Coronavirus

Dems' Hazard Pay Proposals Are a Recipe for a Lot Fewer Essential Workers

We need essential workers right now. We also need markets and the price signals they provide.

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Frontline workers are doing the Lord's work right now ensuring that grocery store shelves are stocked, hospital patients are cared for, and trains are running (mostly) on time. Congressional Democrats have a couple of proposals to put them out of a job.

This week, Rep. Bonnie Watson Coleman (D–N.J.) introduced the Essential Pay for Essential Workers Act, which would guarantee essential workers an extra $15 an hour on top of whatever they are currently earning.

These essential workers are "putting their lives and their families' lives at risk with little protection and even less compensation, and they are often already the individuals with the least financial security," said Watson Coleman in a press release. "This bill is about recognizing something we've always known but have never admitted—that we can't function without these workers."

Her bill, which has picked up three co-sponsors so far, would guarantee this wage premium to workers in a string of industries, including health care, agriculture, energy, transportation, and law enforcement.

The text of the bill has yet to be released. Coleman said on Twitter that employers would be required to pay the extra $15 an hour up front, for which they would receive a 100 percent tax credit.

Hazard pay for those working in environments where they might contract COVID-19 is both a popular idea among policy makers and an economic reality at many companies. Amazon has temporarily bumped pay for warehouse workers by $2 an hour, and it is offering double overtime pay in the U.S. and Canada. A number of grocery chains and state governments have followed suit with pay bumps of their own.

But not all employers have introduced increased hazard pay, and some workers say their employers' increases are insufficient to compensate them for the added risks they face.

Cue the calls for government-provided and/or government-mandated hazard pay.

Coleman's proposal is the most recent, and the most generous, but it's similar in kind to other bills that have been floated by congressional Democrats.

Rep. Matt Cartwright (D–Penn.) introduced legislation last week that would require employers to pay high-risk health care workers an additional $18.50 an hour and other essential workers an additional $13 an hour. The mandated increases would be capped at $35,000 per year for health care workers and $25,000 per year for other essential workers. The bill would create a fund within the U.S. Treasury Department to cover this hazard pay.*

Senate Democrats have also been pushing the idea of a Heroes Fund. This would also provide essential workers with an additional $13 an hour, and it would give certain health care workers a $15,000 recruitment incentive bonus for taking a job right now. The pay bump would be capped at $25,000 a year for those earning under $200,000, and $5,000 for workers earning $200,000 or more.

Unlike Coleman's proposal, the federal government would fund this hazard pay upfront through grants to employers.

The American Action Forum (AAF), a center-right think tank, estimates that the Heroes Fund would cost between $153.9 billion and $672.8 billion, depending on the duration of the program and how broadly it defines essential workers.

Molly Kinder of the Brookings Institution, a liberal-leaning think tank, has published an analysis of various hazard pay proposals. She argues that the $2-an-hour pay bumps adopted by some corporations are too little, and that the Heroes Fund levels of hazard pay would be more appropriate.

Both AAF and Brookings point out that the Heroes Fund's singular pay bump would be simple, and therefore easy to administer. It would still be a massively expensive program. The higher $672 billion cost estimate puts the Heroes Fund in spitting distance of what we spend on our bloated Defense Department each year. It would come in addition to the trillions in new coronavirus spending that Congress has already authorized.

And while a single, flat pay increase might be simpler to administer, it wouldn't reflect the varying levels of risk that come with different essential jobs. Workers would, therefore, be incentivized to migrate to the least risky jobs covered by a Heroes Fund, leaving many crucial industries and positions understaffed.

On the other hand, by having the federal government pay for this hazard pay directly, it would also avoid the more serious defects contained in Coleman's proposal.

Many private employers of essential workers are already coping with coronavirus-induced increases in expenses and reductions in sales. Even companies that are doing more business are often seeing profits shrink.

Amazon CEO Jeff Bezos, for instance, told investors yesterday that despite a 26 percent increase in earnings, the company's profitability was likely to decline over the next few months. Grocery stores, which saw a similar surge in sales last month as people stockpiled goods, are bracing for a drop-off in demand.

Telling these same employers that they'll have to find the money to pay for $15-per-hour pay increases overnight is a recipe for big layoffs, price increases, or cuts in crucial investments in safety and expanded production to meet the demands of the current crisis.

There's a fierce academic debate about whether a minimum wage increase of $2 or $3 phased in over time reduces employment. But mandating an immediate doubling of many workers' pay certainly would. Coleman's offer of a 100 percent tax credit to employers for this increased hazard pay wouldn't address the immediate cash crunch many would certainly face trying to pay these higher wages.

Things would be even worse for local governments that employ first responders, bus drivers, and police officers. The coronavirus pandemic has devastated local tax revenues, making it difficult if not impossible for many places to fund the pay increases mandated by Coleman's bills. And Coleman's tax credit would be worth nothing to local governments.

