Access Press was among the first group of small businesses to receive a Paycheck Protection Program or PPP loan. The application was submitted after it was announced that all funds had been expended. There were already stories in the news of publicly traded corporations, sports teams and others that surprisingly qualified as small businesses. Thanks to having a relationship with Associated Bank, a local bank that had not distributed its allocation of funds, we received the support needed to make this happen.
The Coronavirus Relief, Aid and Economic Security Act, commonly known as the CARES Act, made this possible. The act was signed into law on March 27 to provide fast and direct assistance for American workers, families and small businesses, and preserve jobs for our American industries. While our country was working to flatten the curve of the virus by closing down parts of our economy, the CARES act was bolstering the economy to avoid a fast and steep economic turndown.
In time we will know how effective the act is for our nation. For a small business like Access Press it was essential. The newspaper suffered from the ripple effect of business closures and layoffs that resulted in lost advertising revenues and a loss in donations. It allowed the paper to pay its employees and keep its office open for the next eight weeks. It has a multiplier effect to related business, such as the printing and distribution services used. The turnover of money keeps the economy moving.
This has been great for the short term. But just as the virus shows no sign of flattening and leveling off in Minnesota, the economy is not picking up. We know this when we venture out in the world, as we do when we read the unemployment statistics. After the eight-week duration of the PPP loan, the problems for Access Press are still there. Solutions are needed for the long term. Access Press is important to the community. It not only provides a resource to our readers, but it is a voice to others. We cannot lose our voice.
The CARES Act also provides income supports for workers. Most of us received a one-time incentive payment of $1,200. For the economy, the best thing is to spend it for goods and services. Again, this contributes to the multiplier effect, keeps the money flowing. For the individual who does not need the money at this time, there might be a tendency to hoard the money in case things get worse, and things seem to be getting worse. The cost of needed basic food staples is rising as supply decreases and demand increases.
There are also supports for people who are out of work due to the virus. According to the Motley Fool financial and investing advice company, the average weekly wage in Minnesota is $740 per week and unemployment insurance pays roughly 50 percent of wages. An average wage earner would collect about $370 per week. CARES provide an additional $600 per week through July 31. An employed person making $740 now receives $970 per week not to work.
If you try to hire a personal care assistant (PCA) at a salary of $12 per hour, or $480 for a 40-hour week, there is little incentive. The formula is a bit more complicated for higher-wage workers who lose their jobs. At this time, unemployment benefits the individual more than work.
For the economy, we all benefit when people are employed. Remember the supply/demand curve from your high school economics class? If demand is high and supply is low, prices go up. It is not enough to increase the amount of money in circulation without the production of needed goods and services. The incentive needs to be directed at training and employment for the post-virus economy.
The goods and services produced must be in demand. Even is government opens up the economy, the economy will not be the same as long as this highly contagious virus is among us. Who among us is going to rush to a movie theater, eat a meal in a crowded restaurant, or fly to Disneyland? It will be a long time before some industries return and some may not come back.
In the meantime, there are shortages. There was a shortage of PCAs before this emergency and that continues. With students learning at home, special education students could benefit with more instructional supports. And anyone who receives that phone message saying their call is very important sees the need for call center positions. The challenge now is to re-allocate resources and provide jobs for the new economy.
Jane Larson is a member and treasurer of the Access Press Board of Directors.