JEDE COVID-19 Update for June 19, 2020

JUNETEENTH

Juneteenth is a day set aside by many people in the US to both celebrate emancipation and reflect on the legacy of slavery in the US. 155 years ago, on June 19, 1865, Union General Gordon Granger led troops into Galveston, Texas, to announce the end of the Civil War and the institution of slavery.  This was two and a half years after President Lincoln issued the emancipation proclamation and two months after the surrender of Confederate General Robert E. Lee.  For thousands of enslaved people in Texas, however, this was the first time and how they came to know that they were liberated.  

Clear data shows that the health and economic impacts of the coronavirus emergency have been disproportionately by people of color, and most especially by Black Americans.  As California takes steps to re-open our economy while limiting a resurgence of COVID-19, a core component will be in formally recognizing and reinventing the public institutions and policies that have built and reinforced racial inequality in the US. 

In this edition of the JEDE COVID-19 Update, we have highlighted voices from the economic and business development community who are calling for a clear-eyed assessment of the impediments Black entrepreneurs and other business owners of color face in starting and growing a business.  These voices include the Chairperson of the Federal Reserve Board, a member of the US Securities and Exchange Commission, the Stanford Institute for Policy, and the National Venture Capital Association, among others.

MAJOR ANNOUNCEMENTS - ECONOMIC RECOVERY AND COVID-19 RESPONSE

• State Employment Numbers Released:  EDD released the May 2020 employment numbers for California, reporting that the state added 141,600 jobs as compared to April 2020, resulting in a 16.3% unemployment rate.  https://www.edd.ca.gov/Newsroom/unemployment-june-2020.htm  Nationally, the US Department of Labor reports that unemployment rates were lower in May 2020 in 38 states and the District of Columbia, higher in 3 states, and stable in 9 states.  The highest unemployment in May 2020 among states was reported by Nevada (25.3%), followed by Hawaii (22.6%) and Michigan (21.2%).  https://www.bls.gov/news.release/laus.nr0.htm

• Mandatory Face Covering:  The California Department of Public Health released updated guidance requiring Californians to wear a face covering in high-risk settings.  The guidance is being issued based on a growing body of scientific research that shows people with no or few symptoms of COVID-19 can still spread the disease and that the use of face coverings, combined with physical distancing and frequent hand washing, will reduce the spread of COVID-19.  The updated guidance is specific as to when earing a covering is mandatory, as well as a few limited exceptions, e.g. eating food in a restaurant, or communicating with someone who is hearing impaired and the ability to see a person’s mouth is essential to that communication.  https://www.cdph.ca.gov/Programs/CID/DCDC/CDPH%20Document%20Library/COVID-19/Guidance-for-Face-Coverings_06-18-2020.pdf

• A Rising Tide May Not Lift All Boats:  The Securities and Exchange Commission (SEC) released a copy of Commissioner Allison Herren Lee’s speech at the 39th Annual Government-Business Forum on Small Business Capital Formation. The footnotes include additional information on how these remarks relate to research and SEC actions.  https://www.sec.gov/news/public-statement/lee-remarks-39th-annual-government-business-forum-small-business-capital   As part of her official comments, Commissioner Allison Herren Lee stated:

  • “Third, the agenda today highlights women- and minority-owned businesses, as well as rural entrepreneurship, and I’m very pleased to see that. Our capital formation solutions in this space should be premised on an understanding of the barriers that exist, and should be tailored to address those barriers.  Too often we take a “rising tide lifts all boats” approach in our efforts to facilitate capital raising, and fail to consider the unique challenges that face particular communities."

  • "Simply taking steps to enhance capital formation broadly does nothing to address the underlying reasons why equal opportunities for access to capital still elude so many talented and hardworking minority, female, and rural entrepreneurs. It is crucial that we listen to voices from those communities, that we amplify those voices, and that we take the time to educate ourselves, and inform our regulatory approach, about the systemic and structural issues these communities face. The Forum represents a good opportunity for us to do just that.”