The result: higher wages for some workers, but fewer workers overall. If these workers are truly essential, that'd be a counterproductive result.

Frontline workers are doing dangerous, crucial tasks at a very stressful time. They deserve to be compensated for the increased risks that they're taking on. But the debt we owe them doesn't eliminate businesses' and governments' budget constraints, and it doesn't purge government programs of bad incentives and unintended consequences.

Correction: The original version of this article said that Rep. Matt Cartwright's legislation made employers responsible for funding employees' hazard pay, when in fact the U.S. Treasury would fund it. 

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  1. lmao. Am I the only one to notice how this is all just another way for the dems to advance every single one of their pet policy descriptions over the years? Haz pay? sounds a lot like the 15$ minimum wage for all workers as this thing isn’t every going away for the next couple of years.

    1. It’s not a 15$ minimum wage, it’s a DOUBLING of the 15$ minimum wage. It’s a 30$ minimum wage for essential workers. And if you’re not essential you’re not working. Just last year people were asking the Dems “If 15$ is so good, why not make it 30$?” and the Dems said don’t be ridiculous. Now the Dems are literally asking for 30$ with a straight face.

      This is the Dems being so far out of reality that even Terry Pratchett is rolling over in his grave at their absurd fantasy.

      1. Coleman said on Twitter that employers would be required to pay the extra $15 an hour up front, for which they would receive a 100 percent tax credit.
        Even if this plan worked the way Coleman thinks it will, next year about this time the surviving businesses will start claiming their 100-percent tax credits. Very few of them, if any, will have enough net profits to incur enough in taxes to take full advantage of the offset. What will Coleman say when the Congressional take from business taxes drops to $0.00, or less, at the same time that income taxes from “non-essential” workers plummets?

    2. Aletta ANderson is a regular mom who lost her job last year, and after an unsuccessful job hunt, she started working online. I interviewed her about her amazing story and she revealed her steps for success. She earns 65 dollars an hour.Go to this site to read more…….. More Details Here

    3. Idle…Welcome to what passes as serious economic thought in the People’s Republic of NJ. We truly deserve the representation we elect.

  2. This rings as ridiculous when you consider how many professions are deemed essential in some states. I’m sure the design engineer at Lockheed Martin working from their kitchen table really needs that $15/hr.

    1. Edit: to be clear, it’s also just a ridiculous and bad idea, but the essential workers category makes it even more ridiculous considering how many professions are “essential” that people won’t think of that way.

      1. Our local jeweler is still open. Surely he isn’t “essential,” right?

        Except if your doctor is seeing you via tele-medicine you need a thermometer and a blood-oxy gadget, etc., and these days they’re all battery-operated.

        Guess who’s the go-to guy to replace the batteries. (And no, you can’t just replace the gadgets when they quit; they’re back-ordered.)

  3. Front line workers are cannon fodder. Their role is go and do the job, and if they get sick or die, then they will just will be replaced. No, they don’t deserve $15/per hour extra. The companies will pay the market wage that allows them to attract employees and not a dollar more.

    1. Damn right. And once again, get up off of your knees.

  4. Democrats wanted a UBI, and NHS, and everything in between. And now they will get it because of people’s lack of faith in themselves. Fear got drummed into their heads over a virus that is known to be less deadly now that we have data. Although most of us knew that anyway, could see this coming, warned others, and got shouted down. So – fuck you America. Enjoy the socialism.

    1. Can I opt out?

  5. All of this is easy to say when the median income for your district is over $85K/year.

  6. essential to the needs of the Elite Class … scam or possibly scam-ola

  7. That tax credit must sound super awesome to the nonprofit hospital I work for

  8. These workers certainly deserve extra pay, but in the real world we rarely get what we deserve. Which is a good thing. The idea what we should get the good things we deserve but none of the bad things is especially utopian in its disregard of reality. But don’t let that stop a politician and his voters from believing in the kind of utopia where the rivers run with pink lemonade.

    Who pays for this deserved extra pay? There’s only two answers: The employer or the taxpayer. The employers can’t afford it. Forcing them to pay it will result in massive layoffs. The increased unemployment may be an unintended consequence, but it most certainly NOT be an unforeseen on! If the essential (ei. elite) employees don’t like it they can go do what all of the unessential plebes are doing: stay home for no pay. Stop complaining that you’re abused when you actually have government permission to work, something most people do not have despite the guarantees in the 14th amendment.

    Should the government pay for it instead? By which I mean the taxpayer? That certainly is more fair. Government certainly contributed to this situation, and taxing the unessential to pay for the essential would at least not trigger an immediate unemployment crisis. But in the long run it would devastate the economy. We’re already untold trillions in debt, with more trillions being demanded. We face an unprecedented decade of “austerity”, and the very real possibility of defaulting on the debt and collapse of the dollar. We can’t keep spending money we don’t have.

