The Mercury Lounge turned 25 years old on August 4, and owner Jennifer Henigin Housh is struggling to survive to 26. The club — a down-home combination of grit and old-school attitude in Old Town Goleta — had a great January and February; they were breaking even before the pandemic shut their doors in March. But with COVID-19 widespread in Santa Barbara County, there’s little hope she’ll be able to reopen anytime soon. Her employees, Housh said, need the extra $600 in unemployment from the federal government to survive. Housh’s story is one part of an economic shot-between-the-eyes that’s ricocheting from Washington, D.C. to California.
“The house is burning, and Republicans want to focus on the fence that’s on fire,” said Salud Carbajal, Santa Barbara’s representative in the House, back in town on Tuesday but on call to return to D.C. should the Democrats’ HEROES Act — a $3 trillion stimulus bill — come up for a vote. The proposal to extend the unemployment stimulus for just one week, which Republicans voiced just before the benefit lapsed last Friday, infuriated Carbajal. “We had the HEROES Act done for three months. All of a sudden, for one week they want to cherry-pick what they want to do, instead of looking comprehensively at the challenges Americans face,” he said.
Ongoing talks are taking place behind the scenes to bridge the gap between the $3 trillion stimulus package proposed by House Democrats and the $1 trillion HEALS Act proposed by Senate Republicans, which cuts the extra federal unemployment benefit from $600 to $200 a week. With Congress normally headed for recess in August, there was little faith late last week that Republicans would return and take up the bill, as well as an expectation they’d continue to piecemeal it, Carbajal said.
The negotiations are still under wraps, Congressmember Carbajal said, but the Republican proposals so far have benefited large corporations at the expense of small businesses and individuals. “It’s similar to the tax plan they passed a year and a half ago,” he said. “That plan added $2 trillion to the national debt and gave 83 percent of the benefits to the top one percent.”
The HEROES Act, passed by the Democrat-controlled House in May, continues the CARES Act stimulus funding but adds money for schools, states, the SNAP food stamp program, and much-needed testing. “They added a meal deduction — another tax break — for big corporations, not small corporations. And they don’t want to fund SNAP? They don’t want to provide money for schools’ broadband so students can continue distance learning? They don’t want to fund a national program to test for COVID-19?” Carbajal exclaimed.
“This will blow your mind,” Carbajal continued. “Since we passed the HEROES Act, 3.2 million more people were infected in the United States. And 68,000 more people have died. This is what’s at stake. Our message to the Republicans is that this is not a game. We’re playing with people’s lives and livelihoods.”
Unemployment in Santa Barbara
The Mercury’s Jennifer Housh has yet to receive any unemployment benefits herself, trapped in the state system, like about one million others, according to the news coming out of Sacramento. The self-employed were allowed to apply about two weeks into the state’s pandemic response, and she’s still ping-ponging her paperwork with the state unemployment office. For Santa Barbara County as a whole, 24,700 people were unemployed, or 11.6 percent of the county workforce, as of the latest figures in June.
Like Housh, Gina Karpenko is self-employed. She co-owns a hairstyling shop at La Cumbre Plaza called Loft Hair Salon, part of the Phenix Salon Suites. Karpenko was able to enroll in self-employment benefits when they became available because she’d actually applied before, when the state response first started. That got her in the door before the flood of applications hit.
No matter a person’s income, she said, the state paid a flat $172 a week to the self-employed when she applied. A good day for a full-service hair stylist and colorist was upward of $1,000. She’s taken out emergency loans to help pay the bills from setting up the salon this January — “We still had to pay a license renewal fee even though we can’t work,” Karpenko said, “and business insurance” — but Phenix Salon Suites has forgiven their rent so far.
What Can They Do?
As for alternatives like cutting hair outdoors, that’s not an option at La Cumbre as it is for some other barbershops. Karpenko said the mall managers told her it created a liability problem — an issue addressed in the Republican bill, though Carbajal called it “carte blanche immunity,” saying it lacked provisions for protective gear and eliminated OSHA requirements.
Karpenko added that she wouldn’t run a “speakeasy” salon or go to clients’ homes to cut hair: “You can lose your license for life,” she said of going outside the rules of California’s cosmetology license.
At the Mercury, Housh said they’d looked into the alternative of serving food to stay open. Though they have an outdoor patio, their best nights were when live bands were playing; the bartenders could earn hundreds in tips. But large crowds are still banned in California.
“With the new restrictions, large crowds are not allowed, as it should be,” Housh said, “so even if a bar can serve food outside, you are still not going to make anywhere near what you did before.”
Jennifer Housh bought the Mercury with her husband, Patrick Housh, about two years ago. The Goleta Old Town nightclub started life as Gus’s Cocktail Lounge in 1957, and they still rent from Gus’s ex-wife, Edith Ziliotto, Housh related, who has been willing to postpone the rent payments so far.
“If the government would be able to step up, shut everything down for four weeks, pay people to stay home, I believe we’d have this thing under control,” Housh said. But she knows from her small-bar-owner friends on Facebook around the country that not all landlords are willing to forgive the rent, and they need to pay their bills.
“We understand we’re not essential,” she said, laughing, “but a lot of people think we are.”
Ripples of Repercussions
After they closed in March, Housh spent her time on websites like the Small Business Administration’s, figuring out state and federal programs. “Hannah-Beth Jackson and Monique Limón have been really helpful getting information to the public,” she said of the webinars that state legislators have hosted over the past months.
She got a Payroll Protection Program loan, which allowed her to spend 25 percent of it on rent and other bills, but her five employees went on unemployment as there was little hope of reopening in the foreseeable future. “We had so many great bands booked for this summer,” Housh lamented, noting the huge toll the shutdown has had on the music industry. Closing the Mercury even affected her bar-towel supplier, Mission Linen: “No one needed things like that anymore.”
Housh saw the pandemic shutdown affecting every group she’d worked with before, from weddings to high-school theater programs. She also felt the sting of online comments about “lazy people who won’t work because of the checks. This couldn’t be further from the truth. Every bartender I know would much rather be working than getting a government check.” She added, “On a busy night in any given bar, bartenders can earn $200-$600 in tips in just one shift. That’s why it is critical to keep the $600 a week in place.”
The extra federal dollars mattered, Gina Karpenko agreed. “We went from a two-income household down to one,” she said, of her husband, herself, and her young child. They scrimped and cut back on anything extravagant, such as restaurant dining.
When it came to personal-care businesses like hers, the county closed them in March, opened them in late June, and closed them again two weeks later when COVID cases spiked. Karpenko knew she had to keep her son’s nanny for when she could return to her salon. It’s cutting into their savings, she said, but she would otherwise lose the young woman to another family.
If Congress drops the extra unemployment benefit to $200 a week, she’d have to dip even further into their savings until she could work again, Karpenko said. “It’s totally terrifying.”
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