American businesses are poised to benefit from twin victories in the $1.9 trillion Covid-19 relief package, which gives consumers more money to spend but doesn’t force companies to raise workers’ wages.
The legislation, signed into law by President Biden Thursday afternoon, includes $1,400 checks to many Americans and an extension of a $300 weekly unemployment-aid supplement. It doesn’t include a proposed increase in the minimum wage to $15 over four years, meaning retailers, restaurants and others don’t have to worry about higher payrolls for now.
Executives and economists said that unlike the last round of stimulus payments, which came in the midst of lockdowns and heightened economic uncertainty, these checks are more likely to flow into the economy as families face fewer financial constraints, more people are vaccinated and restrictions on travel, dining and other activity are lifted.
“All this money is coming in, and a lot of it is going to get spent,” said Jeff Aronson, co-founder and managing principal of investment firm Centerbridge Partners. “Obviously that has huge implications” that are good for the economy, businesses and consumers, he said.
The bill passed the House on Wednesday, largely along party lines with Democratic support. No Republicans voted for it, with some saying that the economy was poised for a strong recovery without it and that many of its measures are bloated or unnecessary and unrelated to the crisis.
Some business leaders echoed GOP concerns even as they embraced key elements of it.
The Business Roundtable, which counts the chief executive officers of dozens of the biggest U.S. companies as members, said Wednesday, “While we advocated for a more targeted approach, enactment of this package will help deliver urgent resources to strengthen the public health response and provide assistance for individuals and small businesses hardest hit by the pandemic.”
‘We have seen a lift in the past from stimulus checks.’
The U.S. Chamber of Commerce also said it would have preferred a narrower bill. Economic data already points to building strength, the Chamber said in a statement last week, while the current bill “means less money for other priorities, including infrastructure and education.”
During a virtual gathering of dozens of large-company CEOs hosted by the Yale School of Management on Wednesday morning, nearly two-thirds, or 64%, said in a snap poll that the relief package went too far. When asked if they support or oppose the relief package, 34% said they strongly support it, 37% said they somewhat support it, 14% said they somewhat oppose it and 15% said they strongly oppose it, according to the poll.
“If you ask a bunch of CEOs, ‘Could you have done it with less?’ you’re always going to get into probably could’ve done it with less,” Doug Parker, chief executive of
American Airlines Group Inc.,
said during the virtual event. “But that’s not the bigger point. The bigger point is you know there’s broad public support for this bill. That’s certainly true of those of us that are running airlines.”
In addition to the stimulus checks and extension of unemployment benefits, the bill includes funds for coronavirus-related public-health measures such as testing and vaccine distribution, a one-year extension of the child tax credit and funds for schools, state and local governments and small restaurants, among other measures. (See what is in the stimulus package.)
Companies that have been hurt by the pandemic or rely directly on robust consumer spending for sales, such as small restaurants and retailers, cheered the bill’s passage. The National Retail Federation, Consumer Brands Association, National Restaurant Association and Independent Restaurant Coalition supported the bill.
“Ensuring that the American people are given the opportunity to quickly and safely get vaccinated against Covid-19 is the most critical component of the legislation passed,” the retail federation said last week as the bill moved through the Senate.
Danny Meyer, chief executive of Union Square Hospitality Group, which owns several New York City restaurants, said: “This will provide many with a fighting chance to emerge from a deep financial hole. Positive as this news is, this should have and could have happened last fall or winter.” It “may be too late for many independent restaurants including a couple of ours,” he said.
The bill includes $28.6 billion in potential grants to small restaurant companies that lost business because of Covid-19. Rep. Earl Blumenauer, an Oregon Democrat who sponsored a $120 billion restaurant stimulus bill last year that wasn’t enacted, said he believes grants will begin flowing in weeks, not months. He expects the funding to run out given the need among restaurants and bars.
Grants are awarded based on revenue losses from last year compared with 2019, after deducting for past funds allocated to a business through the federal Paycheck Protection Program. Small restaurants will have $5 billion in dedicated funds, and those owned by women and minorities will get to apply first.
“The PPP definitely helped us, but this will help get us to the finish line,” said Ari Weinzweig, co-founding partner of Zingerman’s Community of Businesses, an organization of food businesses and restaurants in Ann Arbor, Mich. It lost around $15 million in sales over the course of the pandemic, despite a big increase in mail-order sales, Mr. Weinzweig said. The organization dropped to about 550 employees from 700, he said.
Past pandemic stimulus packages have led to higher spending, boosting retailers and other companies.
“We have seen a lift in the past from stimulus checks—sometimes as clear as customers receiving the money in their bank account on a Saturday morning and then seeing a pop in our business by that afternoon,” said Lee Bird, chief executive of home décor retailer
At Home Group Inc.
“We would expect that dynamic to continue to play out.”
Chief Financial Officer Vasant Prabhu said Wednesday at an investor meeting that “when stimulus checks hit, you immediately get the impact.” In January, the checks led to a big surge “in our debit business in the first couple of weeks,” he said.
—Heather Haddon contributed to this article.
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