Why Georgia’s Service Economy Is Reopening Now

During the last week in March, Georgia processed more claims for unemployment insurance than the state did in all of 2019. In the span of seven days, workers made 390,000 new jobless claims, and the Georgia Department of Labor says the state issued nearly $42 million in unemployment benefits.

Then the full force of coronavirus closures struck state coffers. Over the course of about three weeks in April, Georgia has paid out some $600 million in unemployment claims, according to the Augusta Metro Chamber of Commerce. The state has processed more than 1 million jobless claims, blowing past records set during the Great Recession. It’s unclear how much money is still left in the state’s unemployment trust fund, which started the year at $2.6 billion — but without intervention, it may last only a matter of weeks.

A course correction may be coming. On April 20, Georgia Governor Brian Kemp announced that he would lift the state’s stay-at-home order for certain conspicuously non-essential businesses, including health clubs, hair salons, tattoo parlors and bowling alleys. Those businesses could re-open this Friday. Restaurants, meanwhile, can resume dine-in service as of Monday. The establishments that the governor just whistled open account for a huge share of those new jobless claims. Workers in restaurants and retail alone make up about a third of the state’s workforce.

Critics have hammered Kemp’s decision to reopen the economy as “reckless” and “insane.” This weekend, business owners across the state are allowed to ask their employees to clock back in, even though Georgia has not yet met the so-called gating criteria outlined by the federal government for ending social-distancing protocols. It’s not just a question of red tape: Testing has revealed more than 21,000 confirmed Covid-19 cases in Georgia, a number that continues to climb. More than 1,000 new cases were identified since April 21. The state’s coronavirus case count is the 10th worse nationwide; its death toll stood at 872 on April 23.

In Albany — a small town in the poorer and predominantly black stretch of rural Southwest Georgia that has lost 110 residents to the pandemic — local leaders spoke with dismay about Kemp’s decision to reopen jobs. Dougherty County Commission Chairman Chris Cohilas said that people should continue to shelter in place and practice social distancing. “Just because you can do something, doesn’t mean you should do something,” Cohilas said.

Albany Mayor Bo Dorough agreed. “We are not ready for this,” he told NBC News this week. He said that Kemp’s decision to prevent local leaders from issuing more restrictive orders where necessary was misguided and irresponsible. Mayor Keisha Lance Bottoms of Atlanta, the state’s biggest city, has also shared her concerns about the reopening order.

Public misgivings about Georgia’s scheme even reached the White House. In a surreal spectacle on Wednesday, President Donald Trump casually threw Kemp under the bus for acting with the haste demanded by the president. Nevertheless, two other GOP-led states, South Carolina and Tennessee, plan to follow suit.

Some Democratic lawmakers in Georgia worry that the governor’s real priority in reopening its service economy is flattening the curve of public benefits. “The first thing that came to my mind when Governor Kemp relaxed the shelter-in-place order was: What happens to people who are currently on unemployment?” says Georgia House Representative Dar’shun Kendrick, who represents the state’s 93rd district. “What happens if they fear for their safety and don’t want to go back to work?”

Opening gyms and barbershops might not be a solution that saves Georgia’s economy — not when the state’s schools remain closed for the rest of the academic year and office buildings must stay shut. But the move could serve the state’s bottom line. Employees will be removed from state unemployment rolls when they return to work, of course. Workers who are worried about coronavirus exposure might also lose their benefits if they don’t go back to their jobs.

On Wednesday, Kendrick issued a letter to George Department of Labor Commissioner Mark Butler to find out exactly how the state aimed to navigate unemployment benefits going forward. The letter asks whether workers who worry for their safety — or the safety of the people around them — will lose their benefits if they refuse to go back to work. Kendrick says she hasn’t received a response.

“It’s our jobs as elected officials to make sure that the health and safety of Georgians is not being jeopardized unnecessarily in exchange for Georgians to be able to survive financially during these troubled times,” reads the letter, signed by Kendrick and 20 other Democratic state house representatives.

It’s an open question as to how Georgia officials will choose to interpret the governor’s missive, according to Alex Camardelle, senior policy analyst for the nonprofit Georgia Budget and Policy Institute. Under normal circumstances, an employee who’s been released or furloughed can’t keep drawing down unemployment benefits if they get offered their job back but don’t take it. But plenty of reports find that this is the signal coming from out-of-work barbers, beauticians, servers, and others.

