In a year when millions of Americans are struggling to survive the Covid-19 pandemic, watching as their life savings have plummeted to zero and unemployment remains rampant, some of the biggest corporations have been absolutely thriving. If we're going to ever end this neo-Gilded Age, we're going to need to reckon with the utter immorality of that disconnect.
It has been eight months since the CARES Act was signed into law, the only lifeline that the federal government has thrown to the drowning masses as the virus has overwhelmed the country. The act set up loans under the Paycheck Protection Plan to help small businesses with about 500 or fewer employees keep staff members on payroll during shutdowns this spring.
But it turns out a disproportionate amount of that money went to big companies with established ties to major banks. More than half of the $522 billion allocated by August went to just 5 percent of the recipients, The Washington Post reported.
Billionaries, lobbyists reap PPP loan windfallJuly 8, 202002:57
The restaurant industry is a perfect example. It has been one of the hardest-hit sectors of our economy. Reduced dining capacity and other constraints meant to slow the virus have cut into already thin margins for smaller establishments, forcing 100,000 restaurants and bars to permanently close. But an analysis from The Counter, an outlet focused on the food industry, showed that about $1 billion in paycheck protection loans went to a set of businesses that exploited a loophole. Loans of more than $3 million went to "a Taco Bell operator headquartered in Minnesota; a Wendy's franchisee in San Antonio; a group with more than 200 Pizza Huts in California; and a McDonald's franchisee in Tampa, among others."
In that way, the corporations that own those franchises bypassed the $10 million cap on the loans. The Counter reported that "255,050 restaurants borrowed a total of $30 billion through the program. Our analysis found that a quarter of the money went to just 1 percent of recipients."
Compare that with the latest cover story from New York Magazine, which listed 500 businesses that have closed in New York City because of the pandemic. It's a grim love letter-cum-obituary to the places — especially restaurants — that made the city feel like home to the magazine's writers. And it makes the successes of the mega-corps all the more galling.
On average, the increased compensation offered to their staff was less than half of the windfall companies made this year compared to last.
The gap is even wider between corporations and the workers they employ. The Brookings Institution issued a report last month that found that the biggest retailers in the country have flourished this year. CVS Health, Home Depot and Lowe's have all earned $1 billion more in profit in 2020 compared to this time last year. Walmart's and Amazon's profits are on a whole other level, up by a mind-boggling 45 percent and 53 percent respectively — more than $10 billion between them. Those numbers will likely increase after the holiday season.
But the employees of these corporations have seen almost none of the benefit. Brookings found that, on average, the increased compensation offered to their staff was less than half of the windfall companies made this year compared to last. Or as the report sums it up, "In other words, Amazon and Walmart could have quadrupled the hazard pay they gave their frontline workers and still earned more profit than the previous year." (Shoutout, though, to Home Depot for spending more on its workers than its increased profits.)
This all allows the financial community to ignore the strain and hardships on the working class. In fact, the stock market, a gambling pit that puts Las Vegas to shame, briefly hit new highs Tuesday as investors dumped money into their bets that a new stimulus package could be coming from Congress.
And yet, bipartisan negotiations may be stalling out in Congress — again. The biggest issues include whether to include direct payments to Americans again and whether to provide funding to state and local governments. Republicans' biggest holdout, aside from the overall price tag, is a demand to shield businesses from lawsuits for exposing their workers to Covid-19. Imagine putting millions of Americans' lives at risk by holding up assistance to keep companies from being sued for forcing their workers to place their lives at risk.
Senate Majority Leader Mitch McConnell offered this week to move ahead without the shield — but only in exchange for dropping aid to state and local governments. His Democratic counterpart, Minority Leader Chuck Schumer, rejected the proposal.
In sum, if you were a major corporation at the start of the year, odds are you're still doing better than fine. I don't wish you ill at this point; I just wish that you would — quite literally — share the wealth.