COVID-19 Legislative Impacts

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Legislative Actions - COVID-19: High Net Worth Investors

No publicly-available information could be found regarding legislative actions taken by the United States government in the wake of COVID-19 that are expected to have a lasting impact on high net worth investors even after a thorough search through news articles, reports, government websites, and databases. Some helpful findings, as well as the methodology used for this research, are available below.

Helpful Findings:

  • H.R. 6201, or the Families First Coronavirus Response Act, is a federal mandate that requires businesses with 500 and fewer employees to grant 12 weeks of paid leave to its employees. Businesses from various industries such as the printing industry are worried that this would lead to an acceleration of layoffs and closures and are urging Congress to formulate a federal emergency program for businesses affected by this mandate.
  • Lawmakers are facing pressure to introduce legislation aimed towards helping mitigate the economic impact of the COVID-19 outbreak. This pressure is caused by the growing number of airlines canceling flights, travelers canceling plans, and schools and workplaces announcing closures.
  • Other legislative actions being considered by Congress include unemployment insurance for furloughed workers, delay of the April 15 tax deadline, as well as a suspension of business payroll taxes.
  • As of March 20, 23 states, as well as the District of Columbia, have already enacted or adopted legislation to support state action concerning COVID-19. This includes workforce protection or medical coverage, disease surveillance, isolation and quarantine, and other related actions taken by the Governor in a state of emergency.
  • Stock market experts are advising investors to begin preparing for an eventual recession amidst the COVID-19 pandemic. United Capital CEO Joe Duran states that the stock market has already priced in for a likely recession and urges investors to consider buying stocks now.

Research Strategy:

After several hours of research, information on legislative actions taken by the US government concerning COVID-19 that are expected to have a lasting impact on high net worth investors could not be found in the public domain. We were able to find a compilation of State-level legislative actions as well as news articles that details the actions the government has taken concerning COVID-19, however, the information we found was focused more on the impact of COVID-19 to the general US population instead of just specific groups of people. Seeing as the public health emergency concerning COVID-19 was only declared on the 31st of January and continues to be an ongoing situation worldwide, it is likely that information on legislative actions that have an impact on certain groups of people like high net worth investors will become more available in the future as more information is made available on the public domain. Nevertheless, we have made attempts to gather relevant findings with what is currently available to us.

We looked up reports on the US economy in light of COVID-19 under the assumption that these reports may include information on how the government's actions may have impacted investors. We were able to find a report on the impact of the pandemic on businesses across the globe, however, this report gave no information relevant to this project. We then scoured news articles from credible sites such as Manning-Napier and The Hill for insights on the economic impact of COVID-19 in the US and what legislative actions the government has taken regarding this. We specifically looked for articles that make mention of how this has affected high net worth investors. We were able to find that the Federal Reserve has announced a $1.5 trillion funding program to help keep the financial system of the US functioning properly and that investors are being advised by experts to prepare for a likely recession, however, no information relevant to the project was found. After an extensive search through publicly-available news articles, reports, and databases, insights on legislative moves taken by the US government concerning COVID-19 that are expected to have a lasting impact on high net worth investors could not be found.
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Legislative Actions - COVID-19: Upper Middle-Class Investors

Legislative Actions — COVID-19: Upper Middle-Class Investors

Several bills have been passed on both the state and national levels in the wake of CoViD-19. Notable bills include the H.R. 6074: Coronavirus Preparedness and Response Supplemental Appropriations Act, the S. 3415: Paid Sick Days for Public Health Emergencies and Personal and Family Care Act, and the H.R. 6201: Families First Coronavirus Response Act. There is no direct information in the public domain regarding any lasting impact of these legislative actions on any investors, let alone the ones in the upper middle class. However, several valuable insights regarding the investment environment and changes brought about by recent legislation in response to CoViD-19.

Insights Regarding the CoViD-19 Legislative Actions and Its Impact on Upper Middle-Class Investors

  • Investment decisions are based on several factors including their risk profile, personal needs and future expectations. These expectations of the future include those regarding the performance of the economy and the expected actions of government.
  • Further, the United States is currently divided regarding the state of the American economy, its leadership and their investment practices long wealth, income and political lines. These deep divisions are influenced by subjective factors and they determine if an investor will be optimistic and more risk tolerant or pessimistic with an aim to preserve their wealth.
  • Given these facts, one cannot reasonably determine how investors in the upper middle-class, which comprises approximately 15% of the population, choose where to invest their money or how much of it is impacted by legislative action surrounding the impact of CoViD-19 without conducting extensive research.
  • However, the individuals with a net worth between $500,000 and $2 million have significant investment stocks, securities, mutual funds, trusts, business equity and other real estate. While exact figures for the percentage of their wealth invested in are not available for the group worth half a million to two million, it is reasonable to assume the lower limit of this percentage is at least 11% (the average of middle income earners) and the upper limit approximately 40% (the average of upper income earners).

