Georgia job growth lackluster after federal unemployment benefits cut

Mary Martinez helps two daughters while studying her own school work at their home in Sugar Hill on Wednesday, October 6, 2021. Martinez had been a retail sales associate before the pandemic, but she was tired of a paycheck that barely covered child care costs. She left her job and enrolled part-time at Georgia Perimeter College while her husband, a job recruiter, worked more overtime. (Hyosub Shin / Hyosub.Shin@ajc.com)

Combined ShapeCaption
Mary Martinez helps two daughters while studying her own school work at their home in Sugar Hill on Wednesday, October 6, 2021. Martinez had been a retail sales associate before the pandemic, but she was tired of a paycheck that barely covered child care costs. She left her job and enrolled part-time at Georgia Perimeter College while her husband, a job recruiter, worked more overtime. (Hyosub Shin / Hyosub.Shin@ajc.com)

Move didn’t spark more hiring than in states that continued payments

Gov. Brian Kemp eliminated federal unemployment benefits in June, arguing the move would push many people back into jobs and kindle rapid hiring.

Since then, job growth has slowed while hundreds of thousands of job openings continue to go begging.

Moreover, Georgia didn’t add more jobs in July and August than states that continued to disburse the benefits through Labor Day, according to an analysis by The Atlanta Journal-Constitution.

Economists say other factors — child care needs, fear of the coronavirus, a desire to change careers — are still keeping many workers on the sidelines.

“It was not like turning the faucet on,” said William Adams, senior economist with PNC Financial Services. “There are other factors holding back job growth.”

Not that employers are not trying. Some have raised wages or added incentives and perks to draw job applicants. But many small businesses find themselves in a corner, needing to raise wages but unable to match bigger rivals without becoming unprofitable.

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Richard Buchman, owner of a Sandy Springs company that cleans food-processing plants, said he has raised starting pay from $10 or $12 an hour to $14 and sometimes $16, but still can’t find the workers he needs.

“I’m trying to be flexible. I’ll give people a thousand-dollar referral fee if they’ll bring in more people. I give birthday gifts in cash. I give monthly dinners. I give cash to the employee of the month. I’ve paid for cell phones,” he said.

He has 28 workers. He would like to add 15 people now and maybe more by year’s end.

“I’d be happy to pay more than $20 an hour,” Buchman said. “But I signed an agreement with the customer, there’s only so much I can do without going to the customer and saying, ‘I need to charge more.’”

Economists debate how the impasse will end — Higher pay? More automation? Industry shakeouts? — yet the immediate issue remains a shortfall in lower-wage workers.

The end of enhanced benefits didn’t change that.

The AJC compared Georgia’s performance in July and August with the roughly two dozen states that continued federal jobless payments. The comparison used three measurements: the number of jobs, the number of people employed, and the number of people working or seeking work.

Georgia ranked below average on two measurements and above average on one measurement.

Early end to unemployment payments

The start of the pandemic triggered a panicked, if temporary, reset of social programs. With a deadly disease spreading, a vaccine many months away and tens of millions of Americans thrown suddenly out of work, the CARES Act was passed by Congress and signed by then-President Donald Trump in March 2020.

The federal relief package included payments for gig and contract workers who had not been covered before by unemployment benefits. Congress also added an across-the-board, $600-a-week payment to the unemployed. The result dramatically added cushion to a safety net in Georgia, where state payments were capped at $365 a week.

The federal subsidy lapsed and was followed by a series of lesser payments, finally culminating in a $300-a-week payment passed early this year by Congress and signed by President Joe Biden.

Even the downsized payments were decried by business groups as an incentive to stay home in Georgia, where the minimum wage is $7.25 an hour and millions of front-line workers make less than $15 an hour. Virtually every small business seemed to have a story about job openings it could not fill, applicants who never came to interviews, new hires who went out for lunch the first day and never returned.

In May, Kemp announced Georgia would stop disbursing federal unemployment payments in late June. Similar moves were eventually made by half the states, all led by Republicans. Other states continued disbursing money until the program expired in early September.

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In Georgia, the move ended payments to roughly 167,000 gig workers and self-employed workers. It also ended the $300-a-week supplement to tens of thousands of others who were receiving state benefits. Georgia’s Department of Labor also reinstated the requirement that those receiving state unemployment benefits prove they actively look for work each week.

