New York City

Unemployment Insurance and Small Business Boosts Hang in Balance for New Yorkers as Washington Delays Pandemic Aid Bill

Greg David, THE CITY

This article was originally published on Dec 7 at 9:27pm EST by THE CITY

A store on Harlem’s 125th Street shows signs continued financial struggle for city small businesses during the coronavirus outbreak, Dec. 1, 2020.
A store on Harlem’s 125th Street shows signs of financial struggle for city small businesses during the coronavirus outbreak, Dec. 1, 2020. | Ben Fractenberg/THE CITY

The House’s plan to buy time to pass a pandemic relief bill brings the fate of hundreds of thousands of unemployed New Yorkers and tens of thousands of small businesses down to the wire.

By the end of the month, 670,000 New York City freelancers, contractors, gig workers and the self-employed will lose unemployment benefits if Congress can’t agree on a federal aid package that extends the payments.

Meanwhile, small businesses are desperate for additional aid since revenues, which had recovered in the fall to about 60% of January levels, are back down to about half that mark. With COVID rates rising as winter approaches, the potential shutdown of indoor dining — and more — would make the situation even more dire.

“Do the math and see that there’s a lot at stake for city and state residents and our economies,” said James Parrott, an economist at the Center for New York City at the New School who analyzes unemployment numbers.

Without a reinstatement of the $300 weekly supplemental jobless benefit that ran out in September, those collecting unemployment would struggle more than ever to pay bills: The average traditional UI check in New York City is $259 a week and the average payment to freelancers is $286 a week. 

The potential decline in unemployment benefits for some of those hardest hit financially by the coronavirus crisis comes with the state and federal eviction moratoriums set to lift by the end of the month, barring an extension.

Billions Needed

Efforts to pass a $908 billion bipartisan federal aid bill hit a new stumbling block Monday with the announcement of the House plan to pass a one-week extension of funding for the government. The funding bill is expected to be the legislative vehicle for passing a new COVID-19 aid package.

While many details are lacking, a compromise plan proposed by a group of centrist Democrats and Republicans would provide $160 billion in state and local aid, $180 billion in additional unemployment insurance and $288 billion for small businesses. 

The plan also has $82 billion for schools as well as $45 billion for transportation and additional money for health care. 

The measure would add a $300 weekly supplemental unemployment payment — but not send any direct checks to taxpayers like the $1,200 stimulus in the spring aid package. 

Nothing in the federal aid package will directly address a looming housing crisis when the national eviction moratorium ends.

A “cancel rent” sign in Clinton Hill, Brooklyn, May 4, 2020.
 Ben Fractenberg/THE CITY

BronxWorks, a human services nonprofit, says the average person seeking its help with housing issues owes between $8,000 and $11,000 in rent. Executive Director Eileen Torres says it’s not unusual for clients to be behind $20,000 and a handful more than $30,000 in debt to their landlords.

“We’re extremely concerned about what will happen if we don’t see meaningful rent relief that can cover large arrears,” said Torres. “After nine months of this crisis, our community is still struggling, and mass evictions will put recovery out of reach for years to come.”

‘Unsustainable Economic Damage’

Putting money in the pocket of unemployed New Yorkers would appear to be the most pressing need to both pay their bills and support consumer spending, economists say. 

Parrott estimated the amount of unemployment benefits paid to New York City residents fell to $2 billion in October from more than $7 billion in June. 

While part of the decline was a result of people returning to work, the bigger factor was the loss in July of the $600 additional benefit approved in the spring.

In all, 2.1 million people are receiving help with unemployment statewide while the figure for the city is about 1.1 million residents.

Small businesses, many of which normally rely on the holiday season for a boost, are seeing their revenue falter as New Yorkers become more cautious about in-person shopping and indoor dining as coronavirus infections and hospitalizations rise.

City Comptroller Scott Stringer
 Ben Fractenberg/THE CITY

New York has seen the steepest decline in small business revenue of any large city in the country except for San Francisco and Washington, according to an analysis released Monday by city Comptroller Scott Stringer. 

He attributes the losses in those cities to the ability of tech and government employees to work from home, decreasing patronage of small businesses.

Stringer, who is running for mayor, found that as of Nov. 16, small business revenue was down 68% in Manhattan since so few people are working in the borough’s office districts. The decline was 35% in Queens, 34% in Brooklyn, and 23% in the Bronx. Staten Island small businesses were least affected, off by 16%.

“This mirrors the situation in Los Angeles, and highlights the unfortunate COVID dilemma of protecting public health versus protecting economic welfare,” Stringer said. “Too much emphasis on public health can lead to unsustainable economic damage and too much emphasis on economic welfare can put unbearable burdens on hospitals and health care workers.”

‘A Precondition for Recovery’

City restaurants continue to argue that they’re being unfairly restricted, even as the average COVID-19 positivity rates rise across the five boroughs. 

Restaurant owners, though, note that Manhattan’s positivity rate is 2.5% — about half that of suburban counties Westchester, Nassau and Suffolk, which are not immediately threatened with an end to limited indoor dining.

“Another forced government closure of New York City restaurants will cause irreversible harm on even countless more small businesses and the hundreds of thousands of workers they employ, especially if it is not coupled with financial relief,” said Andrew Rigie, executive director of The New York Hospitality Alliance.

Aboard an uptown 3 train, Oct. 9, 2020.
 Hiram Alejandro Durán/THE CITY

The state and city government are also counting on budget infusions from the aid bill, especially with New York’s mass transit system facing Draconian service cuts and layoffs amid devastating ridership drops. 

“We can’t support the level of [economic] activity that existed earlier this year without a robust subway and bus system,” said Ronnie Lowenstein, director of the Independent Budget Office. “It is a precondition for an economic recovery.”

THE CITY is an independent, nonprofit news outlet dedicated to hard-hitting reporting that serves the people of New York.

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