Steve August 4, 2020
america-needs-a-bar-and-restaurant-bailout

You can’t eat a meal, down a shot, or sip a cup of coffee while wearing a mask.

So if wearing masks inside is crucial to halting the spread of the Covid-19 pandemic — and at this point, just about everyone in the scientific, medical, and public health communities agrees that it is — people can’t be eating or drinking in indoor settings outside the house.

Yet despite this seemingly straightforward logic, many jurisdictions in the US have allowed the partial reopening of bars, restaurants, and coffee shops.

In Washington, DC, for example, Mayor Muriel Bowser is sufficiently concerned about rising case levels that she has limited travel from high-risk areas and ordered people to wear masks outdoors in most situations. Maryland Gov. Larry Hogan issued an expanded mask order on Friday and as of this past weekend, “all Marylanders over the age of five are required to wear face coverings in the public spaces of all businesses across the state.”

My birthday wish has already come true: being mayor of my hometown.

Thank you for all the birthday wishes, and if you want to make another come true, please wear your masks. ❤️

— Mayor Muriel Bowser (@MayorBowser) August 2, 2020

But both Washington, DC, and Maryland have allowed restaurants to reopen for indoor service under certain conditions.

It’s no secret why leaders are reluctant to keep restaurants closed. Restaurants provide jobs, restaurant owners have political clout, and food and beverage sales generate tax revenue. Closing schools or ordering people to wear masks outside has no direct financial cost, so these measures look more appealing.

But the financial problems with restricting bars and restaurants have a pretty straightforward solution — bail them out — while the public health value of imposing an indoor mask mandate is significant. Congress should consider bailouts of bars, restaurants, and coffee shops, and states and cities that need tax revenue. It will save lives, create more space for taking public health risks in other areas where the cost benefit is less clear, and ultimately leave the economy in a stronger position.

Indoor aerosol transmission is a huge problem

Public health guidance on Covid-19 has also been shifting and confusing, in part because of leadership failures and in part because science is hard, so our best understanding has shifted over time.

Early in the pandemic, public health authorities actively discouraged the use of masks by the public and messaged heavily in favor of hand-washing and cleaning surfaces. We have subsequently learned the good news that surface transmission seems rare in practice. As Emanuel Goldman writes in the August issue of The Lancet, messaging that suggests high risk of surface transmission “has been assumed on the basis of studies that have little resemblance to real-life scenarios” and in practice the risks here, though not nonexistent, are relatively low.

Surface transmission “isn’t thought to be the main way the virus spreads,” according to current Centers for Disease Control and Prevention (CDC) guidance.

Unfortunately, the practices Derek Thompson calls “hygiene theater,” where business owners or government officials go to great lengths scrubbing and disinfecting various surfaces, have become fairly entrenched at this point. Hygiene theater is appealing in part because it’s theatrical — you can see someone doing the scrubbing. But it’s also appealing because it can, in principle, be done everywhere. The fact that it’s not really necessary in most cases is probably good news. But it has helped bolster a false sense of security in some quarters, worsening a failure to keep up with the latest bad news about how transmission actually happens.

By late March, evidence was piling up that the practice of mask-wearing in Asia was right all along, and on April 3, the CDC started to recommend mask use. The evidence in favor of masks has only gotten stronger since then because as evidence of surface transmission has faded, evidence of “airborne” or aerosol transmission has gotten stronger.

The prior thinking on transmission — that we only had to worry about relatively large droplets — fell rapidly to the ground, hence the emphasis on 6 feet of distance. Those droplets are an issue, but doctors and scientists are increasingly worried about smaller particles that travel further. There’s a lot of dispute about exactly how to characterize this (see my Vox colleague Brian Resnick’s explainer for details) but the bottom line is, as Zeynep Tufekci writes, “we should focus as much on ventilation as we do on distancing, masks, and hand-washing, which every expert agrees are important.”

That brings us back to bars and restaurants. If you’re eating outside, you’re in a well-ventilated space. And as long as surfaces are reasonably clean and you’re not too close to anyone outside your household, you should be fairly safe. But if you’re indoors unmasked, eating and chatting, no amount of disinfecting wipes is going to make things safe unless the restaurant happens to have high-grade ventilation. And while developing clear standards around ventilation, doing tests, and paying for upgrades is one possible solution, those efforts need to be focused on critical facilities like nursing homes and health care providers, not nice-to-haves like restaurants.

