What a nice day and weekend ahead. It is an unusually busy day of news for a Friday so make sure to read below for all of the updates.
A couple of reminders before you get into today’s update – we have a virtual conference next Thursday March 11 at 11:00 AM with John Ferguson, Senior Vice President & Senior Portfolio Manager with Northern Trust. Please join us!
Economic Trends & Reopening of the Economy
- History: Economic and Market Review through the Pandemic
- Current Events: Market and Economic Signs that we are at an inflection point
- Outlook for the Future: Is this a remake of the roaring 20’s?
Our State of the City Address with Joliet Mayor Bob O’Dekirk is back on the calendar for Monday, March 22 at 11 AM. Make sure to sign up here.
Also, please consider taking a few minutes to fill out the 2021 Small Business Needs Assessment. The Joliet Region Chamber of Commerce in partnership with the Illinois SBDC at Joliet Junior College asks for your assistance in our effort to best serve small business. Your input is extremely valuable and we thank you for your time in completing this survey.
*Daily Coronavirus update brought to you by Silver Cross Hospital
Dueling Proposals on Unemployment Payments Hold Up Senate Vote on Aid Bill
A dispute over expanded unemployment benefits stalled the Senate’s progress Friday on a $1.9 trillion pandemic relief package. Democrats thought they had reached an agreement among themselves for an amendment that would scale back the size of expanded weekly benefits from $400 to $300, while extending the benefit through Oct. 4 instead of Aug. 29.
The amendment, to be offered by Delaware Sen. Thomas R. Carper, also calls for exempting from taxes up to $10,200 in unemployment insurance benefits. But Sen. Rob Portman, R-Ohio, was pushing an alternative amendment that would extend the $300 weekly benefit only through July 18. That proposal was giving Joe Manchin III, D-W.Va., second thoughts about whether to back the Carper-brokered compromise between his party’s moderate and progressive wings.
Manchin has said he prefers ending the unemployment benefit over the summer when businesses in his state and elsewhere should be reopening and looking for workers. The Portman amendment, which Republicans said would cut $128 billion from the underlying bill’s price tag, won support from the U.S. Chamber of Commerce and National Federation of Independent Business, which said they would make the Portman amendment a “key vote” on their annual scorecard.
The vote calculus is simple: if Manchin supports the Portman amendment and the Ohio Republican can keep his own caucus united, the amendment would be adopted with a simple majority. But that could scramble the House’s vote next week, after that chamber passed the initial version with $400 weekly benefits through Aug. 29.
If Democrats can keep Manchin on board with Carper’s amendment, which the White House supports, then their alternative would win out. The West Virginia Democrat wasn’t commenting on his plans for the moment. “I like good amendments,” was all he’d say to reporters clustered outside the floor. There was also some question on the GOP side about whether there’d be enough support for Portman’s amendment, given there are those who don’t want to extend unemployment benefits at all.
Job Growth Surges in February
Hiring surged in February as U.S. economic activity picked up with Covid-19 cases steadily dropping and vaccine rollouts providing hope for more growth. The Labor Department reported Friday that nonfarm payrolls jumped by 379,000 for the month and the unemployment rate fell to 6.2%. That compared with expectations of 210,000 new jobs and the unemployment rate holding steady from the 6.3% rate in January. An alternative measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons was unchanged at 11.1%.
Nearly all the job gains came from the battered leisure and hospitality sector, which saw an increase of 355,000 amid a relaxation of dining restrictions in some areas. Bars and restaurants gained 286,000 jobs while hotel-related hiring totaled 36,000 and amusement, gambling and recreation businesses added 33,000.
Despite the gain, the industry is still 3.5 million short of its employment level from a year ago, just before the worst of the pandemic. The pickup in hiring drove the unemployment rate for the sector down to 13.5% from 15.9% a month ago; the accommodation and food services subsector saw its jobless rate fall to 12.7% from 15.3%.
“We’re seeing great opportunities within the service sectors,” said Amy Glaser, senior vice president at national staffing firm Adecco. “We anticipate as the weather continues to get warmer, that [hospitality] sector will start to explode in the next eight to 12 weeks.”
