were shut out given the overwhelming demand for the loans and the limits set by banks.
Raphael Kim, owner of Gomi, a Korean wine bar in New York City, is disheartened, and told ABC News, “I really don’t know what the future of my business is.” During the shutdown, he said, “We have been doing 10% to 20% of what we normally would do. It’s just really, really even difficult to survive.”
Between 2 a.m. and 3 a.m. on Monday, the entire facade of his store was destroyed, and money was stolen from the cash register.
Also in the early hours of Monday morning, Anna Barounis, a Greek immigrant, and the longtime owner of Giorgiana’s, a small neighborhood market and deli in Boston’s South End, saw on social media that her store was ransacked.
Throughout the pandemic, she worked alone, because her employees were fearful of getting sick. According to Barounis, approximately 50 teenagers, carrying baseball bats and sledgehammers, looted and damaged the property. She has been told by investigators that they were likely from out of state.
The Broadstrokes Of A New Program Specifically Targeted At Bars And Restaurants And Why It’s Needed Now
The Pandemic and the many developments that have conspired to harm bars and restaurants are such that the very soul of what we call “The Informal Economy” has been impacted. In this case, examples of “employment” in the informal economy often occur at independent bars and restaurants:
• A man in need of extra money to pay monthly rent may take a job at the local tavern as an identification checker on the weekends.
• A college-student who needs money to pay for her books and food might take a job as a busser or a barback.
• A musician earns money from playing at bars and restaurants for tips between larger gigs.
All of those, and many more, examples of work in the informal economy have been taken away because of our response to The Pandemic and the afforementioned actions that have caused many businesses to close.
Moreover, the response during this time – specifically unemployment payments – was met with remarks by some that prove many Americans do not understand their own economy. For example, Senator Lindsay Graham said that some workers were getting more money for not working than working. But that view ignores the often hard-to-track payment of tips. But, if one takes away the ability to do work in a normal bar or restaurant environment, than gone are tip payments. One could argue that the unemployment payments did a good job of replacing lost tip payments.
The increase in 3rd quarter gross domestic product of 33.1 percent that President Trump brags about was fueled by government spending in the form of disaster relief and the Payroll Protection Program. But all it did was make up for the 33 percent gross domestic product decrease in the 2nd Quarter, even as it did not cover for the 5 percent loss of the 1st Quarter of 2020.
Addressing The Payment Of Tips Will Go A Long Way Toward Economic Recovery
Again, The Trump Administration has not specifically addressed this problem of decreased informal economic activity; doing so will go a long way toward American Economic Recovery.
While the Pandemic makes standard operation almost impossible without making more Americans sick, we should build an infrastructure of help that creates a new form of businesses governance that’s sensitive to this situation. The program needed to do this, would do the following:
1) Provide a fund specifically for bars and restaurants that need repairs that consists of per-establishment grants of up to $50,000 per business.
2) A City-focused technical assistance program that builds websites for bars and restaurants that don’t have them, and an e-commerce ordering provision for each one. Then, those websites would be connected with delivery services. In turn, delivery service’s would face a national cap on service fees, a direct response to the wild west situation of too-high costs that exists today.
3) Provide a separate fund to pay for the delivery and installation of air scrubbing and HEPA Filters. This is specifically designed for use in eateries but is very expensive for many bar and restaurant owners to obtain right now. A government program to purchase and install them will, in turn, launch a new industry with multiple makers of those devices, causing per-unit-cost to fall, dramatically. (That’s not to replace the use of masks and hand sanitizers, but to add an extra system that cleans the air in the eatery.)
I welcome restaurant and bar owners to contact me with feedback on this idea, and to add their own needs to form a program that can work. Right now, I estimate the cost of such an effort will break down this way:
1) $50,000 in damage-cleanup grants for each establishment, up to 1 million businesses nationwide, totaling $50 billion
2) Online-based e-commerce assistance of $5,000 per establishment, again up to 1 million businesses nationwide, totaling $5 billion, and then adding a 30 percent administration cost, which comes to $6 billion.
3) Purchase and installation of restaurant level air purification wall units that use UV light, may cost as much as $2,000 per establishment for businesses seating over 50 people. Times 1 million businesses nationwide businesses and factoring in administration costs, that would come to $2.6 billion.
So, overall, we’re looking at a program that costs almost $58.6 billion. But, considering that one F-22 Raptor costs $339 million, and that program cost $62 billion, $58.6 billion to restore the nations bars and restaurants and save lives until we find a cure for the Coronavirus is not a bad expenditure. Note, this does not cover labor costs, that’s for another program that must also deal with the afforementioned informal economy; this is specifically designed to restart the infrastructure of eateries and taverns in America, and rebuild the very structure of a significant part of America’s economy.
Stay tuned.