Hearing of the House Financial Services Subcommittee on National Security, International Development, and Monetary Policy - Opening Statement of Rep. Cleaver, hearing on Protecting Worker Pay During COVID-19 Pandemic

Hearing

In February, before a pandemic was declared and the economic livelihood of Americans was placed in peril, I sent a letter asking the White House, Treasury Department and the Federal Reserve how they planned to prevent a crisis from occurring due to COVID-19.

I asked them what their strategy was to help protect American health and the national economy. It was months until that letter I wrote with Chairmen Meeks, Green and Clay would receive a response. Unfortunately, by that time it was clear, at least to me, that there was no plan. Because we did not plan, we have become a part of the virus' plan.

Congress was forced to take unprecedented steps to rescue our economy and provide emergency assistance to American families and front-line workers through the CARES Act.

* We provided nearly every American money to feed their families.

* We rushed resources for COVID-19 testing and Personal Protective Equipment (PPE) to hospitals.

* We created the Paycheck Protection Program (PPP) as a short-term lifeline to keep small businesses alive and their employees on the rolls.

Just last week, we heard from Chairman Powell that the CARES Act was able to "provide direct help to people, businesses and communities" and made a "critical difference."

It prevented the kind of mass layoffs and evictions that threatened millions and millions of Americans.Despite that significant bill, it has become profoundly clear that our initial response will not be enough and was not administered the way we intended.

The U.S. has suffered the largest increase in unemployment of any major economy on the planet. The unemployment rate was over 13% in May and more than 16% after accounting for various measurement issues and closer to 20% when workers with reduced hours are included.

Additionally, the clock is ticking on the expiration of many provisions of the CARES Act as economists and public health experts are telling us that the outlook is getting worse. This week, in a report written by Moody's chief economist Mark Zandi, he highlighted that the "prospects are high that we will suffer what may well be considered an economic depression."

His analysis leverages Federal Reserve and Congressional Budget Office research that initially assumed COVID-19 would be tapering off and double-digit unemployment would persist into next year.

However, with a resurgence of COVID-19 around the United States--in Florida, Texas, Georgia and my home state of Missouri--businesses are being forced to shutter again driving a possible second round of economic catastrophe.

Throughout the course of the crisis, both the economic and health consequences of COVID-19 has fallen disproportionately on low- and middle-income families and communities of color.

The Inspector General for the SBA highlighted that the CARES Act required rural, minority and women-owned businesses be prioritized for PPP loans, but based on their analysis, they were not.

By mid-April, 440,000 black business owners had shuttered their company for good -- a 41% plunge. By comparison, 17% of white-owned businesses closed during the same period of time.

The New York Times successfully sued the CDC to release COVID-19 information based on ethnicity and race and learned last week that Blacks and Latinos were three times more likely to be infected with COVID-19 and twice as likely to die.

When you combine these facts with data from the Brookings Institute that low income communities of color are more likely to serve as essential front-line workers with higher rates of exposure, this second dangerous wave could be cataclysmic for the working poor in our country.

The remedy that Mark Zandi prescribed in his report, which is echoed by the Federal Reserve Chairman, many of our witnesses here today, and even by president Trump, is simple.

There is a need for more Congressional action that places employees first.

The HEROES Act which passed out of the House in May and is waiting in the Senate will go a long way in preventing the kind of catastrophe that leading economists are predicting.

Further, a bill sponsored by my friend Congresswoman Jayapal, the Paycheck Recovery Act of 2020, would go a long way in aiding those who need it most.

Source