Georgia’s dependence on travel, hospitality raises recession risk

Georgia's reliance on people gathering in close quarters for travel, conventions and entertainment make the state's workforce particularly vulnerable to the COVID-19 economic fallout. Contributed by Hartsfield-Jackson International Airport

Thousands of Georgians filed for unemployment benefits last week, and many more are likely to join them before the end of what some are already calling the Pandemic Recession.

Initial unemployment claims skyrocketed to 12,140, up more than double from 5,445 claims the previous week, as workers around the country stayed home for fear of contributing to the worldwide COVID-19 outbreak.

Nationwide, 3.28 million people made initial unemployment claims, smashing the previous record of 695,000 claims filed in October 1982.

The sudden surge of joblessness has drawn comparisons to the Great Recession that began in December 2007, but that downturn might seem tame in comparison to what’s in store, said Georgia Budget and Policy Institute senior analyst Alex Camardelle.

“If we do want to draw any reference to what we saw during the Great Recession, our job loss peak was about 300,000 jobs lost, and that’s the peak, about a year and a half after the recession started at the end of 2007. We’re projected to lose about 400,000 jobs just by the summer. So the concern there is that that’s just the beginning. And if our peak was less than that in 2009, where does that mean we’ll be a year from now?”

Camardelle said the current crisis is likely to do the most damage to retail and food service workers, who typically receive low pay, work difficult hours and are disproportionately women and people of color.

“The Great Recession was pretty broad,” he said. “It hit folks at the bottom of the economic ladder and especially hit folks in the middle of the income ladder, but because this particular economic slowdown is really hyper-targeted at the low wage workforce … there’s going to be an outsized impact on those workers.”

Georgia could be hit even harder than other parts of the country because much of its economy depends on large groups of people gathering together, said Georgia State University economics professor Rajeev Dhawan.

“We’ve got the biggest airline, the biggest airport, we’ve got a very big convention business, lots of hotels, so we are actually a lot more in that arena where the job losses are happening,” he said. “You pick out another metro like Indianapolis. It has all this stuff, but it doesn’t have that much compared to what we’ve got.”

Dhawan said he thinks the actual number of Georgians out of work is much higher.

“It takes time to file the claims, collect it, process it, who knows what’s going on. … If you look at the national numbers and given that we have more of this hospitality, transportation and retail, we will be seeing the numbers tick up soon,” he said.

State and federal response designed to mitigate pain

On Thursday, Gov. Brian Kemp signed an executive order allowing Labor Department Commissioner Mark Butler to extend the time an unemployed worker can collect benefits from 14 weeks to 26 weeks. Butler is also now able to exempt the first $300 of weekly wages earned from counting against unemployment eligibility.

“We understand Georgia businesses and workers are anxious during the COVID-19 public health crisis about how to take care of themselves, their families, and their businesses,” Butler said in a statement.  “We are making unprecedented modifications to policies to help all Georgians survive this economic hardship and get us all back to work.”

During the Great Recession it took an average of up to 29 weeks for an unemployed worker to find a job, and extending the amount of time Georgians can receive benefits provides a little breathing room, Camardelle said.

A $2 trillion economic aid package that the U.S. Senate unanimously passed late Wednesday night was also encouraging, Camardelle said, but he cautioned that it still needs to pass the House and garner the president’s signature.

The historic legislation creates three new federally funded unemployment programs.

The Pandemic Unemployment Assistance Act would provide help for workers who don’t qualify for the usual state unemployment benefits, such as self-employed people, independent contractors and gig workers. It could also supplement state benefits.

All unemployment insurance and Pandemic Unemployment Assistance Act claimants would also receive $600 more per week in addition to their regular benefits. It would also tack an additional 13 weeks of state unemployment benefits onto what states offer.

All told, Georgians stand to receive 39 weeks of payments, including the extension of benefits approved by Kemp Thursday.

One-time checks most Americans would receive from the government are getting much of the public’s attention — $1,200 for every adult earning up to $75,000 plus $500 for every child they have.

Dhawan said those checks have the potential to improve lives of families – if lawmakers act quickly to approve the aid package and the money reaches people in time.

“That’s the big if,” Dhawan said. “Some people will get it on time, some people won’t. So people need to be patient. It still hasn’t been signed, it’s been done by the Senate, it has to go to the House.

“Whenever it gets done, after that, it takes a while for the checks to come, so for the next few weeks, people need to basically figure out how they’re going to cover their expenses if they don’t have any income.”