Working families across California are already facing dramatically reduced earnings through work reductions and layoffs, loss of employer sponsored health insurance, and risk of housing displacement due to the COVID-19 pandemic—and many more will join them in the months to come. The impact will fall disproportionately on low-wage workers, immigrants, and workers of color, who are least able to absorb financial and health shocks. Immediate state and local government action is required on several fronts to protect the health and livelihood of California’s workers and their families. In this blog post, we first identify the industries most directly at risk of jobs loss and then outline principles for state and local policy responses to this crisis, highlighting immediate policy priorities.
A snapshot of California industries at the front lines of impact
The New York Times recently estimated that nationally, the primary sectors facing sharp decline in demand due to the COVID-19 pandemic accounted for $574 billion in employee compensation in 2018 and 13.8 million full-time equivalent employees. In Table 1 below, we conduct a similar analysis for California. We identify industries that are likely most at risk of immediate impacts from social distancing and public health directives to slow the spread of COVID-19: hotels, restaurants, entertainment, non-food retail, passenger transportation, and personal care services. In 2018, these industries accounted for 3.2 million jobs (19 percent of statewide employment) and $110 billion in annual payroll. The large majority of these jobs are in lower-wage industries, with annual earnings significantly lower than the state average. These industries are also a key source of employment for low-income communities, immigrant communities, and communities of color.
To be clear, our analysis only identifies major industries that are currently most at risk of direct impacts from efforts to manage coronavirus pandemic. But the statewide shelter in place order that took effect on March 20 idles many other economic sectors, with the exception of federal critical infrastructure sectors and essential services. It is difficult at this early stage to predict what the actual employment and earnings impact will be. We can expect significant effects across the economy, including in industries as varied as professional and business services, construction, manufacturing, motion picture production, and wholesale trade. A recent NPR/PBS survey found that 18 percent of US workers have already had their work hours reduced or been laid off due to the coronavirus.
State and Local Policies to Support Workers and Their Families
Immediate state and local policy action is critical to respond to the hemorrhaging of jobs and wages and to protect the economic security of California’s working families. Key policy priorities include the following:
1. Provide income replacement and keep people in their jobs
Most low-wage workers do not receive adequate paid sick leave. The federal government and the state of California have taken several critical steps to expand benefits, but significant gaps in access and coverage remain.
Provide universal paid sick leave. Last week Congress passed the Families First Coronavirus Response Act, which provides federal reimbursement for 14 days of paid leave for workers who are sick, quarantined, or caring for sick family members or children whose schools are closed. This is available only to firms with 500 or fewer employees, and employers with fewer than 50 employees can be exempted. In the end, only about 20 percent of private sector workers are covered by the mandate. California’s law requires three paid sick days; some cities have greater requirements. Unions and other worker advocates are calling for all employees to have immediate access to 14 days of paid leave, regardless of firm size. Advocates are further calling for expansion of job-protected leave under the California Family Rights Act.
Expand unemployment insurance coverage and improve benefit levels. California has taken important steps to improve access to unemployment insurance. Governor Newsom waived the 7-day waiting period for the state’s unemployment, state disability, and paid family leave programs. In addition, AB5, passed in 2019, applies a new and simpler test to determine if workers are misclassified as independent contractors for the purposes of determining eligibility for unemployment and other benefits; enforcement of the new law will be essential. But large groups of workers remain uncovered; in particular, a state strategy for undocumented workers and true independent contractors is urgently needed. Finally, the coronavirus crisis underscores the long-standing need to update California’s underfunded UI system, which currently is not providing workers with nearly enough income to replace the wages they’ve lost.
Keep workers attached to their jobs. A key policy goal during the COVID-19 crisis should be to keep workers employed in their jobs for as long as possible, even when their work hours are reduced. California can leverage two important programs, Work Sharing and Partial UI, which provide mechanisms for partially compensating workers for their lost hours while still employed. But the programs are currently under-used and need to be updated and strengthened. Examples of improvements to the Work Sharing program include creating electronic applications with automatic approval based on a check list; active promotion of the program to employers, many of whom are unaware of it; broadening employer eligibility for the program; and increasing the wage replacement rate for workers. Improvements to the Partial UI program should focus on increasing the wages paid to workers whose hours have been reduced, which would significantly increase uptake.
2. Protect and support workers on the front lines
Workers whose jobs require public contact and exposure—including health care workers, restaurant and grocery workers, building cleaners, and retail and delivery workers—are at heightened risk of COVID-19 infection. A sobering reality is that a significant share of homecare workers and retail workers are older than age 55 and face greater health risks if they contract the disease. Unions and other worker advocates are calling for mandated training, protective gear, and paid hand-washing time for all workers who are still working during the pandemic, with specific recommendations for sectors most impacted. And WorkSafe is urging the state to take immediate steps to ensure that employers in health care and other care settings serving vulnerable populations fully implement the main protective provisions of the Aerosol Transmissible Diseases (ATD) standard.
Front-line workers during this pandemic also need additional support in order to be able to do their jobs. The state should fund subsidized child care and elder care for these Essential Critical Infrastructure (ECI) workers, and unions and other advocates are calling for hazard pay in recognition of the significant risks the workers are bearing.
3. Ensure affordable health care for all
While millions of Californians gained health coverage under the ACA, 3.5 million Californians continue to lack insurance, and many who have insurance struggle to afford premiums and out-of-pocket costs. In the context of the pandemic, lack of health care access is a serious public health problem.
Improve health insurance access and affordability. The number of uninsured could grow as workers lose coverage from job loss or reduced work hours. Workers who lose job-based insurance coverage can apply to Covered California for private insurance, and many will become eligible for Medi-Cal under current rules. However, the crisis requires short-term expansion of Medi-Cal eligibility and increased affordability of private insurance coverage. Proposals under consideration include expanding Medi-Cal to low-income undocumented seniors who are excluded from Medicare, and improving affordability of Covered California premiums and out-of-pocket costs. Furthermore, the pandemic highlights the need for a longer-term shift to a more unified system that provides coverage and access to all Californians, as is being explored by the Healthy California for All Commission.
Ensure free testing and treatment for COVID-19. A new federal law, along with a California directive, now requires insurance plans to waive all cost sharing for coronavirus screening and testing, and additional state steps that would help consumers afford coronavirus-related health costs should be considered.
4. Protect workers and their families from evictions and foreclosures
California already faces a severe housing crisis. According to the California Budget and Policy Center, 54 percent of renters and 39 percent of homeowners with mortgages are rent-burdened—meaning they pay more than 30 percent of income on housing costs. Lost earnings put families at risk of losing their homes. Governor Newsom recently issued an executive order authorizing local governments to impose a temporary moratorium on evictions through May 31, 2020, and requesting that financial institutions slow down home foreclosures. Some local police departments have declared a temporary halt to eviction enforcement. But broader mandates are needed; a coalition of worker advocates is calling for a statewide moratorium on evictions and foreclosures.
The federal and state policy landscape is rapidly evolving and the true extent of the needed response is not yet known. But the above policy principles—provide income replacement and keep people in their jobs; protect and support workers on the front lines; ensure affordable health care for all; and protect working families from evictions and foreclosures—should serve as the guide post for decisive public policy in California going forward.
Nari Rhee, Annette Bernhardt, Ken Jacobs, and Laurel Lucia authored this blog post, originally published by the UC Berkeley Labor Center, with assistance from Jessie HF Hammerling and Jenifer MacGillvary.