The Best Administrative Structure for Welfare

The Best Administrative Structure for Welfare

by | Oct 22, 2020

The Best Administrative Structure for Welfare

By Erik Randolph

When someone needs financial help or workforce training from the government, where do they go?

If we just allowed people to navigate federal programs on their own, the average person would be completely overwhelmed.

 

mother and daughter in poverty
According to the U.S. Government Accountability Office, there are more than 80 federal assistance programs for low-income persons and 43 federal employment and job-training programs at the federal level, with little overlap. Just listing the programs would exceed the word limit for a typical blog. 

Fortunately, states have some control over the process for some of the larger programs, like food stamps and Medicaid, that serve millions of Americans.

Georgia’s Gateway Strategy

Compared to many states, Georgia is ahead. The state government has spent years and $262 million to streamline its eligibility systems of means-tested programs into an integrated system known as the Georgia Gateway.

Here there is just one “door” to enter to qualify for some of the big federal means-tested programs entrusted to the states to administer.

The awarding-winning Gateway allows individuals to apply for ten programs across four state agencies, including  food stamps; food packages from the Women, Infants, and Children Program; Medicaid; subsidized childcare; and Temporary Assistance for Needy Families.

The Department of Human Services runs the eligibility system at an annual operating cost of about $62 million, but the department does not administer all the programs themselves. For example, the Department of Community Health administers the Medicaid program, and the Department of Early Care and Learning administers the subsidized childcare program. 

Integrated eligibility systems are far more convenient for the customers, requiring them to enter only one door, instead of up to five separate doors in the case of Georgia. It also streamlines the application process for the customer. 

On the administrative side, all the hard work is done behind the scenes. The automated systems can share information between programs. Moreover, the technology sets up the state to accomplish future streamlining, consolidation, and reform.

Despite all these advantages of the Gateway, there is still room for improvement. Take Utah’s system, for example. 

Utah’s Integrated System

Although Georgia is ahead of many states, Utah may be the furthest ahead. 

As explained in a recent American Enterprise Institute report, Utah streamlined 23 workforce programs across six state agencies into a Department of Workforce Services.

In addition to helping customers with employment, Utah treats basic welfare programs as support services. These include food stamps, subsidized childcare, financial assistance, and medical programs. Customers also can file claims for unemployment insurance and apply for disability services. 

The Utah system is clean and easy for the customer. Its “no wrong door” policy allows easy access to help in finding employment and receiving support services. It also sends a clear message that Utah prioritizes work as a solution.

Behind the scenes, Utah works with various federal agencies to make the system work. It is not an easy task. It requires creative solutions and continual effort on part of the state to take on the many hassles that come with dealing with the federal government, including the burdensome task of securing “waiver” approvals to federal law from the federal agencies.

However, the goal is worthwhile. It creates an easier experience for the customers,  at  overall less administrative cost.

Much More Work Needs to Be Done

Utah is showing the way, but much more work needs to be done. 

There are still welfare benefits that the federal government does not allow states to administer. These program benefits are additional doors that people must enter, requiring additional effort to apply for those benefits and hoops to jump through to get assistance. 

In other words, while Georgia has integrated eligibility systems, and Utah has gone even further with its integration, there are federal government programs outside the control of the states. These include the Earned Income Tax Credit, the Supplemental Security Income, and public housing.

Furthermore, as we have written about, the rules themselves still need fixing to eliminate welfare cliffs and marriage penalties. 

Nevertheless, progress is being made, and the work continues on. 

Do you have experience with the Georgia Gateway and other assistance programs?  Or perhaps experience in another state? Share your experiences in the comments below.

Erik Randolph is Director of Research at the Georgia Center for Opportunity. This blog reflects his opinion and not necessarily that of the Georgia Center for Opportunity.

List of Programs per the Government Accountability Office, Reports GAO-15-516 and GAO-19-200.