    So what to do? First off, realize that there is no magic solution. In fact, there may be no solution at all and a lot of people are going to get screwed over. No hand waving from D.C. is going to make things magically right. But what we can do is not destroy our economy and society just to make a few feel better about the very bad situation we are all in. So in terms of policy: Do nothing because there’s nothing that can be done. If the essentials want to strike over this, let them. There are plenty of non-essentials willing to do their work.

    And recognize that life is not fair. EMT and RNs and others knew going in to their profession how hazardous it would be. But pizza delivery dudes did not. It sucks. I get that. But wishing the suck away is not reality. So suck it up or quit and stay home where it’s safe. Choose to be non-essential if you don’t want the hazard that comes along with being essential. Having a two tier system sucks, and it’s probably illegal, but no one’s stopping you from downgrading.

  9. I mean, this is basically someone telling you the world is coming to an end then telling them they’re going to make an extra $15 an hour to brave the apocalypse.

    There is no apocalypse, no one can even really point to immediate concerns that weren’t already concerns, but everyone that still has a job will be glad they get that extra cash even though two of their coworkers that used to help them do the job vanished into the ether.

    Then, of course, you’ll hear tons of people bitching that they work too hard and deserve more money.

    Ah, the circle of life.

  10. I volunteer at a drive through Covid-19 testing site. I’m having a blast doing something worthwhile, and enjoy chatting and eating with the pharmacists and others in a normal atmosphere. (Salvation Army provides us with breakfast and dinner.) This is unbelievable: what a way to destroy the fabric of life. Essential workers? If someone wants to work they accept the risk, if not stay home. I’m not staying home, even if I don’t get paid!

  11. It seems that a measurement is needed to determine if the the workers who are labeled “essential” or “frontline” are contracting and dying from the Wuhan Flu. Without that data, these bills are meaningless.

  12. So when labor prices increase in the middle of an emergency due to supply and demand, that’s OK because it’s hazard pay…


    But when product prices increase in the middle of an emergency due to supply and demand, that’s illegal price gouging.

    Got it 🙂

    1. Reason needs to create a “thumbs up” feature. I’d click it 20 times for this comment.

  13. Just because your “essential” doesn’t mean your nesessary

  14. This lady is galling = Rep. Bonnie Watson Coleman

    Such lovely children, and by extension – her parenting skills.

    https://savejersey.com/2018/02/democrat-bonnie-watson-coleman-congress-trump-gun-violence-parkland-shooting/

  15. Let me get this straight.

    1) Non-essential workers who want to work are not allowed to work. It’s not their choice, the government ordered their employers closed. Therefore, their income has gone down considerably.
    2) Essential workers, who could quit if they wanted – they’re choosing to work, should have a $15 per hour increase.

    Doesn’t this increase income inequality? I thought the Dems were opposed to income inequality.

  16. Hazards can be difficult to quantify, as is the dollar value of working with a hazard.
    Each person might reasonably ascribe different values to hazards, as their own perceived risk, actual risk, and need for reward will differ from others. Seems like an optimal solution for the free market.
    If enough people show up for work, then the wage is right. Need more employees, but no new applicants, then then the wage will have to go up.
    Right now the biggest factor undermining the free market is the free money the government is giving to people, often in excess of their present wages, so that even college grads, are finding that their starting white collar wages are easily matched by unemployment plus federal money. I have two nephews in that situation who would be fiscal fools for accepting lower paid work right now that would upset their furlough pay.

  17. let us be clear about where trumpistas fall on this:

    They do not want to pay workers extra
    They want to absolve corporations of responsibility for covid deaths
    They want to force employees off unemployment

    Yeah, standing up for the little guy indeed

    And as to this article:lame

    workers will migrate to the least risky jobs that pay….uhh, yeah, you are going to quit your job at a hospital after 10 years and go work at a sub shop because it pays more for a few months

    1. Thank you, arpiniant1 for pointing out what I read as well. I can’t believe the ignorant responses here. All these people who are against those of us who are working, and keeping this country up and running during this pandemic, making a little more money. For ONE year. ONE YEAR. I am one of those front line healthcare workers. Republicans just spent trillions on giveaways to corporations and the airlines. Not a word out of anyone. Then, mention helping out US. The PEOPLE in this country…and then they are worried about cost. Debt. Now the money we are spending is a concern. Because to them..it will be going to the “wrong” people. Anyone who is having to work through this pandemic right now deserves more money. I see countless numbers of covid patients everytime I work. I have had two exposures so far that I had to watch myself for symptoms. My boyfriend is an electrician at a shipyard. He is wiring the Navy ships that help keep all you a***hole trump lovers safe. And there are now covid cases popping up in the shipyard. HE deserves more pay for the risk he takes every day he works. No one asked for this and no one “signed up” for it. But how about at least some appreciation.

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