• Re-Opening Manufacturing:  The CMTC released its Return to Work Guide, a comprehensive guide to help manufacturers prepare and respond to the COVID-19 pandemic.  Included within the guide, among other materials, are preparedness and response guides for manufacturers that contain information on resuming operations, monitoring and detecting cases, PPE, cleaning and disinfection, and procedures for suspected infection.  https://offers.cmtc.com/return-to-work-guide?utm_campaign=Newsletter%202020&utm_medium=email&_hsmi=89817708&_hsenc=p2ANqtz-9nqjJi_EILPJjve3-cw8m919isUAeMFAH8x8OIxECeO0EGQKOAl3fhj1PwqKgUmVFF2zd9KAoKhcCzptTTyLzFgjkcVw&utm_content=89817708&utm_source=hs_email

• Let’s Re-Open CA Safely:  California Manufacturing and Technology Association just launched a new website, Safely Making California, that will link CA manufacturers producing personal protective equipment with buyers. Check out the launch of the Safely Making California website.  https://www.safelymakingca.org/

• Federal Emergency Declaration for Civil Unrest:  The SBA issued a disaster declaration for the counties of Kern, Los Angeles, Orange, San Bernardino and Ventura, which makes low-interest federal loans available to businesses and residents affected by civil unrest that began May 26, 2020.  Applications will be accepted from businesses of all sizes and from most private nonprofit organizations, homeowners, and renters whose property was damaged or destroyed by this disaster.  SBA is issuing the declaration under its independent disaster response authority. This request follows a request from the Governor’s Office of Emergency Services on June 16, 2020.   https://www.sba.gov/offices/disaster/dfocw/resources/1663686

• Insurance Coverage During Civil Unrest:  Insurance Commissioner Lara released a fact sheet on key insurance issues relating to civil unrest, including tips on how to report business claims.  The fact sheet only provides general information and states that policyholders are strongly encouraged to read the terms of their policy, as terms and definitions can vary from one policy to another.  The fact sheet is available in English, Hmong, Vietnamese, Chinese-Mandarin, and Spanish.   http://www.insurance.ca.gov/01-consumers/140-catastrophes/CivilUnrest.cfm

• Diversity in VCs:  The National Venture Capital Association launched Venture Forward, a 501(c)(3) nonprofit organization dedicated to expanding diversity and access to opportunity in startups and venture capital.  Venture Forward’s work will revolve around four pillars: (1) advancing a more diverse, equitable, and inclusive ecosystem; (2) educating a new generation of VC investors and the general public; (3) conducting and sharing meaningful trends on VC impact; and (4) capturing the rich history of the industry.  According to the announcement, Venture Forward already has more than 60 VC leaders committed to its financial support.  https://nvca.org/pressreleases/nvca-launches-nonprofit-venture-forward-to-shape-the-future-of-venture-capital/

• Framework for Economic Security:  The Insight Center for Community Economic Development and the Economic Security Project released a report, Centering Blackness: The Path to Economic Liberation for All, a framework from our partners at Community Change.  The report provides a framework for policy leaders and community members to “embark on a serious and sustained effort to center Blackness and the Black experience as a necessary strategy to ensure economic liberation for all Americans."  https://medium.com/economicsecproj/centering-blackness-the-path-to-economic-liberation-for-all-f6c2c7398281

• US-Mexico Border Restrictions Continue:  Travel restrictions at the US-Mexico border will remain in place through July 21. This is the third time border restrictions have been extended for an additional month since the initial joint agreement in March was adopted as a measure to prevent the spread of COVID-19.  According to what Mexico’s Foreign Ministry said on Twitter, the US and Mexico have agreed to a 30 day extension to the border restrictions on nonessential land traffic.  No changes to the terms of the restrictions were announced.

