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For public sector and service workers, covid fatigue took its toll. Now states and localities are saying thank you using American Rescue Plan Act funds.
Hazard pay became a hot button issue as many essential workers who had to put themselves at risk for exposure to the coronavirus were also low-wage employees. Now, more than a dozen localities are using or plan to use American Rescue Plan Act funding to award one-time bonuses to their employees and at least one city in California is giving “gratitude grants” to local grocery workers.
“As we went through the Covid-19 crisis, we did not give our city employees bonus pay or otherwise compensate them for what we felt like was work above and beyond the call of normal duty,” said Mobile, Alabama Mayor Sandy Stimpson. “We saw an opportunity to fill a void.”
During the height of the pandemic, the plight of essential workers who had to show up to work while millions of others could safely work from home raised calls for Congress to include hazard pay in its relief funding. Sanitation workers, farm workers and grocery store employees not only were putting themselves at risk by going to work, they also were more likely to have economic and health repercussions if they did contract the virus. In fact, a recent study published in the Journal of the American Medical Association found that 25% of essential workers were estimated to have low household income, with 13% in high-risk households.
For public sector workers, covid fatigue also took its toll. A local government survey taken in May 2020 by the Center for State & Local Government Excellence at ICMA-RC found that 32% of respondents felt the risks they were taking during the pandemic were not on par with their compensation. By October 2020, that jumped to nearly half.
The Treasury Department’s guidance for the ARPA’s $350 billion in flexible funding for states and localities says those eligible for premium pay include government employees and private sector workers such as nursing home staff and home care workers, and workers at farms, food production facilities, grocery stores and restaurants. Priority should be given to low-income workers and teleworkers are not eligible.
“Employers’ policies on COVID-19-related hazard pay have varied widely, with many essential workers not yet compensated for the heightened risks they have faced and continue to face,” the rule said. “The added health risk to essential workers is one prominent way in which the pandemic has amplified pre-existing socioeconomic inequities.”
The rule defines premium pay as “an amount up to $13 per hour in addition to wages or remuneration the worker otherwise receives” and is capped at $25,000 per eligible worker.
Municipal Employee Get Bonuses
While no official count exists, at least a dozen cities and counties have announced plans for or approved employee bonus pay. Terms vary. For example, in Georgia, the city of Cairo is giving $1,500 to public safety employees and $1,000 to municipal workers for a total of $178,000, while Thomas County is setting aside $6 million and calculating bonuses based on the formula included in the Treasury guidance.
Brooks Rainwater, director of the National League of Cities' Center for City Solutions, said the awards are an acknowledgement of the vital role local workers played in keeping basic services functioning during the pandemic. What’s more, they did so under the threat of furloughs or job loss as local governments slashed budgets in response to the pandemic.
“It shows how critical the public sector is to making sure our daily lives function as they should,” Rainwater said. “I think there’s been a newfound appreciation by the public ... and more of a broad scale consensus that these people should be better compensated.”
Bonuses for Grocery Worker Too
Private sector employers can receive a grant from their state or local government for hazard pay for their workers.
During the pandemic, city councils across California and elsewhere mandated controversial temporary pay raises for grocery workers, which immediately prompted lawsuits from the California Grocers Association, a trade group representing the industry. Oxnard, California, had considered a “hero pay” ordinance, but when premium pay became an eligible expense for ARPA funding, it switched gears.
“At this point in the pandemic, the need for direct income assistance is past but we wanted to work on something that recognized their effort and still contributed to the recovery,” said Emilio Ramirez, the city’s housing director. “That’s why we decided to make the change from a hero ordinance to a gratitude program. It allows that money to be put into our local economy.”
Oxnard is using ARPA funding to give $1,000 bonuses to eligible grocery workers and is the first city to do so, according to the United Food and Commercial Workers. The union is urging others to follow the city’s lead.
The premium pay bonuses so far are more common in cities than at the state level. Only Florida and Minnesota have approved premium pay for workers statewide, according to the Associated Press. Hawaii Gov. David Ige vetoed a budget provision to pay teachers $2,200 bonuses and a premium pay proposal in Oregon failed.
In addition, at least one state—Washington—prevents its municipalities from awarding premium pay or bonuses for work already performed, according to municipal attorney Oskar Rey. To get around that, he said that a local government employer could adopt a prospective policy for premium pay and bonuses, and use ARPA funds later this year for that purpose.
While states and localities have until 2024 to allocate their ARPA direct aid, some worry the urgency and appreciation will fade more quickly.
“Unfortunately, the longer you delay doing it, the less it’s going to be on the top of minds of voters and those policymakers,” Molly Kinder, a fellow at the Brookings Institution, told the Associated Press.
Liz Farmer is a journalist and fiscal policy expert who often writes about budgets, fiscal distress and tax policy.