The Impact of CoViD-19 Legislative Action on American Investors

  • Amid the decline in the stock market, businesses are required to provide their employees with additional benefits and paid sick leave. There are costs involved with implementing this legislation, however. But businesses will be able to take advantage of new tax credits to offset costs.
  • However, there is evidence that businesses could find difficulty in funding these requirements. For example, the Printing Industries of America claim that many businesses liquidity and tolerance for debt to fulfill this mandate.
  • In addition to this, the bill specifies that job restoration is entitled to certain employees or that companies have to make a reasonable effort to employee individuals who were on a sick leave to a similar position.

Research Strategy

There is no research available which directly addresses the impact of legislation on middle-class investors. Further, establishing an expected impact indirectly is not possible without understanding where investments of this group are. And lastly, investors as a whole could not be used as a proxy as that research is still unavailable and legislation is still ongoing.
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03

Legislative Actions - COVID-19: Middle Class Investors

There is no publicly available information that specifically identifies legislative moves undertaken by the US or State-level government in the wake of COVID-19 that may have a lasting impact on middle-class investors. Instead, there is a wide array of information available on the impact of the pandemic on the US business and investment sphere, and legislations being introduced and adopted. We used this available information as helpful findings to the research as discussed below.

Helpful Findings

  • On March 18, 2020, the president of the United States, Donald Trump, signed the $100 billion coronavirus relief package into law. The law required business with 500 or fewer employees to provide two weeks of paid leave to their employees, food assistance programs, as well as free testing for COVID-19. The lawmakers who opposed the bill claimed that this law may have a negative impact on these small businesses.
  • However, the legislation only applied to workers who are being tested or receiving treatment for coronavirus, hence paid sick leave. Additionally, the employees qualify for this paid leave if they have been instructed by a government official or doctor to stay at home due to symptoms or exposure. This will immensely affect the financial situation and the disposable income of individuals.
  • In response to COVID-19, approximately 28 states, as well as the District of Columbia, have introduced and some enacted legislation as support to state action revolving around funding, isolation and quarantine, medical coverage, and disease surveillance.
  • As a result of the different legislations introduced across the United States, financial institutions may respond by restricting and repricing credit due to a lack of accurate assessment of short term risk associated with COVID-19. This will make it more difficult for individuals and small businesses to grow and invest.
  • The spread of COVID-19 continues to affect the stock market significantly. On March 16, 2020, the Dow Jones Industrial Average was down over 1000 points. On the other hand, Apple already declared that it would not meet its quarterly targets due to the inability to make iPhones in China. The impact of the pandemic is affecting both companies and investors significantly; including those who own 401(k) plans.

Research Strategy

After thorough research by scouring news sites, government websites and publications, institutional websites, and reports we could not successfully identify legislative moves undertaken by the United States or at the state level in relation to COVID-19 response that may have a lasting impact on the middle-class investors. The lack of this segment-specific information in the public domain could be because the information and updates being published focus on the general impact of the pandemic, rather than a specific group of people. We, therefore, believe that since this situation is ongoing across the globe, more information will be published which may expand coverage to specific groups, such as middle-class investors. However, we applied a number of research strategies to find the requested information in the public domain.
First, we searched up-to-date reports such as the Mckinsey report. The information on the report covered the general impact of the pandemic on businesses and economies, as well as preparedness measures, with no specific information on the impact on middle-class investors in the US.
Next, we searched for state and government websites and publications for the information on the subject. We were able to find state by state legislation across the United States as well as their status (pending, enacted or adopted). However, none of the enacted and adopted legislations addressed or impacted the middle-class investors.
We then scoured the various news update and Organizations' information websites such as CNN, CNBC, CDC, NAFSA, New York Times, and Business Insider for legislations made in the wake of COVID-19 and their impact on middle-class investors. We were able to find information on the coronavirus relief package legislation which covered emergency paid leave for workers as well as free testing. This information did not provide a direct relation to the impact on middle-class investors but rather an overall effect on small businesses in the United States. In addition, money.com provided information on the general status of investments in the midst of COVID-19. We identified these data points as helpful findings to the research request.
Sources
Sources