FEDERAL LEGISLATION – COVID-19 AND ECONOMIC RECOVERY

• Testimony Before House Banking Committee:  Federal Reserve Chairman Jerome Powell is telling Congress that federal aid to state and local governments deserves their attention. In video testimony with the Senate Banking Committee and with the House Financial Services Committee, Powell said that the 13% of the American workforce who are employed by state and local governments represent a significant part of the economy.  In addition, Powell emphasized the importance of addressing job losses of African Americans, Hispanics, and women, who, as the Federal Reserve noted in its June Monetary Policy Report, had experienced the sharpest decline in employment during the pandemic.  He further stated that “If not contained and reversed, the downturn could further widen gaps in economic well-being that the long expansion had made some progress in closing.”  https://www.federalreserve.gov/newsevents/testimony/powell20200616a.htm

• Federal Infrastructure Proposal:  The Transportation and Infrastructure Committee of the US House of Representatives completed its markup of HR 2 (DeFazio) Investing in a New Vision for the Environment and Surface Transportation in America Act (INVEST in America Act), after 24 hours of debate and consideration of 177 amendments.  The INVEST in America Act is a five-year $490+ billion highway and transit bill.  According to the Committee’s press release, amendments were accepted from both sides of the aisle, including 34 Republican amendments and 23 Democratic amendments.  POLITICO reports that the INVEST in America Act will be combined with other major policy bills on education, water, and rural broadband to form a $1.5 trillion package, which the House intends to schedule for a vote by July 4, 2020.  The White House has said that President Trump is working on a$1 billion infrastructure plan; no specific details are currently available.

  • Bill Text: https://www.congress.gov/bill/116th-congress/house-bill/2

  • Committee Press Release:  https://transportation.house.gov/news/press-releases/after-marathon-markup-committee-advances-the-invest-in-america-act-a-transformational-surface-transportation-bill-to-move-nations-infrastructure-into-new-era

  • HR 2 Fact Sheet: https://transportation.house.gov/imo/media/doc/2020%20INVEST%20In%20America%20Fact%20Sheet.pdf  (as introduced)

  • Press Release with California projects from Congressmember Garamendi, the senior ranking member of the House Transportation and Transportation Committee:  https://garamendi.house.gov/media/press-releases/garamendi-secures-major-wins-california-and-environment-infrastructure-bill

DATA, SURVEYS, AND ANALYSES

• Impact of COVID-19 on US Small Businesses:  Stanford Institute for Policy research released a report, The Impact of Covid-19 on Small Business Owners: Evidence of Early-Stage Losses from the April 2020 Current Population Survey.  Among other findings, the report states that the number of US small business owners declined by 3.3 million (22%) between February and April 2020.  African-American small businesses were hit especially hard experiencing a 41% drop, followed by a 32% decline in Latinx business owners, and 26% in Asian business owners.  As has been found in other studies, these declines are partly attributed to the percent of business owners by race within certain industry sectors. Immigrant small business owners also experienced substantial losses (36%).  Female-owned small businesses were reported to have experienced a 25% reduction.  The report summary notes that while these are early-stage losses, these findings have important policy implications and may portend longer-term ramifications for job losses and economic inequality.  https://siepr.stanford.edu/research/publications/impact-covid-19-small-business-owners-evidence-early-stage-losses-april-2020&nbsp

• Impact of COVID-19 on UK Small Businesses:  McKinsey and Company released a report, How the COVID-19 Crisis is affecting UK Small and Medium-size Enterprises, based on a survey of small and medium-size businesses (SME) during the week of May 11, 2020.  https://www.mckinsey.com/industries/public-sector/our-insights/how-the-covid-19-crisis-is-affecting-uk-small-and-medium-size-enterprises?cid=other-eml-alt-mip-mck&hlkid=606df1cb78ce4b2a84f2fadd9a26b202&hctky=2745601&hdpid=01a2df70-d5e9-41f4-8348-3d7426fd2730   Among other findings, the report states:

  • The effect of the COVID-19 crisis on UK SME performance is immense. Of surveyed SMEs, 80% reported stable or growing revenue for 2019 and 80% of SME respondents now say their revenues are declining in May 2020.  In addition, 25% report being concerned defaulting on loans; 28% expect to reduce their number of employees; and 28% doubt they will be able to sustain their supply chains.