Friday’s report showed that hiring also was stronger in January than initially indicated, with that month’s tally revised to 166,000 from 49,000. However, December’s count was revised lower from a loss of 227,000 to a drop of 306,000. Health-care jobs in February rose 46,000 while retail added 41,000. Manufacturing also posted a 21,000 increase.
Several sectors saw losses. Local and state government education jobs fell by a combined 69,000 while construction declined by 61,000 and mining lost 8,000. In all, there were still 8.5 million fewer Americans holding jobs in February compared with a year ago, a total that fell only slightly from January. The size of the labor force increased by 50,000 but the labor force participation rate held steady at 61.4%, down 1.9 percentage points from a year ago.
New Aid Bill Would Push Higher Taxes on “Gig” Workers
A last-minute insert by Democrats looking to offset the cost of their coronavirus aid package would send tax collectors into the gig economy, eventually costing Uber and DoorDash drivers, Airbnb hosts and others about $1 billion annually.
Under current law, such online platforms only have to report to the IRS when they pay individuals at least 200 times a year, for a minimum $20,000. The change inserted into a managers’ amendment just before House floor debate on the $1.9 trillion measure would cut that threshold to $600, regardless of how many transactions, generating an estimated $8.4 billion in extra tax revenue through fiscal 2031.
For decades, brick-and-mortar businesses have had to send tax reporting forms based on payments to vendors greater than $600. But the rise of eBay Inc. as a major player in the online market for connecting buyers and sellers of various wares highlighted a problem for the IRS: tracking how much money thousands of individual online merchants were making.
So in 2008 when lawmakers needed an offset for housing market tax incentives they established an income-reporting regime for “third-party settlement organizations” to try to capture some of that underreported tax liability. But they set the threshold high enough to keep the paperwork burden manageable and not discourage online commerce.
The $20,000 and 200-transaction thresholds didn’t contemplate the explosive growth of the gig economy in recent years, with all manner of third-party settlement organizations appearing on the scene. “No one was thinking about Uber and Lyft and Airbnb,” said Caroline Bruckner, a tax professor and managing director of the Kogod Tax Policy Center at American University. Even though the advent of smartphones and the gig economy has since dwarfed eBay, the IRS still defines third party settlement organizations on its website by the eBay definition: “online auction payment facilitators.”
Eyeing that underreported online income, lawmakers in the last three Congresses have sought to lower the reporting threshold. Companies lobbying on related legislation in the 116th Congress included Uber, Lyft and TaskRabbit, as well as trade groups TechNet and the Retail Industry Leaders Association.
Now, the stiffer tax burden would be imposed while 10 million Americans are unemployed and more and more have turned to freelance and gig economy work to make ends meet. Cutting the reporting threshold “adds a significant burden to gig economy and small business workers at the worst possible time,” TechNet spokesman Steve Kidera said in an email.
Unlike the 2008 change, which delayed implementation until 2012 to give businesses time to adjust, the new lower reporting threshold would take effect starting in 2022.
Nina Olson, who ran the IRS’s taxpayer advocate services for 18 years, predicted the estimated tax revenue will prove elusive because many gig workers who are paid by Uber, Lyft, DoorDash, Grubhub, TaskRabbit and the like are living paycheck to paycheck and won’t be able to pay the bill. “Workers who are underreporting their income now will become guilty of nonpayment next year and subject to penalties and actions by the agency,” Olson said.
Olson added that an IRS collection action “can destroy a person’s life,” as employers can be hesitant to hire someone with a federal tax lien and lenders won’t make loans without charging the highest interest rates.
The new $600 income-reporting threshold for gig workers is also included in the Senate’s substitute amendment to the House-passed relief bill, making it all but certain to become law. During the late-night debate on the House floor, Rep. Adrian Smith, R-Neb., said Democrats had delayed the vote in part because they “were adding a new cash grab, drastically lowering the threshold at which gig workers” have to report income to the IRS. “It is like the majority learned nothing from the debacle they created when they shoehorned new [reporting] rules into Obamacare,” Smith said, referring to a $19 billion offset for the 2010 health care law. That law expanded the $600 reporting requirement for services payments so that goods purchased above that threshold also needed to be reported, such as a business buying lunch for its workers at a local carryout. But after an outcry that requirement was repealed a year later.