  • 21st Century Community Learning Centers
  • Additional Child Tax Credit
  • Adoption Assistance
  • Adult Education Grants to States (Adult Education and Family Literacy Act)
  • Affordable Care Act Maternal, Infant, and Early Childhood Home Visiting Program
  • American Indian Vocational Rehabilitation Services
  • Career and Technical Education – Basic Grants to States
  • Chafee Foster Care Independence Program
  • Child and Adult Care Food Program (lower-income components)
  • Child Care and Development Fund
  • Child Support Enforcement
  • Choice Neighborhoods Implementation Grants
  • Commodity Supplemental Food Program
  • Community Based Job Training Grants
  • Community Development Block Grants
  • Community Service Employment for Older Americans
  • Community Services Block Grant
  • Compensated Work Therapy
  • Consolidated Health Centers
  • Disabled Veterans’ Outreach Program
  • Earned Income Tax Credit
  • Education for the Disadvantaged- Grants to Local Educational Agencies (Title I, Part A)
  • Emergency Food and Shelter Program
  • Environmental Workforce Development and Job Training Cooperative Agreements (Brownfield Job Training Cooperative Agreements in 2011report)
  • Exclusion of Cash Public Assistance Benefits
  • Family Planning
  • Federal Pell Grants
  • Federal Supplemental Educational Opportunity Grants
  • Federal TRIO Programs
  • Federal Work-Study
  • Food Distribution Program on Indian Reservations
  • Foster Care
  • Foster Grandparent Program
  • Fresh Fruits and Vegetables Program
  • Gaining Early Awareness and Readiness for Undergraduate Programs
  • Grants to States for Workplace and Community Transition Training for Incarcerated Individuals
  • H-1B Job Training Grants
  • Head Start
  • Higher Education: Aid for Institutional Development programs and Developing Hispanic-Serving Institutions programs
  • HOME Investment Partnerships Program
  • Homeless Veterans’ Reintegration Program (Homeless Veterans’ Reintegration Project in 2011 report)
  • Homeless Assistance Grants
  • Housing Opportunities for Persons with AIDS
  • Improving Teacher Quality State Grants
  • Indian and Native American Program (Native American Employment and Training in 2011 report)
  • Indian Education – Bureau of Indian Education
 