  • Responses differed across industry sectors, with SMEs in logistics, construction, and agriculture being most heavily impacted and SMEs in scientific, finance and insurance, and education sectors least impacted.

  • In aggregate, 50% of SMEs in the UK either already have or are planning to take advantage of the government’s furlough program [in which the UK government pays up to 80% of a furloughed employee’s salary, up to a maximum of £2,500 per month].  The participation rate increases to 75% for enterprises with more than ten employees, which account for more than two-thirds of the overall UK SME labor force.

• Unemployment Claims:  Federal and state unemployment numbers were reported for the week ending June 13, 2020:

  • The US Department of Labor reported 1.5 million first-time filers for the report week, bringing the total number of Americans who have filed unemployment claims since March 14, 2020, to more than 45 million Americans. https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20201259.pdf

  • EDD reported 175,663 claims being filed in California during the report week, including regular Unemployment Insurance (93,198 claims) and Pandemic Unemployment Assistance (82,465 claims).  This brings the total number of claims filed in the state between March 14 and June 13, 2020, to 5.5 million with total payments valued at over $30 billion.  https://www.edd.ca.gov/About_EDD/pdf/news-20-26.pdf 

• Inland Empire Forecast:  Dr. John Husing issued his second quarter report, Inland Empire 2020 Forecast in the Midst of a Pandemic, Shutdown & Demonstrations.  Among other information, the report states:  “As the economy opens from April until December, an important question is what 2020 Inland Empire annual average employment will be.  This would include the strength in January and February, weaknesses in March and April and the growth anticipated through December.  In 2019, average annual employment was 1,556,900.  The 2020 annual average job level is estimated at 1,486,300, down -70,600 jobs or -4.5%.”  The forecast was derived from a sector-by-sector analysis, which is outlined in the report.  https://files.constantcontact.com/9cbb8f35201/6857ff11-9361-416f-85b5-58f81d5b3fed.pdf

• Federal Funding Accountability:  The Pandemic Response Accountability Committee (PRAC) released a report, Top Challenges Facing Federal Agencies:  COVID-19 Emergency Relief and Response Efforts.  The PRAC is comprised of the Offices of Inspector General overseeing various departments.  While the CARES Act and other related legislation do not require a report by the PRAC, the PRAC chose to develop this report based on its existing requirement to annually report to the US Congress on top management and performance challenges facing their agencies and the Committee’s current practice of annually issuing a report that includes a list of the top challenges faced by agencies.  This report includes contributions by the 37 agencies who received the bulk of the $2.4 trillion coronavirus-related emergency funding.  Areas of concern, common among contributing agencies, include:  financial management of CARES Act and other funds; grant management; information technology security and management; and the ability of departments to protect health and safety while maintaining effective operations.

  • Report to the US Congress:  https://www.oversight.gov/sites/default/files/oig-reports/Top%20Challenges%20Facing%20Federal%20Agencies%20-%20COVID-19%20Emergency%20Relief%20and%20Response%20Efforts_0.pdf?source=govdelivery&utm_medium=email&utm_source=govdelivery

  • Excerpt of the Report relating to the Federal Deposit Insurance Corporation:  https://www.fdicoig.gov/sites/default/files/attachments/FDICOIGTopChallengesCOVID-19Final.pdf?source=govdelivery&utm_medium=email&utm_source=govdelivery

• High Public Debt in UK:  According to the Financial Times, the UK government’s debt exceeded the size of the UK economy (£2 trillion) in May 2020 for the first time in more than 50 years as borrowing surged to pay for coronavirus mitigation measures, official data published on Friday showed.  https://www.ft.com/content/57974640-8bea-448c-9d0b-32f34825f13e?emailId=5eec644b50c6480004c06665&segmentId=3d08be62-315f-7330-5bbd-af33dc531acb