Dylan Opalich, a spokeswoman for House Ways and Means Chairman Richard E. Neal, D-Mass., said the new reporting threshold was added to keep the coronavirus relief bill in line with the budget resolution’s deficit ceiling. But she said it was also an overdue policy change.
“Under the present law rules, significant amounts of income go unreported both to taxpayers and the IRS, and this provision is bringing reporting requirements applicable to large internet platforms in line with the same requirements that apply to main street businesses,” Opalich wrote in an email. The provision would exempt transactions between individuals using online payment platforms like Venmo or PayPal, or when an individual occasionally sells used items and uses such payment networks.
There’s a potentially bigger issue at play for third-party networks than just the reporting threshold, however: fear of having to reclassify workers as employees, rather than independent contractors. The dreaded employee designation carries substantial new obligations, such as putting the employer on the hook for payroll taxes and benefits like health insurance.
The industry was shaken last month when the United Kingdom’s highest court ruled that Uber’s drivers were employees and not self-employed independent contractors. That was after Uber and others dodged a bullet in November, when Californians approved a ballot initiative to exempt them from a state law that would have required the same. And President Joe Biden during his campaign said he would seek enactment of a federal law to end “misclassification” of workers as independent contractors.
Seeking to head off such moves across the country and nationwide, gig economy firms in the last Congress got behind legislation proposed by Sen. John Thune, R-S.D., and Rep. Tom Rice, R-S.C., that would lower the threshold to $1,000, but with a safe harbor to designate workers as independent contractors if certain conditions are met.
According to the IRS, workers subject to payroll withholding and reporting by their employers generally pay about 99 percent of what they owe. By contrast, those whose taxes aren’t withheld and their income reported to the IRS pay about 45 percent of what’s owed. Lawmakers for years have sought to claw back some of that “tax gap” revenue.
That made gig workers an obvious target when lawmakers went looking for easy last-minute offsets, ignoring past attempts to compromise, said Katie Vlietstra, vice president of government relations and public affairs at the National Association for the Self-Employed. This “dramatic” change is going to be difficult for generally lower-income workers to adapt to, Vliestra said. “Are these the people we actually want to be bringing the full force of the IRS on?”
Illinois Comptroller Hoping for Return to Outdoor Events this Summer / Indoor for Fall
Illinois Comptroller Susana Mendoza said she is hopeful outdoor events can return as early as this summer with large indoor events such as conventions and trade shows beginning in the fall. Speaking during a Senate Tourism and Hospitality Committee hearing, Mendoza said that the return to holding events would be gradual and based on a number of factors, including COVID-19 transmission and vaccination rates.
“We’re on a favorable trajectory in the pandemic,” Mendoza told the committee on Thursday. “Let’s continue to prepare for the worst and plan for the best and optimally position ourselves to reopen with greater capacity sooner rather than later.” The state’s COVID-19 seven-day rolling average was near a pandemic-low 2.4 percent for the sixth consecutive day Thursday, while hospitalizations continued to decrease and about 7.5 percent of the state’s population had been fully vaccinated.
Mendoza said she is hopeful the governor’s office will be receptive to a wider reopening approach this year. “Working now in concert with industry shareholders, organized labor, the legislature, of course, and the administration on agreed safety measures is a sensible course,” she said. Mendoza said allowing events and gatherings to resume safely in a quick and efficient manner would be key to jumpstarting an economic turnaround following the COVID-19 pandemic as the state works to return to a full reopening.
“My job, as you know, is to pay the state’s bills, which is hard to do when businesses close and people lose their jobs, and neither the businesses nor the employees are in any position to pay taxes,” Mendoza said. Citing numbers from the state’s tourism office, Mendoza said COVID-19-related shutdowns and event cancellations cost the state nearly a $500 million in tax revenue over the past year. Prior to the pandemic, tourism in the state brought in nearly $2.5 billion in sales tax revenue annually, she said.
