Dispute over Georgia jobless numbers helps shape race for labor chief

Robbin Shipp, Democrat

Campaign contributions (as of June 30): $46,455

Shipp served as a one-term House District 58 representative of Reynoldstown, Cabbagetown and parts of west DeKalb County, beginning in 2007. She resigned from her General Assembly post in 2009, citing concerns that her second job — as a Fulton County assistant district attorney — could be a conflict of interest. Since then, she has held a number of educational and legal advising positions.

What does the labor commissioner do?

The Department of Labor serves two groups: unemployed Georgians and the state’s business community. The labor commissioner heads the department, making decisions on how to connect employers with job applicants, conduct workforce research and maintain the unemployment benefits fund. There are no term limits for this elected position.

Ongoing coverage

It’s a big year for politics in Georgia, with a governor up for re-election and an open U.S. Senate seat. The Atlanta Journal-Constitution is following it every step of the way.

Labor Commissioner Mark Butler’s re-election elevator pitch seemed simple enough. First, point to the Republican “R” next to his ballot name. Then tout a pragmatic fiscal approach to a crowd of conservative sympathizers. Butler could have ridden a recovering economy back into office, with jobs being added, layoffs decreasing and tax revenue up.

But unemployment numbers skyrocketed from June to July, increasing from 7.4 percent to 7.7 percent – the second-worst rate in the country. Butler’s office explained away the numbers as a seasonal blip caused by school workers who had been laid off temporarily. Then the August numbers came: 8.1 percent, the nation’s absolute worst.

Butler questioned the Bureau of Labor Statistics’ data, noting that the sudden rise in unemployment just didn’t add up with other factors.

“First quarter alone, amount of wages increased by $2.6 billion over last year,” Butler said. “From January to April, 100,000 more people showed up on businesses’ employment rolls.”

If the state’s jobs chief is looking for a new job himself come spring, Butler’s failure to forecast that unruly employment rate could be to blame. Democrat Robbin Shipp certainly thinks so, ramping up her public criticism as she lobbies to supplant Butler as Georgia’s labor commissioner for the next four years.

“Our labor commissioner and our governor have squandered their responsibility to the citizens of this state,” Shipp said. “We’ve got to implement a change.”

Economists are divided on the unemployment rate’s relevance, with some noting that other economic indicators remain strong. Growth from more reliable measures such as jobs, sales tax and income tax suggest a sunnier outlook for Georgia’s economy. Regardless, the fickle rate has emerged as the central issue in the race for labor commissioner.

The federal data are compiled through two surveys: a 60,000-person household survey and a 144,000-business payroll survey. “The only thing that shows we’re losing jobs is the household survey,” Butler said, noting that the payroll survey showed 80,000 jobs added in the past year, the sixth-best growth in the nation. Butler says that survey is more dependable because companies won’t lie about adding employees — they get taxed based on how many they have.

“Look, if you’ve got skills, you can work. There are employers here screaming, saying that they need more and more people,” Butler said. “I’m not sure what (Shipp) is talking about, unless she just wants to talk about the household survey.”

Much of Butler’s tenure has been spent rebalancing the state’s unemployment trust fund. The fund pays for recently laid-off workers through taxes on businesses.

Through the high times of the early 2000s, Georgia legislators had given unemployment tax holidays to companies, failing to bolster the trust fund. Then the recession came and the state’s benefits recipients doubled, forcing the state to take out a $761 million federal loan as the fund quickly ran dry.

The borrowing was expected to take six to eight years to pay back.

Butler and fellow Republican Gov. Nathan Deal whittled the amount away with severe cuts on unemployment aid. Through legislation, the state reduced checks from 26 weeks to between 14 and 20 weeks. More than 190,000 Georgians lost anywhere between $260 and $1,820 in benefits as a result, the left-leaning Georgia Budget and Policy Institute estimated when the policies took effect in 2012.

On the other hand, the state was able to pay off the deficit in four years thanks to the cuts and increased taxes on businesses. That saved Georgia businesses from paying an interest rate that would have reached $220 million next year alone.

“That’s money those businesses can now spend on capital improvements and hiring employees,” Butler said.

Shipp has pivoted her economic plan around two goals: increasing the minimum wage and decreasing the gender pay gap. In August, Shipp targeted a $9.50 minimum wage while speaking at the Democratic National Convention in Atlanta. She upped that ante to as much as $12 or $13 while speaking at a press conference following last week’s release of the disappointing unemployment numbers.

The state’s minimum pay is $5.15, but almost all businesses in Georgia are required to pay at least the federal rate of $7.25.

“We simply must increase the minimum wage in the state,” Shipp said.

It’s unclear what an increase would do to unemployment. States that have upped wages have also seen more companies looking to hire, Shipp said, because consumers have more purchasing power. A 2013 survey by the University of Chicago School of Business showed that 60 percent of economists who responded believed the benefits of raising the minimum wage to $9 an hour outweighed the costs — 16 percent disagreed, while the rest were uncertain.

“It is a fundamental economic premise that the more money individuals have in their pocketbooks, the more they are then willing to spend,” Shipp said. “More jobs are created.”

Some market watchers are skeptical, though. The American Action Forum, a right-wing policy institute, found in March that a $1 increase in the minimum wage came with a 1.48 percent increase in the unemployment rate while also decreasing job growth by 0.18 percent.

That matches the experience of Karen Bremer, executive director of the Georgia Restaurant Association, who said an increased minimum wage would restrict entry-level positions at restaurants. She pointed to a study commissioned by the GRA, which showed an increase to a $10.10 minimum wage would result in 21,000 jobs lost.

“We don’t employ a majority of minimum-wage people in our industry,” Bremer said. “Our concern is that it’s going to destroy those first jobs for young people.”