Is a wage subsidy better than stimulus checks, SBA loans?

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Is there a better way to save the U.S. economy and head off rampant unemployment amid the coronavirus pandemic?

The massive $2.2 trillion stimulus package deploys a patchwork of aid programs including $1,200 stimulus checks, enhanced unemployment benefits and federally-backed, forgivable loans for small businesses to pay workers and other expenses even while they’re shuttered.

Yet some experts say the government could have chosen a more elegant path: Simply pay companies directly to fund their payroll expenses while sales have vanished, as several European countries are doing. Such a system would cover virtually all affected businesses and for longer periods than the loans, proponents say. It also may have avoided the millions of layoffs that already have pummeled U.S. households, allowing the economy to bounce back more swiftly.

“Subsidizing furloughs … is the most efficient and effective way to deal with this tremendous crisis,” says Angela Cornell, clinical professor of law at Cornell Law School. With the current system, “I have concerns that businesses will fall through the cracks and workers are going to fall through.”


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