  • Indian Education—Formula Grants to Local Educational Agencies
  • Indian Health Service
  • Indian Housing Block Grant
  • Indian Human Services (Division of Human Services)
  • Job Corps
  • Job Placement and Training Program (Indian Employment Assistance in 2011 report)
  • Job Training, Employment Skills Training, Apprenticeships, and Internships
  • Legal Services Corporation
  • Local Veterans’ Employment Representative Program
  • Low-Income Home Energy Assistance Program
  • Low-Income Housing Tax Credit
  • Maternal and Child Health Block Grant
  • Mathematics and Science Partnerships
  • d settings.
  • Medicaid
  • Medical Care for Low- Income Veterans Without Service-Connected Disability
  • Migrant and Seasonal Farmworker Program
  • National Breast and Cervical Cancer Early Detection Program
  • National Farmworker Jobs Program
  • National School Lunch Program (free and reduced- price components)
  • Native American Career and Technical Education Program (Career and Technical Education – Indian Set-Aside in 2011 report)
  • Native Employment Works (Tribal Work Grants in 2011)
  • Native Hawaiian Career and Technical Education Program
  • Nutrition Assistance Program for Puerto Rico
  • Nutrition Service for the Elderly
  • Older Americans Act Grants for Supportive Services and Senior Centers
  • Older Americans Act: National Family Caregiver Support Program
  • Projects with Industry
  • Public Housing
  • Reentry Employment Opportunities (Reintegration of Ex-Offenders in 2011 report)
  • Refugee and Entrant Assistance – Discretionary Grants (Refugee and Entrant Assistance – Targeted Assistance Discretionary Program from 2011 is now part of this program)
  • Refugee and Entrant Assistance – Targeted Assistance Grants
  • Refugee and Entrant Assistance – Voluntary Agencies Matching Grant Program
  • Refugee and Entrant Assistance State/Replacement Designee Administered Programs ((Refugee and Entrant Assistance – Social Services Program from 2011 is now part of this program)
  • Registered Apprenticeship
  • Rental Housing Bonds Interest Exclusion
  • Rural Education Achievement Program
  • Rural Rental Assistance Payments
  • Ryan White HIV/AIDS Program
  • School Breakfast Program (free and reduced-price components)
  •  Second Chance Act Technology-Based Career Training Program for Incarcerated Adults and Juveniles (Second Chance Act Reentry Initiative in 2011 report)
  • Section 8 Housing Choice Vouchers
  • Section 8 Project-Based Rental Assistance
  • Senior Community Service Employment Program
  • Social Services and Targeted Assistance for Refugees
  • Social Services Block Grants
  • Special Supplemental Nutrition Program for Women, Infants and Children (WIC)
  • State Children’s Health Insurance Program
  • State Supported Employment Services Program
  • State Vocational Rehabilitation Services Program (Rehabilitation Services – Vocational Rehabilitation Grants to States in 2011 report)
  • Summer Food Service Program
  • Supplemental Nutrition Assistance Program
  • Supplemental Security Income
  • Supportive Housing for Persons with Disabilities
  • Supportive Housing for the Elderly
  • Tech Prep Education State Grants
  • Temporary Assistance for Needy Families
  • The Emergency Food Assistance Program
  • Title I Migrant Education Program
  • Trade Adjustment Assistance for Workers
  • Transition Assistance Program
  • Transitional Cash and Medical Services to Refugees
  • Tribal Technical Colleges (United Tribes Technical College in 2011 report)
  • Tribally Controlled Postsecondary Career and Technical Institutions
  • Veterans Pension and Survivors Pension
  • Veterans’ Workforce Investment Program
  • Vocational Rehabilitation and Employment (Vocational Rehabilitation for Disabled Veterans in 2011 report)
  • Voluntary Medicare Prescription Drug Benefit- Low-Income Subsidy
  • Wagner-Peyser Act Employment Service (Employment Service/Wagner-Peyser Funded Activities in 2011 report)
  • Water and Waste Disposal Systems for Rural Communities
  • Weatherization Assistance
  • Work Opportunity Tax Credit
  • Workforce Investment Act Adult Activitiesa
  • Workforce Investment Act Youth Activitiesb
  • WIOA National Dislocated Worker Grants (WIA National Emergency Grants in 2011)
  • WIOA Youth Program (WIA Youth Activities in 2011 report)
  • Women in Apprenticeship and Nontraditional Occupations
  • Youth Partnership Programs (Conservation Activities by Youth Service Organizations in 2011 report)
  • YouthBuild

DISINCENTIVES FOR WORK AND MARRIAGE IN GEORGIA’S WELFARE SYSTEM

Based on the most recent 2015 data, this report provides an in-depth look at the welfare cliffs across the state of Georgia. A computer model was created to demonstrate how welfare programs, alone or in combination with other programs, create multiple welfare cliffs for recipients that punish work. In addition to covering a dozen programs – more than any previous model – the tool used to produce the following report allows users to see how the welfare cliff affects individuals and families with very specific characteristics, including the age and sex of the parent, number of children, age of children, income, and other variables. Welfare reform conversations often lack a complete understanding of just how means-tested programs actually inflict harm on some of the neediest within our state’s communities.

DOWNLOAD WHITE PAPER
DOWNLOAD EXECUTIVE SUMMARY
VISIT WELFARECLIFF.ORG

The Top 5 Recommendations to the Feds on Economic Mobility

The Top 5 Recommendations to the Feds on Economic Mobility

by | Oct 8, 2020

The Top 5 Recommendations to the Feds on Economic Mobility

 

By Erik Randolph

 

 

If you had the opportunity to tell federal agencies what they need to do to help low-income people improve their economic circumstances, what would you tell them?

This is not an arbitrary question. It was formally asked by the current administration in Washington, D.C.

