April was the cruelest month for about 1 million jobless Georgians, tossed out of work since the governor opened it with a stay-home order to contain COVID-19.
That emergency response to a public health crisis wreaked havoc on a state economy largely powered by hospitality and travel.
More than 290,000 Georgians got unemployment benefits in the first full week in April alone. The department distributed at least $309 million to out-of-work Georgians in 2020 at last count, more than it paid out in all of 2018 or 2019.
On April 2020’s last day, the Georgia Department of Labor is set to announce new weekly jobless claim numbers Thursday afternoon, just hours before Gov. Brian Kemp’s stay-home order is scheduled to expire. He announced at the beginning of last week he’d lift some restrictions on businesses including hair salons, gyms and restaurants but hasn’t said yet whether he will extend his shelter-in-place order.
According to the state’s Business Layoff and Closure Listing, the latest Georgians to lose jobs or income include 210 hotel staffers at the Intercontinental Buckhead, 400 car rental employees at Enterprise Holdings in metro Atlanta and 166 aluminum factory workers at the Aludyne foundry in Columbus.
Georgia’s unemployment trust fund is created through payroll tax contributions from workers. The eye-popping number of jobs Georgia shed in recent weeks – more than 1 million – is causing some analysts to ask how the state can continue to afford to pay benefits to the out-of-work masses unless many of those people can find work again by early summer.
The labor department expects to update the public Thursday on the ability of the unemployment fund to sustain benefits to jobless workers, a spokeswoman said late Wednesday. Earlier in the day the department declined to say how much money is on hand to pay spiking unemployment claims. According to a report from the U.S. Department of Labor, the balance was about $2.5 billion at the start of the year.
That’s not enough to keep up with unemployment claims at the current rate for more than two months, according to an April Tax Foundation study.
“If anything, this estimate is generous, as it only takes into account claims filed through April 4 (due to the timing of data releases) and does not adjust for the degree to which these states’ funds have already been drawn down over the past two weeks,” wrote the foundation’s Director of State Tax Policy Jared Walczak.
The Tax Foundation’s pessimistic forecast recalls the state’s strained unemployment insurance fund cash flow during the Great Recession a decade ago, said Georgia Budget and Policy Institute Senior Analyst Alex Camardelle.
“During that time period, Georgia’s trust fund became depleted in less than a year,” Camardelle said. “That said, we cannot be sure exactly when the fund will run out. There are a variety of complicating factors, such as how long it takes to process claims. Amid COVID-19, Georgia is already seeing an unprecedented demand for unemployment insurance. New federal support for state unemployment insurance will provide more funding, but it’s unclear how long that will last.”
The potential for a shortfall in the state’s unemployment fund led some political foes to suggest Kemp’s controversial decision last week to let some close-contact businesses reopen is a move to disqualify idled workers from jobless benefits.
“Front line workers tend to be low wage workers who, right now, because they are furloughed or cannot go to work, can collect unemployment and protect themselves,” said Stacey Abrams, Kemp’s Democratic rival in the 2018 governor’s race on the CNN podcast, “The Axe Files.” “And instead of fixing an unemployment system that is not processing people fast enough, his response is to send those people back to the front lines without the protective equipment that they need, without any assurances that the owners that they will work for will actually do what they’re supposed to, and with very limited ability to complain.”
Kemp says his decision was made with consultation from public health officials and others and is a measured approach designed to help laid-off workers.
Labor Commissioner Mark Butler says Kemp should get credit for his policy that allows workers to earn up to $300 per week while they continue to collect their full weekly unemployment benefits.
“Despite claims to the contrary, returning to work does not automatically eliminate an individual’s state unemployment eligibility,” Butler said last week. “In fact, we designed this provision to encourage employers to continue to file while returning employees to work to take advantage of the CARES Act benefits.”
Georgians who are afraid to go back to go back to work to avoid the risk of contracting COVID-19 might risk losing their unemployment payment after a labor department review of their claim.
“If you are afraid to return to the workplace and decide to separate yourself from your place of business, you have the right to file an individual claim,” reads a post on the department’s Facebook page. “Your eligibility will be determined based on the facts presented in your claim.”
State Rep. Dar’shun Kendrick, a Lithonia Democrat, posted a letter to social media that she received from the labor department that lists requirements that a worker must meet to continue receiving benefits if they are afraid to go to work due to the novel coronavirus pandemic.
It says a Georgian who is afraid of contracting the disease or passing it on to a family member does not appear to be covered, Kendrick said.
“I am NOT satisfied with the response,” Kendrick said in an email to the Georgia Recorder. “I am disappointed that a valid fear of the virus is not a reason under which they will consider continuing unemployment benefits and that ‘lack of PPE material from the employer’ was not listed as a valid excuse.”
Georgia took out a federal loan during the last recession to help fund unemployment insurance, Camardelle said. After the recovery, the state cut unemployment benefits to help repay the loan.
“Instead of requiring more support from employers, the state placed the majority of the burden on low- and middle-income Georgians in search of work,” he said.
“There are other options the state can take this time around to either restore our (unemployment insurance) trust or, down the road, pay back the federal government,” he added. “For example, Georgia can broaden the taxable wage base and/or evaluate employer tax breaks to trim back those that are not shown to be creating jobs.”