Politics

The Trump administration allowed aviation companies to take bailout funds and lay off workers, says House report

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This story was printed in partnership with ProPublica, a nonprofit newsroom that investigates abuses of energy. Join ProPublica’s Big Story e-newsletter to obtain tales like this one in your inbox as quickly as they’re printed.

Within the spring, Congress created a program to save lots of aviation employee jobs. Then the Trump administration undermined that program by granting lots of of tens of millions of dollars in aid to aviation corporations for jobs they’d already largely eradicated, in line with a House report launched Friday.

Consequently, 1000’s of employees at airline caterers and different contractors are out of labor whereas their employers obtained public funds that had been purported to be handed to employees. What’s extra, at the least two corporations that obtained lots of of tens of millions in taxpayer funds restored full pay to administration, the report discovered.

The report follows a monthslong investigation that the Home Choose Subcommittee on the Coronavirus Disaster launched in July, citing ProPublica reporting on this system.

The $32 billion Payroll Help Program, a part of the sweeping CARES Act to rescue the economic system from the ravages of the coronavirus disaster, was designed so that cash would go by means of corporations to employees within the hard-hit aviation trade. The federal authorities gave grants and a few loans to airways and their contractors, who had been then meant to maintain employees on their payrolls. The quantity every firm obtained could be primarily based on six months price of payroll from final yr. In change, the businesses needed to agree to not conduct any layoffs till October, about six months after the CARES Act was handed.

However ProPublica discovered that the businesses laid off employees all through the spring after which took the cash meant to protect the roles that they had already reduce. The Treasury Division, charged with implementing the legislation, provided no incentive for the businesses to rehire their employees.

The choose subcommittee’s report reached an analogous conclusion.

“Treasury’s implementation of the Payroll Help Program undermined this system’s job preservation function,” the subcommittee wrote. “Treasury permitted aviation contractors to put off tens of 1000’s of employees by means of the worst months of the pandemic and nonetheless obtain full payroll assist calculated primarily based on pre-pandemic workforce numbers—the identical quantity they might have obtained if that they had not laid off a single employee.”

In response to the report, a Treasury spokesperson wrote that “the Payroll Help Program has supported lots of of 1000’s of aviation trade jobs, stored employees employed and related to their healthcare, and performed a essential position in preserving the U.S. airline trade. Implementation centered first on the most important employers to assist stabilize an trade in disaster and assist as many roles as potential for so long as potential.”

Congressional investigators obtained tens of 1000’s of pages of paperwork and interviewed Treasury Division and firm officers.

Within the case of 1 contractor, Swissport U.S.A., the subcommittee uncovered correspondence during which an organization govt instructed managers to “urgently” confirm the employment standing of a body of workers previous to finalizing the corporate’s Payroll Help settlement, and to allow them to go in the event that they weren’t wanted.

“CARES is now imminent, and we have to be sure that we don’t incur pointless prices as soon as the ink is on the paper,” the chief wrote, referring to the employees, weeks earlier than the corporate obtained $170 million from this system.

Swissport didn’t reply to a request for remark.

The subcommittee additionally took to activity two airline catering corporations that ProPublica wrote about in July, Gate Connoisseur and Flying Meals Group, for benefiting from this system.

The report discovered that the businesses drastically lowered their payroll forward of making use of for the aid funds, and continued to take action whereas their purposes had been pending. However as soon as the agreements had been finalized, neither restored employment to pre-pandemic ranges. In truth, the subcommittee discovered that Flying Meals Group, which obtained $85 million by means of this system, had not rehired a single employee out of the 1000’s it laid off or furloughed for the reason that pandemic hit.

In the meantime, each corporations have since restored cuts that had been made to administration pay. Each count on the cash they obtained from the Payroll Help Program to subsidize their payroll bills nicely into subsequent yr, in line with the report.

Neither firm responded to requests for remark.

Rep. James Clyburn, D-S.C., who chairs the choose subcommittee, has referred to as for aviation corporations to halt any further layoffs till they’ve spent the rest of the funds they obtained.

Nevertheless, for the reason that Sept. 30 deadline for halting layoffs below the CARES Act expired, Flying Meals and Gate Connoisseur have already initiated lots of of further layoffs at airports throughout the nation, in line with official layoff notices issued by the businesses in latest weeks.

 

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