Job Recovery Is Not the Special Session’s Focus

This building remains boarded up, and legislators are not there (except the House Speaker and Clerk, pantomiming a real session on Zoom.)

By Steve Haner

With the Virginia General Assembly’s “Cops and COVID” special session moving into its third week, it seems likely to impede rather than assist the state’s economic recovery from the pandemic. It may also greatly expand COVID-19’s financial burdens in the years to come.

The highly publicized issues of unpaid rents and utility bills, threatening tens of thousands with choices between eviction, disconnection, or years of additional debt, are clearly related to un- and under-employment from the COVID-19 recession. But getting people back to work does not seem the top priority for legislators.

The original stated purposes for the session starting August 18 were to amend the state budget in response to the recession, and make other adjustments responding to the viral disease. Deadly confrontations between police and Black suspects in several American cities, and the violent response, added police and judicial reform issues to the agenda. 

The 270 bills introduced by legislators (so far) reach far beyond those issues. Only one election-rules bill has passed both chambers so far, but 55 others have passed at least one chamber. This update focuses on some of those that will impact employers or taxpayers. There is mainly bad news on both fronts.

Both chambers are dominated by Democrats. So far, repeating the pattern from the regular session that ended in March, the Virginia Senate is refusing to adopt as “progressive” an agenda as the more numerous House. But it remains possible the General Assembly will:

  • Create a state mandate for employer-paid sick leave, either through legislation or by inserting it into the budget bill. Legislating in the budget is getting to be routine, sadly.
  • Extend protection and the payback period for those behind on their rents and utility bills, giving debtors from six to 24 month to pay. The 24-month period extends into 2023.
  • Expand state authority to probe and punish alleged price gouging, not just at the point of sale but throughout the manufacturing and supply chain.
  • Create a presumption that certain employees who get severe cases of COVID-19 were infected at work and deserve compensation, with the employer (public or private) footing the bill.

Something else that could impact any business or service operation dealing with the public:

  • Emergency orders from the Governor, which may also be in force for months or years to come, may soon carry the risk of a $500 fine. Current law sets the minimum punishment as a class one misdemeanor, ridiculous for minor infractions and thus seldom imposed.  Fines are easy and may prove commonplace, and produce revenue that governments need right now.

The worst news for the economic climate involves a failed idea. One of the key measures that all employers, including non-profits, sought from the special session was some protection against lawsuits over COVID if they are making good faith efforts to protect their employees, clients, and customers. Both House and Senate versions of that idea – which has passed in some form in many states – were withdrawn last week.

The House version of the bill had been amended into a form where the business community saw it as promoting litigation. Union efforts for similar changes led to the demise of the Senate bill. Only the nursing home industry still has active legislation creating some narrow immunity from lawsuit.

The many other states which have addressed this issue may see quicker and easier economic recoveries. Fear of lawsuits is playing a major role in many Virginia business operations remaining closed or limited.

One of the deepest and longest lasting financial impacts will come from the response, or lack of response, to the rent and utility debts. Both the state and the federal governments, with bipartisan support, have been quick to prohibit evictions or utility disconnections. But the answer to the inevitable question of who ultimately pays and when has been slow.

It is likely real estate evictions and foreclosures will be restricted into the spring of 2021, and legislation pending would prevent eviction at that point but instead require 12 or even 24-month repayment plans. Where the money will come from for those, how people will start paying even higher rents if the economy is still mired in recession in 2021, is never discussed.

On the utility side of things, prohibitions on disconnections and mandatory long-term payment plans are also proposed. But this past week reports surfaced that Governor Ralph Northam wanted to direct the State Corporation Commission to use any excess profits held by Dominion Energy Virginia to cover unpaid bills. Potentially more than $300 million, money that might otherwise be future refunds for all Dominion customers, could be diverted to cover the bills of those fallen behind.

It won’t be enough money, probably not enough even for Dominion’s late payers. Every utility – electricity, natural gas, water, and sewer – has seen its accounts receivable explode. Families which are able to get back on track will again be paying extra per month to cover their debts, leaving less for other needs or desires. The potential to further retard economic recovery is obvious.

Likewise, any decision to offer wage replacement, medical coverage, disability status or death benefits to COVID-19 sufferers means higher workers compensation insurance premiums for their employers.