Mendoza also said state hotel revenue fell from $300 million in fiscal year 2019 to $250 million in fiscal year 2020. In the first six months of the current fiscal year, the state has only brought in $42.5 million in hotel tax revenue, she said. “This is economic activity that we need to nurture and sustain to the best of our abilities while we combat the pandemic,” Mendoza added.
Mendoza cited recent decisions by the National Restaurant Association and the International Housewares Association to cancel their annual conventions in the state as an example of how the state could lose out on key income if large-scale events do not return in some capacity in 2021.
Some business leaders told the committee that they have been set back by the state’s current cap of 50 people for event gatherings under Phase 4 of the Restore Illinois guidelines. Phase 5 of the reopening plan would allow for a return of large-scale events with the necessary safety precautions, pending the widespread availability of a COVID-19 vaccine or treatment.
As a result of the federal government moving up projections that a vaccine could be available to the entire population by the end of May, business leaders asked the committee for a “ramp” approach to reopening under Phase 5 to allow events to resume in some capacity as soon as possible. “I don’t think we need to have capacity limits,” Bob Reiter, president of the Chicago Federation of Labor told the committee on Thursday. “We need to have percentages that account for actual spaces.” In the “ramp” approach, Reiter asked that public health guidelines on event gatherings be made more flexible as the state works towards the next phase of reopening amid vaccinations and a declining positivity rate. “I think we can move past that benchmark and set other benchmarks that get us closer to full capacity as the vaccines work their way through the system,” Reiter said.
Mendoza expressed confidence that the state could exercise flexibility in allowing events to return as early as this summer. “As more and more of our people are vaccinated and Illinois continues in a positive direction, it’s really gratifying for me to hear that outdoor events like the State Fair this summer are a very real possibility,” Mendoza said. “When necessary, we can always adjust and be nimble, recognizing of course that public health and safety are always the prime consideration,” she said. “All of us, Democrats and Republicans, from Chicago to Galena to Cairo, we all agree we need to do whatever we can within appropriate safety protocols to gradually open this critical segment of our economy again,” she said.
Will We Fully Recover from COVID? What we Learned from Dr. Anthony Fauci’s Chicago Talk
As the U.S. continues to ramp up vaccinations, Dr. Anthony Fauci discussed what the future holds for people who are vaccinated, whether COVID-19 worries will ever completely fade, and how divisiveness hurt efforts to fight the pandemic, at a virtual Chicago event Thursday.
Fauci spoke as he accepted an award from the University of Chicago Harris School of Public Policy that’s given annually to an exceptional leader who has championed analytically rigorous, evidence-based approaches to policy.
Here are five takeaways from the remarks by Fauci, who is the government’s top infectious disease expert, heading the National Institute of Allergy and Infectious Diseases:
- Vaccinated people should still be cautious
“The instinct is to say, ‘We have a really good vaccine, I’m vaccinated, I have a 95% effective vaccine, why can’t I do whatever I want to do?’” Fauci said. “Ultimately, you may be able to do that but not right now because there are things we don’t know.”
Fauci said it’s unknown whether the vaccine prevents a vaccinated person from spreading the illness “so we say you’ve got to wear a mask.” He thinks that if individuals get COVID-19 after being vaccinated, the level of virus in their system likely will be substantially lower than it would be in a person who hasn’t been vaccinated. “There’s a study from Israel that strongly suggests that. But we’re doing a study now to try and nail that down, and if in fact we find that out, then you’re going to see a pulling back on some of the restrictions, but we’re not there yet.”
- Vaccines may not completely end COVID-19 worries
Harris School Dean Katherine Baicker asked Fauci whether mass vaccination will allow the world to ever truly get over COVID-19, or whether variants, booster shots, and vaccine tweaks will always be part of life.
“I don’t know the answer to that question. I just don’t, and the reason I don’t is there are too many variables in there that I don’t have control over, nor do my public health colleagues have control over,” Fauci said. “How many people are going to get vaccinated? How many variants are you going to have? And then you have the thing that we really don’t have, individually, a lot of control over, and that is a global pandemic requires a global response.”
