WASHINGTON — When the federal government began rushing trillions of dollars of assistance to Americans crushed by the coronavirus pandemic, the hope was that some of the aid would allow businesses to keep workers on the payroll and cushion employees against job losses.
But so far, a staggering number of Americans — more than 16 million — have lost their jobs amid the outbreak. Businesses continue to fail as retailers, restaurants, nail salons and other companies across the country run out of cash and close up shop as their customers are forced to stay at home.
There is a growing agreement among many economists that the government’s efforts were too small and came too late in the fast-moving pandemic to prevent businesses from abandoning their workers. Federal agencies, working in a prescribed partnership with Wall Street, have proved ill equipped to move money quickly to the places it is needed most.
An analysis by University of Chicago economists of data from Homebase, which supplies scheduling software for tens of thousands of small businesses that employ hourly workers in dining, retail and other sectors, suggests more than 40 percent of those firms have closed since the crisis began.
The pandemic could cost the United States a quarter of its restaurants, said Cameron Mitchell, who owns and runs a chain of 21 restaurants in Ohio and has more across the country. He has furloughed all but six of the company’s 4,000 workers. “I’m not asking for a handout,” Mr. Mitchell said, but “we need some additional help, or else America’s not going to have a restaurant industry to come back to.”
His chain, Cameron Mitchell Restaurants, had applied for a $10 million loan through Huntington National Bank but was awaiting confirmation from the Small Business Administration in Washington.
Policymakers have tried to head off the economic devastation that businesses like Mr. Mitchell’s are now experiencing, but it has proved complicated. Congress and President Trump have already approved nearly $3 trillion in economic rescue packages aimed at countering the effects of the virus, including aid to companies that explicitly tries to keep workers tied to their jobs. The Federal Reserve has also created a flurry of new programs to keep the financial system from seizing up, including one effort announced Thursday that seeks to help nearly 19,000 businesses that have not otherwise obtained federal assistance.
But the federal government is not equipped to quickly establish or manage complex funding programs, and by the time policymakers began those efforts, it was already too late for some businesses.
Some companies have chosen to lay off workers, viewing that as a better option for them than keeping them on part time or paying just a fraction of their salaries. An expansion of unemployment benefits added $600 per week to the amount received by every laid-off American for the next four months, giving some companies an incentive to direct their workers to federal assistance.
For many workers — those who earn up to $1,200 a week, depending on the state — that additional benefit means their unemployment pay could exceed what they were earning on the job. The discrepancy could encourage some companies to furlough workers.
Small-business aid from an initial $349 billion pot has been slow to arrive for many companies already staring down the possibility of bankruptcy, with bureaucratic and technological hurdles bedeviling the program. The Paycheck Protection Program — which offers companies forgivable loans to continue covering their payroll — began taking applications only on April 3, weeks after many merchants had been ordered to close their doors. Very little of the more than $100 billion committed through it so far has actually made it into borrowers’ hands.
Banks, which are expected to front the money for the program, are still battling bottlenecks at the overwhelmed Small Business Administration and are waiting for technical information they need to close and fund the loans. Smaller banks are on the verge of running out of cash to lend. They are relying on the Federal Reserve to quickly repurchase their paycheck program loans, which the Fed has said it will do, but it has not yet provided details on its plan.
A program aimed at keeping airline employees on the payrolls is also in a holding pattern, as the Treasury Department vets applications from airlines and prepares to negotiate what the government will receive in exchange for bailing them out.
And individual checks to help millions of Americans continue to pay bills are not expected to arrive until April 15, at the earliest
Even the Fed’s “Main Street” lending program, announced Thursday, may prove insufficient for business needs. It operates through banks, so it still requires lenders to feel comfortable extending credit. And while they can sell most of the loans they originate — the Fed will buy 95 percent of eligible loans, up to $600 billion worth — the banks will still have to hang onto a tiny slice of risk. There is no clear date when the program will be up and running.
Policymakers have moved faster, and appropriated far more money to combat the economic fallout from the pandemic, than American leaders did during the 2008 financial crisis, said Tony Fratto, who served in the George W. Bush administration during that crisis. But the response came too late to save many of the businesses that now face bankruptcy.
“There’s creativity and there’s scale, and they’re trying to do it quickly,” Mr. Fratto said, “but they weren’t early enough, and there’s going to be a lot of damage because of that.”
Lawmakers have agreed they will need to approve larger sums of money to help smaller businesses. But an effort by Senator Mitch McConnell, Republican of Kentucky and the majority leader, to speed an additional $250 billion through the Senate failed on Thursday when Democrats objected because they wanted Mr. McConnell to tack on assistance to hospitals and local governments.
Senators and advocacy groups have begun to push additional measures to bolster companies through the pandemic. Senator Josh Hawley, Republican of Missouri, wrote on Thursday that “the federal government should cover 80 percent of wages for workers at any U.S. business, up to the national median wage, until this emergency is over.”
Senator Ron Wyden, Democrat of Oregon, said the government should provide cash assistance of up to $75,000 each for businesses that employ 50 workers or less. The Economic Innovation Group, a think tank in Washington that helped drive the creation of the small-business assistance program Mr. Trump signed into law late last month, called on Congress to amend the program by adding more money to it, allowing individual businesses to borrow more and removing limits on spending from the loans for expenses other than payroll — like rent.
Mr. Mitchell, the restaurant owner, also said he would like to see the spending limits for loans tweaked and the timeline for spending loan funds relaxed.
Other countries have taken more direct steps to prevent the type of mass unemployment and widespread collapse of companies now facing the United States.
France, Germany and a number of other European countries are paying employers not to lay people off by footing the bill for 80 to 90 percent of a furloughed worker’s salary.
The idea is to limit layoffs and company closures, so that when the coronavirus is finally under control, Europe’s businesses and economies can rebound from the recession with less pain than if unemployment had been allowed to soar.
More than seven million employees in France have been put on paid furlough directly financed by the government, which is spending 45 billion euros to keep workers employed and companies afloat. Use of Germany’s paid furlough program is also soaring, with nearly a half-million firms filing for support in March, including Daimler, Volkswagen and Lufthansa.
Congress seems unlikely to adopt a similar program, or even something akin to what Mr. Hawley proposed on Thursday. And while Mr. Trump has promised a “boom” in the economy in the weeks to come — foreshadowing a push to lift the restrictions officials have placed on activity — many economists disagree.
Forecasters at Moody’s Analytics warned on Thursday that some 45 million Americans were at risk of losing their jobs amid the pandemic, including three-quarters of the workers in the hospitality and construction industries. They warned it was a “conservative estimate.”
“Most businesses are struggling with reduced demand,” the forecasters wrote, “as consumers shift their spending to necessities and cut back on the rest.”
Reporting was contributed by Alan Rappeport, Emily Cochrane and Jeanna Smialek from Washington; Liz Alderman from Paris; Patricia Cohen, Stacy Cowley and Emily Flitter from New York; and Noam Scheiber from Chicago.