Today is Thursday which means it is that time of the week for our usual unemployment reports. Unfortunately, not much other good news today on the economy or discussions in DC regarding a funding bill. Probably best to just put this gloomy day behind us and move on to Friday and the weekend.
Today’s unemployment report showed the number of Americans filing for unemployment benefits increased for a second straight week. Initial claims through regular state programs rose to 1.43 million in the week ended July 25, up 12,000 from the prior week, the Labor Department said. There were 17 million Americans filing for ongoing benefits through those programs in the period ended July 18, up 867,000 from the prior week.
Gross domestic product shrank 9.5% in the second quarter from the first, a drop that equals an annualized pace of 32.9%, the Commerce Department’s initial estimate showed. That is the steepest annualized decline in quarterly records dating back to 1947 when reporting started to be archived and compares with analyst estimates for a 34.5% contraction. Personal spending, which makes up about two-thirds of GDP, slumped an annualized 34.6%, also the most on record. Between April and June, U.S. gross domestic product (GDP) shrunk at a pace that would have wiped out roughly a third of the value of the economy if extended over 12 months, according to the Commerce Department’s advance estimate of second-quarter growth.
Any Closer on an Agreement for Funding?
Talk has increased and complaints seem to be rising about the fact that the HEALS Act did not include any additional funding for Medicaid. The move precludes a likely fight with House lawmakers over the need to allocate funding for the health care program as governors warn that they will need to cut their Medicaid programs without substantial aid from the government.
Senate Republicans also did not include funding in the proposal toward the November election to prepare for a deluge of mail-in ballots or early voting. Officials are concerned that without a new injection of federal funds, state and local officials facing budget shortfalls may struggle to carry out safe and secure elections that ensure every American can vote.
Negotiations between the White House and congressional Democrats stalled this week largely because of the standoff over the liability shield in the GOP’s coronavirus package unveiled Monday. Both sides are digging in, with Senate Majority Leader Mitch McConnell and Democratic leaders calling the issue a looming dealbreaker. The deadlock has prompted McConnell and Senate Republicans to discuss the possibility of moving a smaller relief package that would not include the liability shield proposal. Republicans initially envisioned securing liability protections for large- and medium-sized businesses, as well as health care providers and other organizations, in exchange for hundreds of billions of dollars Democrats want for cash-strapped state and local governments.
One of the chief criticisms of the proposal is that it does not require employers, health care providers and organizations to adhere to any one set of standards for protecting workers, patients, and customers.
Senator John Thune, the No. 2 Senate Republican, said that if they can’t get one large agreement on the various issues, they’ll have to look for a “Plan B.” The problem is nobody seems to know exactly what “Plan B” could consist of. Time continues to tick quickly on the unemployment bump and evictions. We will see if a smaller plan materializes.
Tax Credits in the HEALS Act
Expanded Employee Retention Tax Credit (ERTC) – The ERTC would be increased to 65 percent, up from 50 percent. This tax credit is available to employers for wages paid to employees if they have had to partially or fully suspend their business OR if they have seen a significant decline in gross receipts. The required decline in gross receipts for eligibility would be reduced to 25 percent, down from 50 percent.
The maximum amount of qualified wages would be increased to $30,000 this year, up from $10,000. Finally, the threshold for employees under which all wages are qualified for the credit for working employees – not just furloughed employees – would be raised to 500, up from 100.
Expanded Work Opportunity Tax Credit (WOTC) – The WOTC would be expanded to include qualified COVID unemployment insurance recipients hired prior to January 1, 2021. The credit amount applicable to this new group would be 50 percent of the first $10,000 in first-year wages.
Safe and Healthy Workplace Tax Credit – The bill would establish a refundable payroll tax credit equal to 50 percent of an employer’s qualified employee protection expenses. These include personal protective equipment, contactless payment equipment, cleaning supplies, COVID testing for employees, and qualified workplace reconfiguration expenses. Each quarter, the credit cannot exceed the cap based on the number of employees. The cap is equal to $1,000 for each of the first 500 employees, plus $750 for each employee between 500 and 1000, plus $500 for each employee that exceeds 1,000. The credit would be available retroactive to March 12, 2020, and through January 1, 2021.
Illinois Department of Labor Survey on Reopening
The Illinois Department of Labor – Workplace Safety and Health Consultation Division has created a brief survey that you can take to express the challenges your small business is facing as you reopen or prepare to reopen during these unprecedented times. Survey responses will help guide IDOL as they determine what tools and resources businesses need across Illinois.
Reiterating the Importance of Childcare
Childcare is a two-generation workforce issue, essential to support the workforce of today and vital to develop our workforce of tomorrow. Parents rely on childcare to help them enter, re-enter, or remain in the workforce, but access to affordable, quality childcare is hard to come by. Now due to the COVID-19 pandemic, families are experiencing additional challenges and finding childcare is nearly impossible to find.
At the same time, the majority of childcare across the country is provided by small business owners. Many of these businesses have closed temporarily due to health and safety concerns. For those businesses that are open, they now have increased operational costs to keep kids and staff safe but greatly reduced revenue due to capacity limitations. Parents are trying to balance childcare and work, childcare providers are trying to stay open or re-open with an unsustainable new business model, and employers are trying to determine how and when their working parents can return to work. Next Wednesday, the 5th of August at 10:00 AM, we will be conducting our next Virtual Conference with Sean Noble of ReadyNation with the topic of “Childcare: Increasingly vital to our workforce & economy.” Watch your Chamber email for the direct invite to register.
Finally, here again is an extremely short survey on a topic that can have some scrambling at the end of the year. The State of Illinois has mandated sexual harassment training and we are interested in hearing how many organizations have complied so far and for those that have not, what the interest would be in a group training. We look forward to your responses: https://www.surveymonkey.com/r/6F782PV
Joliet Region Chamber of Commerce & Industry Staff and Board of Directors
Vice President – Government Affairs
Joliet Region Chamber of Commerce & Industry