A New Council on Economic Mobility

The U.S. Department of Health and Human Services (HHS) is leading the development and establishment of an interagency Council on Economic Mobility. This council will include the heads, or their delegates, of the U.S. Departments of Agriculture, Education, Labor, Housing and Urban Development, and the Treasury. It will also include the heads of the Social Security Administration and the Council of Economic Advisors.

The purpose of the Council is to find areas where the participating agencies can collaborate for a very important purpose: “to promote family-sustaining careers and economic mobility for low-income Americans … and help individuals sustain their economic success.” Note that all these departments administer important welfare and workforce-development programs. 

Last July, HHS solicited comments to 15 questions to help  develop  this new council. What should be its priorities? What barriers do individuals face? How are welfare cliffs impacting individuals? 

Relying on its experience with providing services, working with other service providers, and research, the Georgia Center for Opportunity (GCO) submitted recommendations to this request on October 2, 2020.

GCO’s Top Recommended Priorities

Below are GCO’s top recommendations for what the council’s priorities ought to be.

Priority #1: Eliminate Marriage Penalties

Marriage penalties make number one on our list. 

The strong correlation between marriage and prosperity is well-researched and undeniable. Research also demonstrates overwhelmingly that a stable home with married parents benefits children in many ways, including emotional stability, educational achievement, and future income. Unfortunately for many, the idea of healthy marriage is something desirable but unattainable for themselves. A strong marriage has It’s becoming a luxury for many, and they are losing out on which denies too many the economic and otherwise fulfilling benefits. 

Recently, the Office of Family Assistance at HHS sponsored the study Marriage Penalties in Means-Tested Tax and Transfer Programs: Issues and Options, authored by Bradford Wilcox, Ph.D., Chris Gersten, and Jerry Regier, Ph.D. This study does an excellent job at detailing current research in the area and discusses potential solutions. By the way, GCO gave input to the authors of the study.

Priority #2: Eliminate Welfare Cliffs

As just indicated, the welfare system has embedded disincentives that can discourage recipients from seeking employment, working additional hours, or accepting pay increases. And our research in this area has been recently corroborated by a National Bureau of Economic Research paper written by five economists, including two who work for the Federal Reserve Bank of Atlanta. 

Many of these disincentives are the direct result of federal government policies and are found within the tax code and various eligibility and benefit determination rules of means-tested welfare programs.

Priority #3: Sponsor Research and Financial Modeling to Solve the Big Problems

In a prior blog , I wrote about how welfare programs and the tax code can be barriers by creating disincentives to advance economically. Also, a prior study illustrated how marriage penalties are further barriers. 

Well, these problems are complex, and the solutions have perplexed policymakers for years. Therefore, it is important for continued research to come up with the best solutions. 

By the way, GCO is well positioned to help examine these issues. We have studied both the problems and offered potential solutions. 

Priority #4: Promote Work-First Policies

Research and experience show that promoting work first for those applying for welfare assistance—as opposed to seeking education and training first—usually works better in helping them secure meaningful employment in the long run. 

A work-first policy does not mean that education and training are forsaken. It simply recognizes the reality that connecting people to real jobs in the economy gives them a foothold in the workforce where further skill development and training can often be accomplished while they are holding down a job and earning earned income. 

Priority #5: Look for ways to reduce regulatory barriers

The federal government should review its policies to make sure they do not make it harder for people to get jobs or start job-creating businesses. This recommendation falls under the broad heading of “getting government to help facilitate job growth, not hinder it.”

So what do you think? Should these be the recommended priorities for the new federal council? Are there other priorities you would have included? Post your comments below. 

Erik Randolph is Director of Research at the Georgia Center for Opportunity. This blog reflects his opinion and not necessarily that of the Georgia Center for Opportunity.

DISINCENTIVES FOR WORK AND MARRIAGE IN GEORGIA’S WELFARE SYSTEM

Based on the most recent 2015 data, this report provides an in-depth look at the welfare cliffs across the state of Georgia. A computer model was created to demonstrate how welfare programs, alone or in combination with other programs, create multiple welfare cliffs for recipients that punish work. In addition to covering a dozen programs – more than any previous model – the tool used to produce the following report allows users to see how the welfare cliff affects individuals and families with very specific characteristics, including the age and sex of the parent, number of children, age of children, income, and other variables. Welfare reform conversations often lack a complete understanding of just how means-tested programs actually inflict harm on some of the neediest within our state’s communities.

