Analysis: Third stimulus package lacks comprehensive strategy to respond to urgent workforce needs today

By Katie Spiker, Katie Brown, March 26, 2020

On March 26th the Senate voted on a third stimulus package to address the current CoVid-19 pandemic and its economic impact. The legislation is known as the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The bill included important provisions for workers who have lost their jobs – federal support for expanded “Pandemic unemployment insurance” that would add an extra $600 a week to unemployment insurance payments and $345 million in national grants to support activities to serve dislocated workers. It also included access to loans for businesses – and nonprofits – to cover payroll costs during the economic downturn and federal support for layoff aversion strategies like job sharing.

It lacked, however, the vision of a comprehensive national strategy to support workers’ ability to reenter the workforce after job loss. The bill also doesn’t do enough to empower businesses to rapidly upskill and reskill workers to respond to immediate workforce needs in healthcare, manufacturing or transportation, distribution, and logistics industries.

Bipartisan agreement on a nearly $2 trillion package to support workers and businesses is an undeniable win in time of national and international crisis. This crisis has stress-tested our unemployment, workforce, and education systems, however, and the package fails to address the woefully inadequate investment and support we provide workers once they lose their jobs and on their path to reemployment in industries in which businesses need workers today.

This package is the third in a series of stimulus packages over the past couple of weeks. Earlier versions provided federal support for extended Unemployment Insurance benefits, paid sick leave for workers, and waived time restrictions on access to Supplemental Nutrition Assistance Program (SNAP) benefits for certain individuals.

As we look to an undeniably necessary fourth stimulus package, Congress and the administration should use that opportunity to reach bipartisan agreement on a bill that supports a national system with training, income, and healthcare supports for workers who lose their jobs. The next package must also address industry’s immediate needs so that our businesses, workers, and communities aren’t left waiting for a Congressional response that may be too little too late.

On March 19th, National Skills Coalition sent a letter to Congressional leadership with comprehensive recommendations for any stimulus package that would address needs of workers, businesses, and communities. On March 21, NSC along with more than 30 other national organizations sent a letter to Congressional leadership calling for vital investments in workforce programming as part of any response to CoVid-19 and its economic impacts. We look forward to continuing this work with our network of practitioners and businesses and with national partners to elevate the critical role workforce training plays in preparing workers with skills necessary to respond to the immediate crisis and its economic impact.

We will release additional analysis in the coming days of where policymakers should look to rectify these challenges as part of a fourth stimulus package.

What’s included in the third stimulus package

1. Supplemental appropriations for Dislocated Worker National Reserve (DWNR) Funds: The bill includes $345 million in new funding for the DWNR; national grants to support training and career services for workers who have lost their jobs due to CoVid-19. This investment will be critical to states’ ability to serve dislocated workers but is woefully inadequate to respond to the actual level of needs businesses and workers face today.

In the 2009 stimulus package, the American Reinvestment and Recovery Act (ARRA), Congress invested $1.25 billion in formula dollars to states to support dislocated worker activities, combined with an additional nearly $3 billion in other workforce funding streams. During that economic downturn, the workforce system experienced a 234 percent increase in the number of Americans seeking reemployment and training services and the system served more than 8 million people in 2009.

The public workforce system is poised today to address challenges faced by workers who are dislocated as a result of COVID-19 and need rapid retraining to enter in-demand jobs, like those in healthcare, logistics, and manufacturing. But the system needs adequate investment to respond to the scale of need it is already facing.

2. Reauthorization of the TANF block grant and targeted funds for training TANF-eligible workers for healthcare careers: The bill includes a clean extension of the Temporary Assistance for Needy Families (TANF) block grant through November 30, 2020. It also includes an extension of the Health Profession Opportunity Grants (HPOG) until November 30, 2020, allowing grantees a longer time period to spend existing dollars. HPOG grants go to partnerships between healthcare providers and workforce and education providers to empower TANF-eligible workers to access training for healthcare careers and to fund support services – like access to childcare and transportation – that ensure workers with the greatest skills needs can succeed in this training. Current HPOG grantees are set to finish out their grant cycle this year and the House has introduced a reauthorization bill to expand HPOG grants, and significantly increase funding for these grants, in what would be the third round of the program.

3. Layoff aversion strategies for small businesses and nonprofits: The bill includes access to up to $10 million in loans to businesses and nonprofits, including veterans’ organizations, to support payroll, insurance premiums, rent, and other costs incurred during the crisis. The bill also includes access to loan forgiveness provisions, tied to organizations maintaining employment levels and not laying off employees.

It provides federal support for Short-Time compensation (STC) – programs that enable workers to access a portion of their UI benefits when companies reduce their hours by 20%, enabling businesses to avert layoffs and reduce public UI costs. For states that already support STC, the bill would contribute 100% of cost of new claims. For states setting up new STC systems, federal funding would support both set up costs and 50% of claims.

The inclusion of nonprofit organizations in the loans provision is critical to workforce providers’ and human service organizations capacity to continue to serve clients during this time of crisis. For many local practitioners, the forced move to remote services means they’re helping clients in new ways – often without access to national or state grant funding to provide services like trying to access unemployment claims or meet work requirements associated with SNAP or Temporary Assistance for Need Families benefits.

These loans will be critical to enabling a robust network of training and human service organizations persist during the crisis, but it will be vital that nonprofits are able to access loan funds and are not penalized as being risky loan recipients based on low capital resources or other standards.

4. Resources for postsecondary institutions and the students they serve: Thousands of postsecondary institutions have had to close their doors to keep educators, students, and others safe during this pandemic. However, the needs of these institutions and students have not dissipated—rather, they have increased. As a result, the bill looks to provide emergency grant funding to both graduate and undergraduate students by expanding the Supplemental Economic Opportunity Grant (SEOG) program. SEOG grants aim to provide students with the most financial need with funding to offset the overall cost of their education. These expanded grants are meant to help students cover any unforeseen costs associated with COVID-19.

The bill also equips institutions to provide students enrolled in the Federal Work Study (FWS) program with the payments they anticipated receiving in exchange for their FWS service for the duration of the academic year. Additionally, if a student is unable to finish their coursework due to COVID-19 related issues, any Pell grants they used to cover the cost of enrollment will not count against their lifetime Pell eligibility.

In terms of direct support for postsecondary institutions, the bill provides $14.25 billion in funding to institutions of higher education to support students facing urgent needs related to coronavirus, and to support institutions as they cope with the immediate effects of coronavirus and school closures. This provides targeted formula funding to institutions of higher education, as well as funding for minority serving institutions and HBCUs.

5. Increased funding for supportive services, including childcare, housing and mental health services to states: The importance of supportive services for students, workers, and families cannot be overstated—particularly during times of crisis. Countless individuals across the U.S. have had to leave their jobs, drastically reduce their hours, adjust to remote work or schooling, or work overtime depending on their circumstances.

In recognition of this, the bill provides $3.5 billion in Child Care and Development Block Grants (CCDBG) to states for immediate assistance to child care providers to prevent them from going out of business and also to support child care for families, including healthcare workers, first responders, and others playing critical roles during this crisis.

The bill also provides $425 million in funding to address mental health and substance use disorders as a result of the coronavirus pandemic. It makes housing resources available under the Department of Housing and Urban Development (HUD) for elderly, disabled, veteran, homeless, and low-income populations are funded at $17.4 billion.