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Some GOP governors cutting unemployment aid have ties to businesses that may benefit

·11 min read
REFILE - CORRECTING HEADLINE Jim Justice II, Governor of West Virginia, speaks during a roundtable discussion with U.S. first lady Melania Trump, local and state leaders at Cabell-Huntington Health Department in Huntington, W.V., U.S., July 8, 2019. REUTERS/Al Drago (Alexander Drago / reuters)

When West Virginia Gov. Jim Justice, R, announced his decision last month to cut federal unemployment benefits for his state's jobless residents, he pointed to what he said was a plethora of openings for those who needed work.

"West Virginians will have access to thousands of jobs, right now, and we need everybody back to work," he said on May 14. "We got to have you back to work. You know, America is all about work. And you know, that's what's made this great country."

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Justice didn't need to look far for examples of companies struggling to hire workers. The storied West Virginia resort he owns, the Greenbrier, has been looking for dozens of new employees in recent weeks and until recently had received far fewer applications than normal. But after Justice announced his decision, that started to change, said Kathy Miller, vice president of human resources at the luxury hotel.

"Fortunately the applicant pool has started to improve, so we're very happy about that," she said in an interview in late May, attributing the shift in part to the cutoff of extra federal payments and more widespread vaccinations. "I think that people are preparing, if they are under West Virginia unemployment, to get back into the workforce."

Republican governors in 25 states are in the midst of a giant economic experiment, ceasing enhanced jobless aid for an estimated 4 million people, arguing that the generous benefits are dissuading people from going back to work. But a number of these governors have personal connections to businesses that are trying to find workers and could benefit from the policy change, according to a Washington Post review of financial disclosures from state elected officials.

Video: Why some Americans are hesitant to get back to work

"I do think that's part of the reason he's making this decision, is he thinks it would be better for his businesses and he would get more people back to work if we refuse any additional money from the federal government from this particular program," said West Virginia state Sen. William Ihlenfeld, D. "It's a shame that one of the richest men in the state has decided to withhold aid from the people who need it the most."

A spokesman for Justice did not respond to a request for comment.

"There was no relation between the Governor's decision and The Greenbrier whatsoever," said Elmer Coppoolse, the Greenbrier's chief operating officer, in a separate statement to The Post.

As part of its response to the economic fallout from the coronavirus pandemic, Congress over the past year has boosted jobless Americans' weekly unemployment checks by hundreds of dollars per week, extended the number of weeks they can collect aid and offered help to those who aren't typically eligible, such as gig workers. Those benefits otherwise would have run through early September, but the group of GOP governors has moved to end the aid in June and July. A handful of states will maintain federal aid for gig workers and other self-employed Americans, while most are ending all the programs.

The cutoffs will affect over 4 million people, according to analysis by Andrew Stettner, a senior fellow at the Century Foundation, a left-leaning think tank. More than 2 million people will lose their benefits entirely.

Early studies last summer found that extra benefits had not affected employment rates or rehiring, or found no evidence that they did so, but Republican officials argue that offering aid that in some cases outmatches the wages people can draw in the job market depresses the supply of workers. The growing divide over workers and incentives picked up steam with the release of an April jobs report that fell well short of many economists' expectations. The May jobs report, released Friday, found that the U.S. economy added 559,000 jobs last month, missing expectations but staving off fears of an economic slowdown.

The Biden administration and its allies in Congress argue that any reluctance by Americans to return to work is due more to a lack of child care, lingering concerns over safety during the pandemic and low wages. This month, the Democratic-led Joint Economic Committee released data showing that local economies stand to lose over $12 billion as a result of the early end to the benefits. In remarks on Friday about the May jobs report, President Biden said it "makes sense" for the enhanced jobless benefits to end in September.

Nationwide, there were 8 million job openings in March and about 9.3 million jobless people in May, according to the latest government data available.

A May 26 research note by J.P. Morgan found that although some of the states that are reducing their benefits early have signs of a tight labor market and strong growth in hourly wages, many of them do not.

"It therefore looks like politics, rather than economics, is driving decisions regarding the early ends to these programs," the note said.

In at least some cases, GOP officials' private business interests mean they are changing policies in a way that could affect their bottom lines.

Justice's sprawling business empire, which in addition to the Greenbrier includes agricultural companies and coal enterprises, has made him a lightning rod for criticism from ethics watchdogs. A 2019 investigation by the Charleston Gazette-Mail and ProPublica found a thicket of conflicts of interest inherent in his dual roles as business magnate and public servant. Justice's most recent financial disclosure lists over 100 corporate entities.

Ihlenfeld introduced legislation in 2020 mandating that West Virginia governors place their assets in a blind trust, but the bill failed.

In New Hampshire, members of GOP Gov. Chris Sununu's family are investors in the Waterville Valley Resort, a ski resort in the White Mountains with a full slate of summer offerings including boating, tennis and golf. Sununu served as chief executive there until late 2016, a few days before he took office.

When he announced his decision in May to end the federal benefits, Sununu pointed to data showing 14,000 jobs available in the state and a 2.8 percent unemployment rate, tied for the nation's lowest. He simultaneously announced a $10 million program to offer one-time stipends for people returning to work at jobs paying less than $25 per hour.

"The timing works really well with our summer tourism season, a lot of jobs opening, restaurants opening up, attractions opening up," Sununu said of the stipend program. "Every employer I talk to out there is looking for workers."