DOWNLOAD WHITE PAPER
DOWNLOAD EXECUTIVE SUMMARY
VISIT WELFARECLIFF.ORG

Welfare Cliffs Exist—Concludes Team of Economists

Welfare Cliffs Exist—Concludes Team of Economists

by | Sep 17, 2020

 

 

 

Welfare Cliffs Exist—Concludes Team of Economists 

 

 

 

 

 

 

By Erik Randolph

 

 

Since 2016, the Georgia Center for Opportunity (GCO) has demonstrated the existence of welfare cliffs. Now a team of five economists has come to the same conclusion.

Welfare cliffs are an unfortunate feature of the American welfare system. They occur when a family’s breadwinner, or an individual, discovers that his or her family will become worse off economically by earning more money. It sounds paradoxical, but it happens whenever the loss in welfare benefits exceeds the additional take-home pay.

Exactly when the cliffs occur, and how bad they are, depends on many factors, including the characteristics of the family, how much they earn, and where they live. And because of the haphazard way the welfare system is constructed, it turns out that there isn’t a single cliff but multiple cliffs that a family can encounter over the range of potential earnings.

For more information on GCO’s work on the cliffs, check out this website that shows cliffs in eight states by common family types.

New Study

Authored by economists at the Federal Reserve Bank of Atlanta, Boston University, and the University of California, Berkeley, a newly published study takes a sophisticated approach to identify disincentives in the U.S. tax and welfare structure. Published as a working paper by the National Bureau of Economic Research (NBER), the authors fed the results of the most recent Survey of Consumer Finances through a fiscal analyzer.

The Economic Team

David Altig, Federal Reserve Bank of Atlanta

Alan J. Auerbach, University of California, Berkeley and NBER

Laurence J. Kotlikoff, Boston University and NBER

Elias Ilin, Federal Reserve Bank of Atlanta and Boston University

Victor Ye, Boston University

 

 

The Survey of Consumer Finances is a project of the Board of Governors of the Federal Reserve System. It is the most comprehensive survey examining the personal finances of American individuals and families. Thus, the input data for their study represent a statistical picture of how families are faring economically.

In other words, the financial situations of a representative cross-section of families in America was fed through a fiscal analyzer. This particular fiscal analyzer was based on a personal financial planning tool developed by the software company of Laurence Kotlikoff, one of the study’s authors.

The fiscal analyzer estimates the likely future financial path that individuals or families will take over their remaining lifetime, along with the future taxes and benefits they will pay or receive. The study uses standard mortality rates to predict lifespans and gives a unique calculation on the degree and magnitude that incentives or disincentives exist over that likely path.

The study defined the future fiscal burdens, consisting as taxes and benefits, as marginal tax rates. If a person’s remaining marginal tax rate increases, then so does the tax burden. The greater the magnitude of the marginal tax rate, the greater the disincentive.

Study Results

Given our own work, the conclusion of the authors was not surprising. To quote from their study:

“Our findings are striking. One in four low-wage workers face marginal net tax rates above 70 percent, effectively locking them into poverty.”

“… one in four bottom-quintile households, regardless of age, face marginal tax rates above 65 percent. Thus, a major share of poor households are effectively locked into poverty by America’s fiscal system.”

The authors were careful to point out that this study looks at the structure of America’s fiscal system, meaning these disincentives are hardwired into the laws and rules of the system. This corroborates exactly with our research. The very rules themselves are what create the disincentives and the cliffs. The silver lining here is that rules can be changed.

This study did not attempt to measure how people react to the disincentives. Some might bite the bullet, take the hit, and still advance their earnings anyway. On the other hand, others may take a defeatist tact, backing off from earning more to draw down more government assistance. This is a ripe area for future research, to determine the proportion of people who forge ahead anyway versus those who give up and retreat.