- Divisiveness made it more difficult to fight COVID-19
One of the challenges the pandemic response faced was that it occurred during one of the most divisive periods in recent U.S. history, Fauci said. “You have public health measures that are assuming almost a political stance, whether or not you should wear a mask, whether or not you should avoid congregate settings. That makes it extremely difficult to address a pandemic of this proportion.”
- The U.S. could have used a more uniform response
“You’ve got to do some things that are really uniform. That was one of the things that actually was the weakness in our response. … We wanted to all pull together, and yet some states often related to their ideology of whether it was a red state or a blue state, which inherently is wrong because you’re dealing with a single common enemy,” he said.
- COVID-19 highlighted health inequities facing brown and Black communities
Fauci said the pandemic has shown the “extraordinary health disparities we have in this country for our minority populations, for our brown and Black populations.”
“You see discrepancies that are stunning, that you have brown and Black people by the nature of the jobs they have, that are essential workers keeping the country going, they’re interfacing with people … they’re out there and they have a higher incidence of infection,” Fauci said. “Then what they have is a much higher incidence and prevalence of the comorbidities that put them into that category, at whatever age they are, of having a serious outcome of hospitalization and deaths.”
“We can’t let this be forgotten when we get out of COVID-19. We’ve got to remember the health disparities that keep coming back and biting the populations that are the most vulnerable.”
Program Notices & Reminders
SBA Page Links for Direction and Questions on PPP
Webinar Series: PPP Updates for Your Small Business
The Small Business Administration has some key changes to the Paycheck Protection Program (PPP) which will be available for a limited amount of time to ensure America’s smallest businesses get exclusive access. If you are a small business owner with 20 employees or less or are self-employed; there is new information for you. Please join a series of webinars hosted by the U.S. Small Business Administration, Public Private Strategies Institute, & other stakeholders to hear about:
- What steps you can take now to take advantage of this special opportunity, which closes at 5:00 P.M. EST, Tuesday, March 9th, 2021.
- Additional changes and recent policy announcements made by Biden-Harris Administration
- Have your questions answered by SBA Leadership
Mar. 6, 2:00 p.m. ET, Veterans, Self-Employed Business Owners, Click here to register.
Mar. 8, 3:00 p.m. ET, LGTBQ Business Owners, Youth Entrepreneurs, Restaurant Owners, Click here to register.
A Chance to Win $50,000 for Your Small Business – FedEx Grant Contest
The 2021 FedEx Small Business Grant Contest is now open. Entries close March 9, 2021. Before you enter, have your FedEx account number handy. Or create an account if you don’t have one. Now you have a chance to win $50,000 to help you continue growing your business. Enter the 9th annual FedEx Small Business Grant Contest today.
Enter here: https://smallbusinessgrant.fedex.com/enter-now
More info: https://www.fedex.com/en-us/small-business/grant-contest.html?CMP=SOC-1006521-1-16-1003-1111000-US-US-EN-FXALISBGCKIT200&LINK=LEARNGCLI315120
Finally, March is shaping up to be a busy month on the chamber calendar. Please add the Women’s Empowerment Forum on Wednesday, March 24th. In honor of National Women’s History month the chamber has partnered with Lewis University and invites you to join an interactive, virtual, open forum with women educators and leaders from our community.
Panel to include:
Dr. Karen Trimble Alliaume, Director, Women Studies Programs, Lewis University
Dr. Kristi Kelly, Vice President of Diversity, Lewis University
Ms. Ruth Colby, President & CEO, Silver Cross Hospital
Ms. Monica Mainland, Joliet Refinery Manager, ExxonMobil
Moderated by Jen Howard, President, Joliet Chamber
Join us at 2:30 PM by registering here: http://jolietchamber.chambermaster.com/events/details/2021-webinar-march-24th-women-s-empowerment-forum-6018
Joliet Region Chamber of Commerce & Industry Staff and Board of Directors
Vice President – Government Affairs
Joliet Region Chamber of Commerce & Industry