Kemp spokeswoman Katie Byrd said the decision has been validated as part of a strategy “to encourage more Georgians to go back to work and get business back to normal.” She cited “16 straight months of declining unemployment rates, sustained job growth, and fewer unemployed Georgians than before the pandemic.”

Georgia’s economy does look strong, with robust growth in many sectors and rising incomes.

Kemp moved faster than most to “reopen” the economy in the late spring of 2020. Since then, the state has recovered more than 80% of the 609,500 jobs lost. The number of unemployed, defined as those actively looking for work, is almost as low as in February 2020.

But most of the progress came before the summer of 2021. While there was robust job growth in July, August was very weak. At the same time, many Georgians without jobs still aren’t actively looking for work.

Georgia still has an estimated 300,000 open jobs, according to Mark Butler, the state’s labor commissioner. “You don’t have to drive around much to see all those help wanted signs everywhere.”

While Butler thinks cutting jobless benefits has boosted hiring, the number of Georgians in the workforce is still about 30,000 below the pre-pandemic level, he acknowledged. “We have seen the workforce starting to come back. Not as fast as we’d like it to.”

Crunching the numbers

Compared with the 25 states and the District of Columbia that did not cut benefits, Georgia looked better on some metrics and worse on others in July and August. That translated into a middling performance, based on three key U.S. Department of Labor measurements.

-- Labor force: Georgia added 10,184 people to the labor force in the two months, growth of 0.2%. Thirteen states that continued disbursing federal benefits and the District of Columbia grew at a more rapid pace. Labor force counts the number of people working or actively seeking work.

-- Employment: The number of people with jobs grew by 36,909, up by 0.7%. Six states that continued disbursing federal benefits and the District of Columbia expanded more quickly. The employment number counts the number of people with jobs.

-- Jobs: Georgia added 31,100 jobs, growth of 0.7%. That was slower growth than 17 states that did not cut benefits. The jobs number counts the number of full-time and part-time jobs. Some people have more than one job.

Butler, the labor commissioner, pointed to Georgia’s stronger performance using the “employment” metric as evidence that cutting benefits had its intended effect.

Cutting benefits did push some people off the sidelines, but the effect was “probably not very large,” said Jeffrey Humphreys, director of the Selig Center for Economic Growth at the University of Georgia.

“The delta variant (of the coronavirus) reduced confidence, reducing people’s willingness to work and shop,” said Humphreys. “That’s especially true for high-contact activities in some industries very important to Georgia’s economy, like air travel.”

Missing workers tend to fall into a few categories, according to Michael Wald, former regional economist for the Bureau of Labor Statistics.

Some older men have left the workforce, and some people who had multiple jobs are still working, but have cut back on the number of jobs they are doing. But most notable are the impacts of family.

“The people missing from the ranks of employed are made up of men who have financial support because their wives are working (and) some women who have financial support because their husbands are working,” Wald said.

The hiring still lagging is in the lowest-paid positions, ”reflecting employers’ inability to fill jobs at current rates,” he added.

Combined ShapeCaption
Mary Martinez turns on a television while her three daughters take a break from their homework at their home in Sugar Hill on Wednesday, October 6, 2021. (Hyosub Shin / Hyosub.Shin@ajc.com)

Credit: HYOSUB SHIN / AJC

Mary Martinez turns on a television while her three daughters take a break from their homework at their home in Sugar Hill on Wednesday, October 6, 2021. (Hyosub Shin / Hyosub.Shin@ajc.com)

Credit: HYOSUB SHIN / AJC

Combined ShapeCaption
Mary Martinez turns on a television while her three daughters take a break from their homework at their home in Sugar Hill on Wednesday, October 6, 2021. (Hyosub Shin / Hyosub.Shin@ajc.com)

Credit: HYOSUB SHIN / AJC

Credit: HYOSUB SHIN / AJC

Pay rates were not enough to keep Mary Martinez in the workforce and they’re not enough now to draw her back.

The Sugar Hill mother of three young children had been a retail sales associate before the pandemic, but she was tired of a paycheck that barely covered child care costs. She left her job and enrolled part-time at Georgia Perimeter College while her husband, a job recruiter, worked more overtime.

“Working for $10 or $11 an hour, it just doesn’t make sense unless I can get into a salaried job. And it is frustrating, because I would be happy to work,” said Martinez, who is taking education courses and plans to become a teacher.

While she has not collected unemployment benefits, she says she’s glad to have access to other federal programs like tax credits and a Pell Grant for college.

“We’re hoping they let me go to school and find a way to make a salary and break into the middle class,” she said.