“If the state narrowly defines suitable work and doesn’t include the implications of the virus and what that means for a workplace, then that might put those workers who are drawing unemployment insurance in a precarious position, where they would have to either lose their unemployment insurance or go back to work in an unsafe environment,” Camardelle says.

Under normal circumstances, exemptions apply, and they might in this case, too. But neither the governor’s office nor the state’s department of labor has issued any clarification about what the order means for shops that feel uncertain. A spokesperson for the  Georgia Department of Labor told Atlanta’s NPR affiliate that fears over Covid-19 may not be a reason to qualify for unemployment. Workers should file a new claim if they get fired for not returning to their old jobs, assuming they reopen. (CityLab’s requests for comment were not answered.)

Sorting out this coronavirus conundrum on a case-by-case basis isn’t a reasonable way to proceed, Kendrick says, especially when the states have been mobbed by so many claims.

Low-income job losses are clustered around metro areas in Georgia. (Urban Institute)

The test of the state’s safety net has already arrived. In Atlanta, where many restaurants have been closed for dine-in service since before Kemp issued such an order on April 1, plenty of restaurants have already decided against reopening any time soon. Many in the restaurant scene are waiting for more guidance. They and others in the service industry, including nail salons and tattoo parlors, must weigh the risks of exposure against what is likely to be a tepid response from customers. Few restaurants have signaled any appetite to open their doors next week.

In Georgia, workers in the food, retail, and hospitality sectors make up a huge chunk of the record-smashing new jobless claims. New research from the Urban Institute shows that job losses in the hospitality and food services sectors lead in almost every part of the state, with low-wage job losses concentrated in the metros of Atlanta, Brunswick, Savannah and Statesboro.

These workers are more likely to be black or people of color. In Georgia, 19% of African-American workers were employed in the service industry in 2018, per the U.S. Bureau of Labor Statistics. A maneuver to sidestep benefits would fall disproportionately on black workers who lack reliable access to health care, another factor in their decision about going back to work.

What happens if the piggy bank goes belly up? It’s happened before: During the Great Recession, the federal government picked up Georgia’s tab for unemployment benefits after the state trust fund dried up. Georgia had to repay that loan, Carmadelle says, and it did so by cutting future benefit periods from 26 to 14 weeks for a time. “When we’re on the hook, Georgia has a tradition of putting that burden on workers, rather than raising the revenue,” he says.

It’s not a matter of if but when for the trust fund — and not just for Georgia, but for every other state, too. So far, Republicans in Congress have been unwilling to approve spending for state and local governments sought by Democrats. House Speaker Nancy Pelosi says that these funds will be a significant part of the next spending package sought by Congress. Senate Majority Leader Mitch McConnell says that it would be better for state and local governments to go bankrupt.

Leaders in Georgia may be on the same page as McConnell. Before the pandemic arrived, Kemp sought to cut back state spending by $300 million. Camardelle says that the state’s position on the safety net is informed by deeply entrenched cultural myths about dependency. Tropes rooted in racism and sexism drive public policy debates in Georgia. With its avenues for raising revenues limited — Georgia was the first state in the nation to cap its income tax rate — the state will have to either rethink its financial philosophy or resort to even more draconian austerity measures.

Cutting off unemployment benefits for low-wage workers who don’t want to put their bodies and loved ones at risk would be an example of the latter. For Georgians, it’s not a question of not wanting to get back to work. Kendrick — a small business owner and attorney who advises other small business owners — says that people are anxious to end their lockdowns and return to the job. But she doesn’t know anyone, or any business, that is eager to open their doors at the height of the pandemic.

There’s no poll in Georgia to show where residents stand on the issue. But national surveys reveal overwhelming support for maintaining sheltering practices as the virus rages. Four polls from HuffPost/YouGov over the last month put the share of Americans staying home at 86% to 89%, with the share that supports state orders to shelter in place at 77% to 81%.

Before workers in Georgia make any decision about going back  to work, they need more information up front, Kendrick says. They need to know whether opening up is safe and whether their customers will be there. And they need to know whether the state has their back if they choose to be cautious.

“The whole reason for getting rules up front is so you know how to play by the rules,” Kendrick says.

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