In the meantime, we shouldn’t wait for future research on how many people accept defeat and remain poor. It makes more sense to fix the rules now so the question becomes moot.

Erik Randolph is Director of Research at the Georgia Center for Opportunity. This blog reflects his opinion and not necessarily that of the Georgia Center for Opportunity.

 

 

 

 

DISINCENTIVES FOR WORK AND MARRIAGE IN GEORGIA’S WELFARE SYSTEM

Based on the most recent 2015 data, this report provides an in-depth look at the welfare cliffs across the state of Georgia. A computer model was created to demonstrate how welfare programs, alone or in combination with other programs, create multiple welfare cliffs for recipients that punish work. In addition to covering a dozen programs – more than any previous model – the tool used to produce the following report allows users to see how the welfare cliff affects individuals and families with very specific characteristics, including the age and sex of the parent, number of children, age of children, income, and other variables. Welfare reform conversations often lack a complete understanding of just how means-tested programs actually inflict harm on some of the neediest within our state’s communities.

DOWNLOAD WHITE PAPER
DOWNLOAD EXECUTIVE SUMMARY
VISIT BENEFITSCLIFFS.org

Safeguarding the Economy is Paramount for Everyone’s Well-Being

Safeguarding the Economy is Paramount for Everyone’s Well-Being

by | Jul 13, 2020

Safeguarding the Economy is Paramount for Everyone’s Well-Being

By Erik Randolph

Recent numbers in confirmed COVID-19 cases have been nothing but discouraging, but is it logical to turn back? The resurgence in confirmed cases may tempt our political leadership to reimpose shelter-in-place mandates and business shutdowns, but at this stage it would be a mistake.

The Resurgence 

The recent data may be giving credence to those medical experts who have been arguing the lockdowns only delayed the inevitable. We must learn from the mistakes made and the impact the shutdowns have had on already heavily-impacted communities.

The official confirmed cases displayed on the Georgia Department of Health’s COVID-19 Daily Status Report webpage lags 14 days behind. Beyond that 14-day window at the time of this writing, the seven-day moving average of confirmed cases peaked at 763.1 on April 22 and began to decline. However, the average began rising again on May 10, and since May 25 the average has been steadily increasing. On June 24, the average reached nearly 2,000 cases, more than double its prior peak in April. There is good news on the Department’s webpage, reported deaths have been on a downward trajectory since the end of April. However, there is still much we do not know, including the unreported number of Georgians who successfully cleared the virus asymptomatically or otherwise.

Comparison to Other States

Compared to other states, Georgia does not look that bad. For example, deaths attributed to COVID-19 are far fewer in Georgia than in the Northeast. 

On the economic front, Georgia’s shelter-in-place orders were far less severe than in other states, such as Michigan, Massachusetts, and Washington State. Recent unemployment numbers suggest a possible negative correlation between the more harsh measures taken by states and employment. Georgia looks good with an unemployment rate better than 72 percent of all states. In some cases, Georgia’s unemployment rate is drastically better. Georgia’s rate is 36.4 percent of Michigan’s rate and less than half of Massachusetts’s rate.

 

 

The Economic Situation Overall is Not Good

When Congress first passed legislation addressing the pandemic, the discussion was shutting and locking down for 14 days that might extend to a month’s time. Recall the talk about a “V” shaped recession with the economy quickly rebounding? With the crisis dragging into its fourth month, this is no longer the discussion.

In my last blog, I argued that the official unemployment rates understate the seriousness of the unemployment problem. While Georgia’s rate measured 9.7 percent, I estimated that the real problem was closer to 25 percent . This was just one metric. There are plenty of other metrics indicating potential for some serious economic damage.

First, the economic impact is not shared equally. Some industries—such as restaurants, bars, tourism, live entertainment, and brick-and-mortar retail stores—have been hit especially hard. Many of these businesses are smaller, mom-and-pop operations with lesser capacity to withstand long periods of economic hardship. Workers, too, have been unevenly impacted, with lower income households bearing the brunt of the negative impact.

