Government & Legal Update
Government Update: With Delta Variant, COVID-19 has Political Staying Power As the Tennessee General Assembly wrapped up its legislative session for the year in early May, COVID-19 cases in Tennessee were around their lowest levels since the onset of the pandemic. With vaccines widely available, and much of the state’s most vulnerable citizens already fully vaccinated, it seemed the worst of the coronavirus was surely behind us. While hopefully that’s still the case, a recent spike in infections across the country and in Tennessee due to the “Delta” variant has kept COVID-19 in the headlines and on the desks of state policymakers. Despite these recent developments, Tennessee’s economic recovery appears to remain in full swing, seemingly held back by vaccine skepticism or a shortage of workers, depending who you ask. In July, a majority of Tennessee Senate Republicans signed onto a public letter urging Tennesseans to get vaccinated. Among the signees included Lt. Gov. Randy McNally (R-Oak Ridge), Majority Leader Jack Johnson (R-Franklin), and the GOP Caucus Chairman Ken Yager (R-Kingston). A short excerpt: “Unfortunately, efforts to get more people vaccinated have been hampered by politicization of COVID-19. This should not be political. Tennesseans need factual information to make educated decisions regarding their health. … Every life lost to this virus is tragic. The COVID-19 vaccines save lives. Again, we strongly urge all Tennesseans to study the facts, talk to your doctor and get vaccinated.” Unemployment Data and Changes to Tennessee’s Unemployment Benefits In June, Tennessee’s unemployment rate had receded almost back to pre-pandemic levels, a full point lower than the national average. Tennessee’s 4.9% unemployment rate was down from a high of 15% last spring. Jobs in the leisure and hospitality sectors and low wage jobs, hit the hardest during the pandemic, appeared to be recovering. But a new problem emerged in media reports across the state: employers have had trouble finding help. A May 23rd U.S. News & World Report headline proclaimed, “A Stifling Worker Shortage Threatens Nashville’s Recovery.” The article cited a somewhat surprising statistic: there were 166,706 unemployed Tennesseans and more than 250,000 advertised vacant jobs in April according to a state report. The data, both empirical and anecdotal, would seem to support Governor Bill Lee’s decision that, beginning July 3, Tennessee would forego additional unemployment insurance The Tennessee Insuror
payments to workers financed by the federal government. Indeed, the Governor cited the same statistic when pressed on the decision. “We have a quarter million jobs in this state that are unfilled, and we do have employers all across the state who desperately need workers,” said Lee. “We know that people want to work, and we want to make that pathway for them. We’re working on a number of initiatives through our Department of Labor and Workforce, but we analyze the data and we think this is the right move for the state.” Business groups largely praised the policy change in Tennessee and other “red” states. With the 2022 gubernatorial election around the corner, it also may have been the right political move. A May 2021 poll by Vanderbilt University indicated that most Tennesseans support removing incentives that might discourage people from reentering the workforce. Legislation to reduce the duration a person can be eligible to draw unemployment benefits from 26 weeks to somewhere between 12 and 20 weeks (indexed to the unemployment rate) was supported by 68 percent of Republicans and 59 percent of Independents participating in the poll. The bill, codified as Pub. Ch. 560, was a major priority for House Speaker Cameron Sexton (R-Crossville) last session. That’s not to say everyone is happy with the changes made to the state’s unemployment benefits by the GOP-controlled legislature and the governor. Democrats in Nashville and Washington have uniformly panned the decision to forego millions in federal aid as misguided. A paper by analysts at JPMorgan Chase & Co. Institute suggested that, although almost half (48 percent) of workers make as much or more money on unemployment benefits than at their previous job with the $300 federal supplement, such funds “were not holding back the labor market recovery in a very significant way.” In late July, seven individuals sued the Governor in federal court seeking a reinstatement of the $300 federal supplement. The program, authorized by Congress under President Biden’s American Rescue Plan, are scheduled to end on September 6. What Pandemic? Revenue Collections Outpace Projections Tax revenue collections by the Tennessee Department of Revenue have significantly exceeded budgeted projections through 11 months of the fiscal year. (June is the eleventh month of the fiscal year 2020-21.) Collections for the months of April, May, and June alone were $1.4 billion more than projected. Below are a few fiscal stats courtesy of the Tennessee 31
