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Pandemic continues to cause layoffs, wreak havoc on economy

By Jill Penley
Freelance Writer

The numbers are staggering. One in five Tennesseans who were employed in February have been laid off or furloughed. Since mid-March, nearly 500,000 residents have sought unemployment benefits, and the Tennessee Dept of Labor reports unemployed workers received more than $850 million in benefits in April alone.

“The unemployment situation’s been devastating for tens, hundreds of thousands of Tennesseans,” said Gov Bill Lee. “It’s part of the reason that we want to get a reboot, a safe reboot, of our economy started. But meantime, we want to serve those who are making unemployment claims, and we’re working really hard to improve that process.”

The process, for some, has definitely been arduous. Several employees temporarily laid off at Parkdale waited well over a month after applying to receive any assistance. Additionally, the sudden onslaught of claims overwhelmed the Tennessee Department of Labor and Workforce Development, which generally processes about 15,000 claims each month. According to department spokesman Chris Cannon, over 200,000 claims — totaling more than $236 million in benefits — was processed between April 20 and April 23.

Russell Robinson, Director of Accounts and Budgets, says it is a little too early to know what kind of financial hit Johnson County will take. “At this point, collections for property tax and sales tax are on target to meet 19-20 projections,” said Robinson. “Hotel/motel tax and motor fuel taxes are still unknown as far as any possible decrease in collections due to less travel because of COVID.” 

Tennessee stands to lose an estimated $5 billion to pandemic-related closures this year, according to state leaders. In Nashville, the pandemic has meant an estimated loss of $470 million in revenue over the next 16 months. Mayor John Cooper is proposing to offset the drop in revenue with not only budget cuts but a controversial property tax hike of nearly 32 percent.

In March, the U.S. Department of Commerce reported the nation’s retail sales had dropped 8.7 percent, making it the biggest month-over-month decline since the government started collecting records in 1992.Since Tennessee does not have a personal income tax, decreased retail activity is especially significant as the state depends on general sales taxes. Robinson does anticipate declines in both hotel/motel and motor fuel taxes for the last quarter of the fiscal year, but it is too early to provide any projections.

It is noteworthy that another reason for the large influx of unemployment filings is the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was passed by Congress with rare bipartisan support and signed into law by President Trump on March 27, allows for those on unemployment to receive an extra $600 per week in addition to their regular benefit causing lots of receipts to bring home more in unemployment than they made while working. 

The $600 a week federal payment is due to end in July; however some Capitol lawmakers are pushing to extend the higher benefits if the economy continues to lag.