It’s also been bad financially. About 3,600 companies filed for bankruptcy in 2020 thus far, 26% higher than the first six months in 2019. Cash reserves is a major issue. A Federal Reserve Banks’ survey found that three in 10 small businesses were financially at risk or distressed at the beginning of the pandemic. 

We do not yet know the total loss in production due to our response to the coronavirus, but we know it will be bad. Production dropped 5 percent for the first quarter of 2020 nationally and 4.7 percent for Georgia. The loss for the second quarter will not be known until the end of the month when new numbers are released. Assuredly, the numbers will be worse.

Lost production is a great economic concern for all of us. It means lost societal wealth and hardships for many individuals and their families.

The Precarious Federal Fiscal Position

Since March, Congress has poured $3 trillion into the economy to help us sustain the hit. This is an enormous sum greater than the annual federal spending for social security benefits, Medicare, and all other mandatory spending programs. Additionally, the Federal Reserve is making trillions of dollars more available to help the public withstand the economic impact of the pandemic. 

In the meantime, U.S. total debt now exceeds $26 trillion and continues to grow. This is more than the total annual production of the United States when last measured. 

The temptation to reverse course in reopening the economy and looking to Congress and the Federal Reserve to bail us out with even more spending comes with enormous risks: high inflation, higher taxes, slower economic growth, and less wealth. Poorer communities and persons with lower income typically suffer more from these consequences.

These risks are based on fundamental principles in economics. We cannot spend money without someone, somewhere, at some time paying for it. With all the new money spent by Congress and created by the Federal Reserve, we will have one of two likely non-exclusive ways to pay for it: higher taxes in the future and/or inflation.

The much worse of the two is inflation. It is a hidden tax that everyone—rich and poor alike—must pay. It will erode wealth and opportunities for many.

An uptick in inflation will place the Federal Reserve in a precarious position. The standard tool is to increase interest rates. However, this can jeopardize any economic recovery from the pandemic. It will also exacerbate the federal budget deficit because of the extraordinarily high national debt, while potentially adding even more to the debt. In federal fiscal year 2019, the federal government spent $376 billion in interest payment to service the national debt—an amount equal to 28 percent of discretionary spending. This amount could easily double over the next few years.

The Best Course of Action

We cannot afford to wait for a vaccine. We must find our way to reopen the economy that is well managed and reduces risks to those most vulnerable to the virus.

Low-risk individuals, including almost all children, need to return to their routines as much as practically possible. This is the best way to extend opportunities for everyone and rebuild wealth so everyone can have fulfilling lives. 

Our fate lies not only with Congress but also with our governors. Reopening the economy is necessary to avoid greater economic damage. Everyone’s well-being depends on it.  

 

Erik Randolph is Director of Research at the Georgia Center for Opportunity. This article reflects his calculations, analysis and opinion and does not necessarily reflect that of the Georgia Center for Opportunity.

To learn more about what Georgia Center for Opportunity is doing to help get Georgians back to work check out our Hiring Well, Doing Good initiative. 

Reopening Responsibly

Reopening Responsibly

by | Apr 24, 2020

Reopening Responsibly

Fully Reopening Georgia’s Economy Safely

As stories continue to mount on the impact of the current COVID-19 pandemic on individuals and communities, the Georgia Center for Opportunity recognizes the need to come together as communities. This is already happening with social distancing becoming the new norm. The next step is for businesses, workers and patrons to begin to take the responsibility on themselves to provide safe environments. With the guidance of health experts, Georgia has the opportunity to be an example of how responsible individuals can come together to combat a common threat.

 

Recommendation for a Governor’s Task Force

On April 21, 2020, a day after Governor Brian Kemp outlined steps to safely reopen Georgia’s economy, the Georgia Board of Cosmetology and Barbers issued guidelines on how its licensees may resume operations while looking after public health and safety. This step sets an example for other industries so that all Georgians can get back to work again in a safe and successful manner.

