To save the US economy, we need to save jobs. This program could do that

Nearly one-third of American workers have taken direct financial hits from the Covid-19 pandemic through lost jobs, lost hours or pay cuts. And the resurgence of infections is causing businesses to shut down again in many parts of the country. It seems likely the job losses will resume, unless Congress and the administration act quickly to provide substantially more financial support to businesses and households.

Lawmakers must rethink how they provide this help to address a critical element missing from the policy response thus far: restoring and preserving jobs.

Fortunately, there have been several proposals from both Democrats and Republicans that could do just that. These employee retention policies would provide hard-pressed businesses with funds to rehire and keep workers on their payrolls. They would also defray a portion of operating costs, so businesses are ready to snap back into action once demand for their goods and services revives. A very limited version of this type of policy, the Employee Retention Tax Credit, was part of the CARES Act, the largest of the fiscal rescue packages passed so far.

We know such policies preserve jobs because they have done so in other countries. Indeed, the United States has the ignominious distinction of suffering the largest increase in unemployment of any major economy. Countries such as Germany and Australia that have implemented employee retention programs have suffered increases in unemployment that are about half that of the United States. Only here in the US is policy not geared to keeping workers out of joblessness — and all the disruption and financial stress that entails.

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