We Are Ignoring One Obvious Way to Fight the Coronavirus
The Federal Reserve did what it could Tuesday to offset the growing economic impact of the coronavirus by announcing a supersize reduction in its benchmark interest rate — the first time the Fed has acted between its regularly scheduled meetings since the financial crisis in 2008.
But the Fed is ill equipped to limit the effect of a global pandemic alone. Lower interest rates may eventually soothe financial markets and help to hold down borrowing costs, but the Fed can’t speed the reopening of Chinese factories or reverse Facebook’s decision to cancel an annual developers conference that last year brought 5,000 visitors to San Francisco.
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The real work falls on the rest of the government. The first step should have been simple: ensuring that testing for the coronavirus was readily available and, better yet, free. But even after weeks of lead time for the virus’s inevitable arrival, access to testing remains woefully inadequate as the domestic death toll rose to nine on Tuesday.
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Congress can help by mandating that workers receive paid time off if they fall ill, or if they need to care for an ailing family member. Such a policy is necessary both to impede the spread of the virus and its economic harm. Roughly one-quarter of workers in the private sector — about 32 million people — are not entitled to any paid sick days. Absent legislation, they face a choice between endangering the health of co-workers and customers and calling in sick and losing their wages and perhaps also their jobs.
The current system is practically devised to spread infectious disease. Among the people least likely to have paid sick days, and therefore most likely to work through illness, are low-wage service workers like restaurant employees and home health care aides. (Those workers also are less likely to have health insurance, which compounds the problem.)
Most developed nations require employers to provide some form of paid sick leave, and the United States should do so, too. Some states already mandate sick leave, and a recent study found that the adoption of such laws reduced cases of influenza by 11 percent in their first year. Whatever the course of the coronavirus, mandatory sick leave for American workers would improve the lives of families and insulate the economy against pandemics.
If Congress cannot bring itself to do the right thing, however, it still could help by mandating sick leave specifically for this coronavirus. A 2013 study of workers in Allegheny County, Pa., estimated that allowing them to take up to two paid “flu days” would have reduced workplace transmission of the flu by roughly 39 percent.
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The Italian government, for example, announced Sunday that it would issue tax credits to businesses that reported declines in revenue of 25 percent or more — in effect shifting the losses from private balance sheets to the government’s balance sheet.
Also seeking to help smaller businesses, the Chinese government has announced that banks can defer the receipt of loan payments from smaller companies that were due during the first half of the year without being required to report such loan payments as overdue. In hard-hit Hubei province, the leniency applies to larger companies, too.
The Trump administration so far has shown little interest in tailored responses. President Trump reacted to the Fed’s announcement by demanding further rate cuts. He has insisted that the United States should have the world’s lowest interest rates; the European Central Bank’s benchmark rate currently sits below zero, at -0.5 percent.
Mr. Trump also has said that Congress should pass a payroll tax cut.
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