The task for reopening the economy is uncharted territory complicated by the fact that Georgia has 233,500 employer-based establishments, according to the most recent data from the U.S. Census Bureau. There are not only differences between industries, but operations and practices can vary widely among business firms within industries. While we can rely on licensing boards and other government agencies to develop guidelines within their purviews, the complexity of the economy demands more.

The Georgia Center for Opportunity (GCO) believes that the only way the Governor’s initiative to reopen the economy can be successful is if business leaders, employees, and customers innovate and adapt to operations under the new circumstances. The best solutions will bubble up from individuals at the local level who will develop practical solutions to safely resume activity. While we all properly look to the Governor for his leadership, success will depend on how each member of the community responds. Local heroes will rise to the occasion in their own ways and set an example for us to follow.

Therefore, GCO recommends a process to help facilitate the Governor’s directive for reopening the economy. The hope is that it will allow the economy to operate under a restricted environment until it is possible to return to full functioning without concern for public health, such as having the population protected with a Covid-19 vaccine or a medication available that is both safe and effective against the virus.

To help ensure the success of reopening the economy, GCO recommends the Governor establish a task force to invite business leaders to submit guidelines specific to their industries. The Governor can use these industry-specific guidelines produced by this process to help him make further decisions on how to effectively and safely bring Georgia’s economy fully back. Furthermore, by making the guidelines available publicly, it will help others determine the best ways they, too, can resume activities safely.

 

Role of the Task Force

The proposed task force will notify business leaders of the opportunity to set up teams for their industry. These teams will draw up guidelines on how businesses in their industry will resume operations in a safe manner, consistent with CDC guidelines and other guidance provided by the Commissioner of Public Health.

The task force may initiate contact with business leaders and invite other industries to form teams. Businesses are responsible for writing the guidelines. In other words, the task force will not write the guidelines. Its job is to facilitate the process and to assist where needed. This approach relies on innovation and the resilience of individuals that have been the hallmark of American prosperity. It also recognizes that the best solutions rise up from individuals at the local level.

The members of the task force should be state officials and key government staff of the Governor’s choosing, and the Governor may elect to appoint private citizens to participate in the task force as well. For example, among those the Governor chooses for the task force may include the economic development commissioner, the labor commissioner, key staff from the Governor’s office, an economic advisor, and perhaps a well-known business leader.

 

Infectious Disease Guidance

Under the proposal, the Commissioner of Public Health plays a critical role. Business leaders, employees, and customers need good and trustworthy information to help them make good decisions. Therefore, the Commissioner will provide guidance, including forwarding CDC information, on how to stop the spread of infectious disease. It is important to formalize her role in this process so that her team can be fully engaged in providing guidance to businesses, employees, and customers.

The information provided by the Commissioner will be crucial to the business teams, allowing them to develop their industry-specific guidelines. As new information and technologies on stopping the spread of infectious disease become available, the commissioner will provide updates. These updates will enable the industry teams to modify their guidelines appropriately.

In turn, small and large businesses alike can use the guidelines to devise practices and protocols on how they can resume operations safely.

 

Industry Teams

Business leaders will volunteer their time and are expected to put together their own teams of experts to devise the guidelines. When the proposed guidelines are ready, they simply submit them directly to the task force.

Under this proposal, businesses are free to form their own teams and submit their proposals even if they were not approached by a member of the task force.

 

Website

One of the first actions of the task force should be to establish a central website with easy access and easy navigation to all industry guidelines and announcements. In addition, the website should provide links to guidance from the Commissioner of Public Health and the names of the industry team members to facilitate communications. This website should go online as soon as possible

 

Responsible Society Reaction

Reopening the economy is extremely important. The livelihoods of Georgians are dependent on it. Moreover, a strong economy is the best policy against poverty, and we certainly do not want to thrust more Georgians into poverty. Therefore, we must find ways to safely resume activity within the current environment. Georgia can be an example to the nation, but its success depends on how we as individuals respond and innovate.

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