The Crush - May 2020 - 3


COVID-19: New Burdens for Businesses

By John Aguirre
Our society and communities will be forever changed by the
COVID-19 pandemic. Those changes will be reflected in the lives
lost, businesses closed and the many households struggling to
stay afloat amidst widespread unemployment. It's also clear
COVID-19 will fundamentally alter the relationship between
employers and employees.
Obvious near-term changes to the employer-employee
relationship center on the need to adequately protect workers
against exposure to COVID-19. However, I believe over the
longer-term, businesses will be asked to shoulder a much greater
share of the burden to save money on behalf of each employee.
The COVID-19 pandemic has laid bare how poorly prepared
many Americans were for riding out a financial emergency, much
less the devastating damage delivered by government mandated
business closures and shelter-in-place orders.
Congress and the president responded rapidly with
unprecedented financial assistance aimed at supporting
businesses, taxpayers and laid off workers with loans, $1,200
stimulus checks and higher payouts for unemployment benefits.
The federal government also mandated paid sick leave to
ensure workers who have COVID-19 remain home, rather than
potentially infect fellow workers on the job. These measures are
necessary to protect workers and keep the economy afloat.
To note that most Americans save too little and are ill prepared
for financial disruptions isn't intended as moralizing on my part.
It is what it is. At 58 years of age, I'm fortunate to have savings
and I've always had employer-provided health insurance. But
certainly there were times earlier in my life when I spent too
much, saved too little and I would've been woefully unprepared
to deal with something like the current crisis.
If government doesn't do a better job of incentivizing people
to save, then the burden of saving on behalf of employees will
fall to employers. In other words, businesses will be compelled
to pay the cost of ensuring workers can survive the financial
disruption that accompanies unemployment or extended
absences from work due to illness or pressing family matters.
COVID-19 has spawned a host of new burdens for employers,
which may be entirely appropriate during the current pandemic,
but would be seriously detrimental to the economy, businesses
and workers if these burdens are made permanent.

Example: An employee earns $15
per hour and works 40 hours per
week for 52 weeks, totaling 2,080
hours. If that employee is absent
from work for 15 days, taking paid
time off, the cost of the employee
(over 1,960 hours worked) rises
to $16 per hour. Add to that
additional mandates for paid time
off, training sessions, paid breaks,
higher unemployment insurance
rates and increased payroll taxes,
all of which means labor costs will skyrocket at precisely when
businesses and the economy can least afford it.
When government increases the cost of labor, businesses are
forced to keep up by increasing the rate of return for each hour
worked. For agriculture, that can be difficult to do and often
impossible. Which is why only those growers who can adopt
productivity enhancing technologies and continue to mechanize
operations will survive.
This past April, Gov. Newsom announced the formation of a Task
Force on Business and Jobs Recovery, to be led by Ann O'Leary,
his chief of staff, and Tom Steyer, former presidential candidate
and activist philanthropist. The task force has convened leaders
from across California to focus on reopening the state's economy
in a way that delivers broad benefits to all communities. Newsom
wants the task force to craft short- and long-term "
that reflect communities across the state, and emphasize a fair
and equitable recovery." Out of the COVID-19 crisis, the task
force is being asked to envision policies and goals that will help
remake our state to provide "...a cleaner, more equitable and
prosperous future for all Californians."
I believe all of us want and support a cleaner, more equitable and
prosperous future that broadly benefits Californians. We may not
all agree on what those terms mean, but we want better, I'm sure.
I'm concerned the job of delivering a brighter, better future for
our state will be given to those who own and operate businesses
and farms. If so, the effort to pull our state's economy back from
the abyss will sputter as businesses and farms falter under the
weight of new burdens and costs.

MAY 2020 / 3


The Crush - May 2020

Table of Contents for the Digital Edition of The Crush - May 2020

The Crush - May 2020 - 1
The Crush - May 2020 - 2
The Crush - May 2020 - 3
The Crush - May 2020 - 4
The Crush - May 2020 - 5
The Crush - May 2020 - 6
The Crush - May 2020 - 7
The Crush - May 2020 - 8
The Crush - May 2020 - 9
The Crush - May 2020 - 10
The Crush - May 2020 - 11
The Crush - May 2020 - 12