The restaurant industry's moral dilemma

Stay open or close down

Food businesses shouldn't have to balance the fates of their employees with public safety. That's an inhuman moral dilemma and a completely capitalist fabrication. A choice you make because, if you choose otherwise, people in your employ will lose live-saving health coverage or stable housing, is not a choice. What is the point of preserving someone's life while also ruining it?

To close temporarily, even for a week, is incredibly punishing to the vast majority of food businesses. They are still on the hook for rent, utilities, sales taxes, benefits and payroll taxes.

Closing would be even more punishing for those who work at those businesses: members of the working class who still need to pay for rent, health care, and various debts. Unemployment benefits can help allay some of those costs. But many food industry workers make the majority of their income from tips, and these are not counted when determining benefits. And according to a 2008 report by the Pew Hispanic Center, 20% of restaurant workers are undocumented but, despite the fact that they pay into that system, are ineligible for those payments. [...]

What we've seen so far from the federal government has not made the decision to close easier. According to the Small Business Administration's guidelines for the $349 billion Paycheck Protection Program (PPP), issued April 2, what was pitched as a forgiveable business loan with a 10-year repayment plan has morphed into one that must be repaid in 2 years with 1% interest.

If a business doesn't rehire all of its staff by June 30, a large chunk of that loan will qualify as non-forgiveable. It's unimaginable that restaurants will recover enough to rehire their entire pre-coronavirus staffs even by the end of 2020. [...] And even though evictions have been put on hold by San Francisco, commercial and residential landlords still have the right to demand rent be paid in full at in the future. The result is a ticking time bomb: We might see restaurants come back from this in May, only to shutter en masse when they have to start paying back their loans and deferred rent.

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5 Responses:

  1. nooj says:

    And it's even more unimaginable that restaurants will know whether they can rehire all of their staff by June 30. So they have to sign the loan papers blind, based on hopes and tremendous risk. Kind of like student loans, and we know how well that has worked out.

  2. bit says:

    Debt and uncertainty is the American dream

  3. o.o says:

    I'm not sure the author isn't conflating the PPP with the EIDL when talking about morphing terms. Under the EIDL you can get a $10K advance on up to a $2MM loan for payroll, etc., and the advance doesn't have to be repaid under any circumstances.

  4. Pinback says:

    Food is entertainment, and entertainment is optional. There are no big cronies in the small restaurant business, like there was in the banks. There is no political block to count on votes from, like there was with the auto industry bailout. For those reasons, the government can't be bothered to put any real effort into doing this right. And in the 'only thumbs up' world we live in now, there will be no one held to account for this when it is over.

    • margaret says:

      i think what you are saying is the poor should have lobbyists too. we'll see how optional the entertainment industry is when movie studios (disney), fast-food restaurants with all their mega-franchisees, and sportsball owners all go jam their proverbial head up into the trough of taxpayer money.

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