End of federal unemployment boost to decrease region’s income this week by $7.2 million


Figuring a net of $540, the federal pandemic unemployment assistance pumped $7.2 million into Northeast Tennessee’s upper eight counties the week before it expired.

JOHNSON CITY, Tenn. (WJHL) – Josh Hagedorn has a pretty good idea how long he’ll be able to keep his head above water financially without a return to work or a new unemployment benefits deal in Congress. It isn’t very long, and he’s by no means alone.

Hagedorn, of Johnson City, is among more than 13,000 unemployed Northeast Tennesseans whose bank accounts will see much smaller deposits this week.

Both continued and new claims remain more than 10 times higher than they were the week of March 14, just before massive layoffs began.

Source: tennessee department of labor and workforce development

As a result, people across eight counties will have $7.2 million less in disposable income — a reality that could soon have ripple effects for landlords, grocery stores and other providers of basic necessities.

Josh Hagedorn

“I actually saved some money while I received the PUA (pandemic unemployment assistance), but without it my rent and utility costs would leave me $500 in the hole each month,” Hagedorn said. He’s scheduled to return to a food service supervisor’s job at King College Friday, but increasing COVID-19 cases have him concerned about whether the school will delay opening in person or have to return to virtual classes even if it does open.

Will Barrett, COO of Bank of Tennessee, fears that without a rapid increase in employment or a deal in Congress to provide some level of weekly add-on to Tennessee’s maximum $275 benefit, stories like Hagedorn’s will begin to stress a local economy that’s been cushioned by generous federal benefits.

“We’ve seen a lot of resiliency in the local apartments and the economy when it comes to fundamental spending to this point,” said Barrett, who’s familiar with business at several large multi-family landlords. “But with this drop in unemployment benefits it’s really going to stress it to a much higher degree – you know $7.2 million is a real number for this region.”

Barrett said he hopes the PUA’s disappearance can be partially offset by economic improvements, but he’s not terribly optimistic.

“I’m not sure if it’s going to be one-to-one parity,” he said.

Continued unemployment claims have decreased at an agonizingly slow rate since early June.

That’s because figures show stubbornly high numbers of people both applying for and continuing to draw unemployment benefits. Tennessee Department of Labor and Workforce Development (TDL) data released Thursday showed 13,397 continued unemployment claims across the eight counties from Johnson in the northeast to Greene and Hancock in the west.

Meanwhile, new claims clocked in at 1,261 and have remained stuck at an average 1,244 for the past 12 weeks. That’s contributed to the slow drop in continued claims.

Businesses continue to lay people off, with new weekly unemployment claims flat to rising over the past two months.

Both continued and new claims remain more than 10 times higher than they were the week of March 14, just before massive layoffs began. At that point, continued claims totaled 1,196 and there were 132 new unemployment claims.

Barrett said without relief of some sort, the area’s economy could actually see a downward spiral as businesses that rely on so-called fundamental spending start having to make decisions about their own workforces.

“If this isn’t addressed in the short term, and it could be just a month or two, you could see an impact where the problem gets worse just because if there’s less fundamental spending going into these local businesses then they’ll have to scale back and it could potentially compound the problem to a greater degree.”

COVID looming large

Hagedorn’s predicament isn’t uncommon. Many people are waiting to return to jobs that involve lots of face-to-face interaction and whose certainty seems to grow less with each day’s count of new COVID cases.

“I’ve started to be concerned that the college won’t come back like normal and I’m going to be having to find something different, especially knowing that I can’t make it otherwise on just standard unemployment,” Hagedorn said.

Finding something different will surely be a challenge. Some employers have admitted they’ve had a tough time filling certain jobs that pay less than what people have been earning with PUA, but all those jobs combined are unlikely to come near returning the area to an acceptable level of unemployment.

Instead, any expansion will likely come through a combination of collective regional grit and improving public health.

Will Barrett

“I’m really hoping at this point that (reduced benefits) can be at least partially offset by an uptick in local business activity but it’s going to be a struggle and it’s going to take us all to work together to pull that off,” Barrett said.

Barrett agrees that in addition to furloughed employees waiting on their former jobs to call back, the PUA amount may have kept some people on the sidelines.

“There is kind of a disincentive that if the benefits get outsized too much that it can contribute to a continued unemployment uptick,” Barrett said.

Indeed, the gross hourly income for Tennesseans receiving the maximum Tennessee unemployment rate plus PUA was $21.88 — far above many laid-off workers’ pre-pandemic wages. The federal Bureau of Economic Analysis found personal incomes actually increased by 10.5 percent in April due in large part to PUA and stimulus checks.

“I think trying to strike that right balance to help give people what they need to recover as well as insuring that everyone’s motivated to contribute from a workforce perspective — it’s a tricky balance,” Barrett said. “I don’t know if I’ve got the right answer but I’m just hoping that we can figure it out as a nation and particularly for its impact on the local economy.”

For his part, Hagedorn is ready for a recovery, economically and public health-wise, sufficient to get him back to working and supporting himself.

“I’m hoping that soon I will either go back to work or find another job to allow me to once again apply myself and to be productive and to get back to earning a living and trying to live life hopefully as normal as possible.”

Copyright 2021 Nexstar Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Trending Stories

Don't Miss

More Don't Miss