GRANTS

• Zero-Emission Freight and Marine Projects:  The California Air Resources Board announced that the first installment of $35 million in VW Environmental Mitigation Trust funding for Zero-Emission Freight and Marine Projects throughout California is now available.  To participate, applications must be submitted by 1:00 pm on August 31, 2020.  The VW Environmental Mitigation Trust is a nationwide program that will provide $423 million for California to mitigate the excess nitrogen oxide emissions caused by VW’s use of illegal emissions testing defeat devices in VW diesel vehicles. California’s funding will support advanced technology vehicle and equipment deployments and accelerate the zero emission transformation of the heavy duty fleet.  More than 75% of the funds from this funding category are expected to benefit disadvantaged or low-income communities.  https://www.californiavwtrust.org/zero-freight-marine/?utm_medium=email&utm_source=govdelivery

COVID-19 PROGRAM UPDATES

• DACA Health Care Workers Staying:  The US Supreme Court rejected on a 5-to-4 vote the federal government’s attempt to dismantle the Deferred Action for Childhood Arrivals (DACA) program, which gave qualifying immigrants who were undocumented a path to obtain work permits and postpone deportation.  The case of Department of Homeland Security et al. v. Regents of the University of California addresses the status of nearly 650,000 undocumented immigrants who were brought to the US as children and who currently participate in the DACA program.  Supporters of the DACA program submitted, among other documents, information on the role that individuals enrolled in the DACA program play in the US’ health care response to the coronavirus emergency.  https://www.supremecourt.gov/opinions/19pdf/18-587_5ifl.pdf

• PPP Forgiveness Application Streamlined:  US Small Business Administration, in consultation with the Department of the Treasury, posted a revised, borrower-friendly Paycheck Protection Program (PPP) loan forgiveness application implementing the PPP Flexibility Act of 2020.  In addition to revising the full forgiveness application, SBA also published a new EZ version of the forgiveness application.

  • EZ Forgiveness Application:  https://content.sba.gov/sites/default/files/2020-06/PPP%20Forgiveness%20Application%203508EZ%20%28%20Revised%2006.16.2020%29.pdf?utm_medium=email&utm_source=govdelivery

  • Directions on how to Complete EZ Forgiveness Application:  https://content.sba.gov/sites/default/files/2020-06/PPP%20Loan%20Forgiveness%20Application%20Form%20EZ%20Instructions%20%28Revised%2006.16.2020%29.pdf?utm_medium=email&utm_source=govdelivery

• CARES Act Guidance on Retirement Accounts:  The IRS released an official notice (Notice 2020-50) to provide guidance to retirement plan participants affected by the COVID-19 coronavirus on how to take advantage of the CARES Act provisions providing enhanced access to plan distributions and plan loans.  CARES Act changes include expanding the categories of individuals eligible for distributions and suspend loan repayment requirements under certain circumstances.  https://www.irs.gov/newsroom/relief-for-taxpayers-affected-by-covid-19-who-take-distributions-or-loans-from-retirement-plans

• Federal Re-Opening Guidance:  The US Occupational Safety and Health Administration (OSHA)  issued guidance to assist employers reopening non-essential businesses and their employees returning to work during the evolving coronavirus pandemic.  https://www.osha.gov/Publications/OSHA4045.pdf  This guidance supplements the US Department of Labor and US Department of Health and Human Services’ previously developed Guidance on Preparing Workplaces for COVID-19 https://www.osha.gov/Publications/OSHA3990.pdf.   

• CA Small Business Loans:  The Governor’s Office of Emergency Services receives updates from the SBA on small businesses that are utilizing the two federal disaster loan programs, the Economic Injury Disaster Loan and Paycheck Protection Program.

• Great Plates Delivered:  The Great Plates Delivered program provides three meals a day to qualifying seniors.  FEMA just granted a 30-day extension to allow the program to continue to July 10.  As shown in the chart below, the demand for meals far exceeds the number of businesses under contract.  Interested restaurants and food providers are encouraged to fill out this form: https://state-of-california-agency.forms.fm/great-plates-delivered-food-provider-interest-form/forms/7917   

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