Overview: Georgia Division of Labor fiscal yr 2023 price range

The Governor is proposing modest spending increases to the Department of Labor (DOL) to amend the current fiscal year (FY2022) while seeking major budget changes that would defer select programs from the DOL’s purview into the next fiscal year (FY2023). The motion changes the spending plan for the current fiscal year (FY2022), increasing spending by 0.9 percent and cutting FY2023 funds by 52 percent.

The amended budget request brings the agency’s FY2022 budget to $13.1 million, up from $12.9 million. If approved, the governor’s fiscal 2023 budget proposal would transfer a significant portion of DOL program services to the state’s Technical College System (TCSG), reducing its spending to $6.1 million in the new fiscal year. Except for this proposed transfer of expenses and select program services to TCSG, the remaining DOL programs in the new fiscal year would maintain the staffing capacity reductions enacted post COVID-19, representing more than $500,000 in vacancy reductions in the budgets of Changed fiscal year 2020 and fiscal year 2021.

The bar chart shows what spending looks like in various Department of Labor programs from FY2020 to FY2023

Through the numbers

Proposed revised highlights of FY2022

  • Added over $310,000 to provide raises for eligible full-time employees.
  • Reduction of $199,000 to reflect the elimination of funds associated with the failure of the 2021 legislation seeking to appoint a Chief Labor Officer.

Proposed highlights of fiscal year 2023

  • Added $430,000 to provide cost of living adjustments (COLA) for all eligible full-time employees.
  • $141,000 to cover retirement benefits and 401(k) employer-match increases for all eligible full-time employees.
  • A further $199,000 reduction to reflect the cancellation of funds linked to the failure of the 2021 legislation seeking to appoint a Chief Labor Officer.
  • $7.2 million reduction to reflect full transfer of employment placement programs to TCSG, including:
    • Workforce Innovation and Opportunity Act (WIOA) Title I programs that provide adult education and literary services that can be combined with industry-specific workforce education and training; and
    • WIOA Title III programs that provide Wagner-Peyser employment services that offer career planning and counseling, match job seekers with suitable employers, and connect job seekers with relevant education and training programs.

Wage protection for involuntarily unemployed workers

The agency, as part of the state safety net, is tasked with providing wage-replacing benefits known as unemployment insurance (AI). These benefits serve as an anti-poverty tool to protect working families from economic hardship in recession-related times of severe job losses, as well as during the normal ebb and flow of job losses outside of recession. More broadly, it sustains consumer spending while providing temporary support to unemployed workers to find and prepare for new suitable employment, which supports businesses and helps maintain constant local and state tax revenues.

While a significant portion of the administration of the DOL program is federally funded, state funding grants provide specialized sources of funding to maintain the efficiency of the state unemployment insurance system during the ebb and flow of federal funding.

Since the start of the COVID pandemic, DOL has processed unprecedented claims — more than $5.1 million — and paid out billions in benefits to unemployed Georgians who turn to the UI safety net.[1] During some of the toughest times of the pandemic, and despite its critical role in stabilizing families and the broader economy, the agency cut spending by more than $500,000 and eliminated eight vacancies in its unemployment insurance and divisional administration divisions tasked with distribution Unemployment benefits and provision of labor market information. While proposed pay and benefit increases for current staff, the governor’s budget proposal maintains pandemic cuts to the agency’s staffing capacity, which remains below pre-pandemic levels in fiscal 2020.

re-employment services

DOL’s Workforce Solutions business has been responsible for managing various re-employment services throughout the pandemic recovery, including careers advice, providing available labor market information, job search assistance, employer referrals and job skills training. While the agency shifted some staff from other departments to deal with the pandemic-related spike in UI application filings, it also reduced that department’s staffing capacity as part of pandemic budget cuts, cutting spending by more than $840,000, eliminating 17 vacancies in AFY 2020 and FY 2021 and maintaining these damaging staff capacity cuts in the current fiscal year. And while the governor’s fiscal 2023 budget proposal is aimed at streamlining employment services by moving those operations out of DOL and all into TCSG, the residual damage that has contributed to a delayed recovery could be felt by some Georgians for years to come to be felt.

Broader budgetary implications

The agency’s ongoing budget cuts for employment services and other agency operations have likely created another obstacle to economic recovery, particularly for Black and Hispanic Georgians of color, who have disproportionately experienced multiple problems at DOL entry and exit points during the pandemic:

  • Black UI applicants in Georgia were more likely to be rejected than white applicants.[2]
  • For Black and Hispanic unemployed people who met unemployment insurance eligibility criteria, their unemployment insurance filings have declined more than twice as slowly as white and Asian jobless applicants since April 2020.[3]
  • Fewer DOL employment services staff has likely left many unemployed and underemployed Georgians underserved, leaving them without a proper assessment of their employment barriers, referrals or training needs. These gaps are probably felt most strongly by black women in Georgia, who now lead all Georgians in terms of unemployment and underemployment, and have almost twice as many white men and women in both categories.[4]

Instead of prioritizing government investments that could help drive user interface modernization efforts and restore pre-pandemic manpower levels, which could improve access to user interface services, these and related proposals from authorities are reminiscent of previous policy decisions affecting the economic Recovery has slowed, particularly for low-income Georgians, who are most vulnerable to job losses during recessions and face the greatest barriers to re-employment during recovery.

In addition to these missed opportunities to prepare for future economic downturns, the agency’s request to the Governor’s Negative Economic Impact Committee for $800 million of the $4.9 billion total ARP financial recovery fund directs additional funds from investments in the UI program that data subjects could benefit from to keep business tax rates low.[5]

As state lawmakers consider the merits of the current DOL budget proposals along with the potential use of Georgia’s allocation of ARP federal recovery funds, they must consider how the state’s unemployment insurance network will reach those who have not yet experienced recovery. In addition, lawmakers must consider how our unemployment safety net can leverage available revenue streams to equitably restore the UI Trust Fund without further restricting access to UI benefits, and how it can further strengthen its ability to weather future economic downturns .

endnotes

[1] GBPI analysis of DOL weekly UI claims data.

[2] Donnan, S Pickert, R Campbell, M (2021, November). “Georgia shows how broken American unemployment benefits are.” Bloomberg. https://www.bloomberg.com/graphics/2021-georgia-unemployment-bias/?srnd=premium&sref=2XhWEs2V

[3] GBPI analysis of DOL ETA 203 reports.

[4] GBPI analysis of the IPUMS microdata of the current population survey.

[5] Office of the Governor’s Planning and Budget. Submitted ARPA Grant Applications. (2022) https://opb.georgia.gov/submitted-arpa-grant-applications