The whole “airborne” debate can get very complicated and technical but the basic issue is simple: Officials who recognize it’s important to wear masks inside need to also recognize that you can’t eat while wearing a mask.

Bail restaurants out with free loans

Of course, if restaurants are told they can’t serve food inside, they will lose money and go out of business. They’re going to need a big bailout.

But here’s the good news. Businesses face two kinds of costs: fixed and variable. For restaurants, variable costs are things like the cost of raw food that gets cooked, and the cost of paying people to do the cooking. When you have more customers, the variable costs increase. When you have fewer customers, the variable costs go down. And as annoying as it is to tell a restaurant it needs to be limited to delivery, to-go, and outdoor dining, it doesn’t change the fact that a sound business should be able to cover its variable costs.

The problem is fixed costs. Restaurant owners need to pay rent and make payments on loans regardless of how many customers come through the door. Since rents were set on the presumption that dining rooms would be full, nobody can cover the rent just doing takeout. To the extent that restaurants have survived this long is in part because landlords recognize there’s no sense in evicting a tenant at a time when you won’t be able to find a new one. But rather than relying on ad hoc workouts, we need a real solution: ultra-cheap credit.

Adam Ozimek is the chief economist at Upwork but perhaps more to the point, the owner of a restaurant in Lancaster, Pennsylvania. Together with John Lettieri of the Economic Innovation Group, he developed a proposal well-suited to independent restaurants’ needs. Here’s how it works:

  • Any qualifying business could get a loan worth the lesser of $5 million or 200 percent of 2019 expenses. The loan would be repaid over a 20-year period with a zero percent interest rate and a three-month grace period with no payments.
  • Loans would be made and held by private banks, so restaurants could use their existing banking relationships, and the federal government would guarantee the loans and pay banks a modest fee for their trouble.
  • The funds should be broadly available for legitimate business uses, including refinancing old loans, paying rent, paying staff, investing in equipment, or something else.

Companies could use the loan to replace old debt with cheaper new debt, cover rent, have cash available to invest in picnic tables or umbrellas, for example, to facilitate outside dining, and then keep selling food with revenue covering variable costs. This wouldn’t save every restaurant or every restaurant job, but it would save a lot of them and make it more economically tolerable to save a lot of lives.

Bail out local governments and unemployed people

The point of letting restaurants survive the pandemic in a shrunken state is that the public health crisis won’t last forever. In principle, with universal mask use and other precautions, the US could get cases down to a level where testing and isolation are sufficient to keep people safe, even with restaurants reopening. Failing that, there will hopefully be a vaccine in the not-too-distant future. Either way, as long as restaurants still exist, they should be able to resume business with more customers, more workers, and more sales when circumstances allow.

The problem is that in the interim, there will be lost jobs and a loss of tax revenue to state and local governments.

Solutions here, however, are fairly straightforward. House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer have rallied behind the correct solution for people who are unemployed: maintain unusually generous unemployment insurance payments until jobs are available for people to take.

Pelosi says $600 UI payments should be tied to the jobless rate, shrink as economy improves. (More on that idea here: https://t.co/27X5Wh4LaO)

She cites Yale study we reported on that found no evidence the payments are discouraging people from working: https://t.co/0cDrflhQPn

— Kate Davidson (@KateDavidson) August 2, 2020

Meanwhile, the federal government can currently borrow money for less than the rate of inflation. The solution to the state and local tax revenue problem is simply to share the borrowing power with lower levels of government by giving them big piles of money. The US is dealing with plenty of problems right now, and it doesn’t need one level of government to be laying off workers while another layer of government can get cheaper-than-free loans. And nobody needs a deadly, incurable virus to spread just because cities feel they can’t do without the tax revenue generated by happy hour.

The scientific understanding of how the coronavirus works has changed a lot since communities started locking down in early March. We now know that a wide range of activity seems reasonably safe as long as it’s done outdoors or with masks, and as long as crowding is kept to a minimum and people are prudent about maintaining distance. But we also know that 6 feet away isn’t good enough if people are going to be unmasked in indoor spaces.

That’s good news for brick-and-mortar retailers, who in the vast majority of cases should be able to conduct business safely. But there’s no way to dine indoors at restaurants safely unless Covid-19 is suppressed much more. The economic havoc of shuttering indoor dining would be substantial, but manageable given the government’s current fiscal situation. And in the long run, the economy and everything else will be much better off if we act decisively and control the virus.


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