In recent weeks, Waterville Valley has posted job openings for camp counselors, desk agents, housekeepers and other positions. A spokesman for Waterville Valley did not respond to a request for comment.

"Absolutely no one at Waterville Valley communicated to the Governor about ending federal unemployment," Ben Vihstadt, a spokesman for Sununu, said in an email. "Gov. Sununu is not involved in the operation of Waterville anymore. The people Gov. Sununu heard from were countless small-business owners on Main Streets across the state who could not find enough workers to staff their small businesses."

Mike Somers, president of the New Hampshire Lodging and Restaurant Association, said the worker shortage in New Hampshire has been severe - leading some of his members to offer signing bonuses, tenure bonuses to workers who stay on three months or longer, and wages as high as $22 per hour for kitchen staff. He said the shortage is probably due to a confluence of factors, including a persistent lack of child care and the fact that some people are still not vaccinated. Sununu's decision to cut the benefits, announced in mid-May, had as of early June not made a "dramatic difference" in the worker shortage, he said.

"I don't think that the federal benefits are an end-all, be-all problem or solution," Somers said. "The real challenge is we're still at the tail end of the pandemic."

Vihstadt said the state of New Hampshire "never closed child-care facilities and put unprecedented levels of financial support into the system while implementing much needed licensing flexibilities so they could remain viable and supported through the pandemic."

Noah Bookbinder, president of the watchdog group Citizens for Responsibility and Ethics in Washington, said it is a "huge problem" for government officials, including governors, to be making policy decisions that could affect their personal holdings.

"It doesn't really matter if there were communications with the business about the decision. These people know what their business interests are," Bookbinder said. "Voters and residents should be concerned that their governors are making decisions that could benefit their own financial interests, potentially at the expense of the interest of people who live and work in the state."

State financial disclosure records show that several other Republican leaders across the country who have cut benefits have business interests that might be affected by the moves. North Dakota Gov. Doug Burgum sits on the board of Arthur Companies, a family agricultural business currently advertising for truck drivers, general laborers and IT technicians. And Mississippi Gov. Tate Reeves is a shareholder in his father's company, Southern Air Conditioning and Supply.

Mike Nowatzki, a spokesman for Burgum, said the governor's position at Arthur Companies played no role in his decision.

"The governor is not involved in the day-to-day operation of Arthur Companies," Nowatzki said in an email. He pointed to Burgum's previously stated reasons for ending the federal programs in North Dakota, including "an abundance of job openings with employers who are eager to hire."

Kevin Karel, general manager at Arthur Companies, said in an email that it has been "extremely hard" to attract job applicants in the past six months, with three to four times more open positions than normal. Karel added that he does not speak to Burgum, and that Burgum does not have "day-to-day involvement" in the company.

A press secretary for Reeves, Bailey Martin, said the governor owns a minority share in Southern Air Conditioning and Supply, which was started by his father in the 1970s.

Asked whether anyone at the company had communicated with Reeves about worker supply issues before his decision to end the benefits, Martin said that Reeves consults his father "on virtually everything" but that Southern Air Conditioning and Supply has not had workforce supply issues.

"Gov. Reeves decided to end participation in the supplemental based on the relevant economic statistics," Martin said, pointing to Mississippi's unemployment rate as now approaching pre-pandemic levels. "Gov. Reeves believes the key to success for Mississippi workers is good work at a good job. He understands that jobs have not always been easy to create in Mississippi, and he knows that more than most states, we needed to get people back to work before their jobs disappeared."

An executive at Southern Air Conditioning and Supply did not respond to a request for comment.

Of course, Republican governors without any apparent relevant business interests have also ended federal unemployment benefits early. Alabama Gov. Kay Ivey's most recent financial disclosure lists no businesses with which she is affiliated, and her outside income comes from bank interest, retirement benefits, Social Security, dividends and capital gains from investments in a blind trust, and timber and hunting leases. Ivey announced on May 10 that federal pandemic unemployment benefits for Alabamians would end on June 19. Tennessee Gov. Bill Lee, who announced the end of federal pandemic unemployment benefits on May 11, lists income from his state salary, the publisher of his book and a blind trust.

"Work is good for the soul, good for families and good for Tennessee," Lee wrote on Twitter the day after he announced his decision. "We shouldn't be incentivizing people not to do it."

Founded in 1778, the 11,000-acre, 710-room Greenbrier has a fabled past and has played host to 27 U.S. presidents and foreign royalty. Justice purchased the property in 2009 from longtime owner CSX Corp., saving it from bankruptcy.

Miller said the Greenbrier had until recently been receiving just one-third of the usual number of applications for job openings. As of early June, the resort had over 100 job openings, including for kitchen workers, HVAC mechanics, bartenders, sommeliers and massage therapists.

"We just didn't have a lot of outside interest in people looking for employment," she said. "But thankfully that is increasing now."

The Greenbrier has a union workforce, and minimum salaries are negotiated in contracts with the unions, said Phil Bostic, who represents a portion of Greenbrier workers. Bostic said he thinks the resort pays competitive wages and benefits, especially for the region it is in. Recent job postings advertise wages of $9.86 per hour for kitchen workers, $4.66 plus tips for pool deckhands and $20.20 for HVAC mechanics. West Virginia's minimum wage is $8.75 an hour.

Asked whether the Greenbrier had considered raising pay to attract more applicants, as some businesses have done nationwide, Miller said Greenbrier executive management is currently reviewing the wage structure.

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