What’s Behind Brian Kemp’s Order Re-Opening Georgia
Georgia Governor Brian Kemp shook up the world, well at least the country, with his recent announcement that he was opening Georgia back up for business.
What is behind Kemp’s move. Georgia has not flattened the proverbial coronavirus curve.
Why open Georgia up now?
First, to answer this question, we have to take a look at the type of businesses Kemp fails to give the green light to open its doors to the public. Banks, schools, and major manufacturing industries are to remain closed. This group of businesses represents the larger employers of middle-class workers in the state, workers with some form of built-in safety net for hard times.
Secondly, under Kemp’s order massage parlors, barbershops, hair and nail salons, bars, restaurants, and bowling alleys are ordered to reopen. These classes of businesses employ lower-income workers and do not provide any safety net in the event of times like a global pandemic.
Why is this important?
If it is safe to go out into the water again, the schools would be the perfect place to start? After all, the kids need their educational instructions.
Also, the public wants access to their money, and the manufacturing industries are the key to kick-start the economy.
One would think these are reasonable assumptions to be placed in a reopening calculus.
Third, from March 14 to April 16, the Georgia Department of Labor had processed over 861,000 unemployment claims, according to the Savannah Morning News (See https://www.savannahnow.com/business/20200416/georgia-unemployment-claims-reach-record-high-in-march).
Georgia Labor Commissioner Mark Butler believes, “Claims could top 1 million” in a few weeks.
Fourth, the state has an unemployment trust fund, which has “about $2.5 billion.” This trust fund is funded mainly by employees and employers in the educational field, banks, and manufacturing; and, to a lesser extent, by the barbershops, nail salons, and massage parlors.
Fifth, “The sectors with the highest increase in initial claims for unemployment over the month were: accommodation and food services, 132,564 claims; health care and social assistance, 37,621 claims, and trade, 23,074 claims,” according to data released to the Savanah Morning News.
Based upon the stress placed on Georgia’s unemployment trust fund due to the economic shutdown caused by the global pandemic, the fund may run out of money if the “sheltering in place” order runs much longer.
Despite Kemp’s claim that politics did not guide him in opening the state back up for business, his reopening policy obviates the need to pay unemployment benefits to at least193,259 people in the industries hit the hardest by the Coronavirus-2019. These claimants represent about 22 percent of all claims as of April 16. And this number will only grow if workers are allowed to continue filing claims. This reduction in the pool of unemployment claimants will relieve a tremendous amount of pressure from the state’s unemployment trust fund.
Otherwise, Kemp faces a tax increase to fund unemployment benefits. He ran on a pledge not to raise taxes.
When viewed in this light, Kemp is throwing the state’s most vulnerable workers under the bus to keep a campaign promise not to raise taxes during his tenure in office.