The legislation pending is limited to health care workers, fire, police and other first responders, and school personnel. Many but not all of those will be government employees, putting the bill on taxpayers directly. If workers file a claim, their employer can seek to establish the disease was not contracted at work. Proving that may be impossible.

If approved, and it has broad and bipartisan support, do not expect coverage to remain limited to those few employment categories for long. A grocery store worker or Internet installer has just as strong a claim that the job put them at risk for this virus. Eventually this will cover everyone. As with the economic waves from the unpaid rents and utility bills, the costs will reach us all.

This was published earlier this morning by the Thomas Jefferson Institute for Public Policy.  

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14 responses to “Job Recovery Is Not the Special Session’s Focus

  1. The easiest way to understand the Democrats in Virginia is to focus on their core value of socialism. They believe that there is plenty of wealth in Virginia without any need to worry about the economy. The plan is to take from some and give to others. In that vein, the excess charges paid by everybody to Dominion will be used to pay the unpaid bills of a few. Heaven forbid that Northam or the others on the left spend any time worrying about how people in poverty might get out of poverty through a vigorous economy.

    Finally, how poor are Virginia’s poor? A lot of older relatively well to do commenters on this blog pound away on expensive laptops calling for more help for “the poor”. Do any of these commenters really understand what it means to be poor in Virginia? The last effort at analyzing this question I recall came from Jim Bacon in 2011. It was eye opening. I wonder how much it has changed sine then.

    https://www.baconsrebellion.com/wp/poverty-does-not-mean-destitution/

    • Translated:
      Democrats thrive on jobless, dependent people. Democrats feast on jobless, dependent, and anxious people. Such folk are Democrats’ bread and butter. Hence Democrats are forever building and importing ever more and more jobless, dependents, and anxious people, American or otherwise.

  2. I had an interesting conversation with a staunch (but moderate) Democrat last week about the impact of the residential rent moratorium. No question, a lot of people are facing hardship during the COVID-19 shutdown and they need help. But deferring rent payments creates a cash flow bind for landlords. Landlords have mortgages to pay, property taxes to pay, and maintenance bills to pay.

    One can predict that landlords with lower-income tenants will respond in three ways which will rebound to the detriment of tenants:

    (1) Landlords will conserve cash by deferring work on maintenance and repairs. The quality of housing provided poor households (whether they pay their rent or not) will deteriorate.

    (2) Landlords will reduce risk by screening tenants more carefully, leasing apartments to tenants with better credit scores and employment prospects. Higher-risk households will find it more difficult than ever to find an apartment.

    (3) Real estate investors will delay construction (or renovation) of properties for the lower-income market until the perception of rent non-payment recedes.

    The needs of tenants facing eviction are immediate. The negative impacts of rent moratoriums are harder to quantify, and they take longer to unfold. Just because the negative impacts are less visible, however, doesn’t mean they are less real.

    • James Wyatt Whitehead V

      Number 2 is already happening. The purpose of being a landlord is to make money. Screening applicants is absolutely necessary to keeping the cash flowing.

    • Maybe job recovery should be the special session’s focus. Or, at least, one of the foci. For all my frustrations with New York City and diBlasio … they did pull off a pretty impressive outside dining plan. I’m not sure Virginia was as aggressive. Meanwhile, Maryland loosened restrictions last Friday ahead of Labor Day while Virginia kept the beaches locked down.

      As far as your listed impacts … (3) is the most interesting. I still get the feeling that a lot of people in the core urban areas are going to leave if they can work from home (even if occasionally). We may see a return to the 1970s and 1980s where the cities were the less affluent areas and the suburbs were the more affluent areas.

  3. Interesting. I don’t see the presence of the blog’s liberals in this discussion. Usually, silence means assent.

    Maybe Larry is on vacation at the beach

    • well… no… Sherlock sez I comment too much… so I’m trying to be good!

      besides whatya gonna do with a bunch of hard core types spouting the deeply held but seriously flawed beliefs that don’t really reflect realities?

      but I digress…. 😉

  4. 40 years ago when Ronald Reagan took office, one of the senior Democrats in the House of Representatives was quoted as supporting the new President’s program for Business recovery. He reportedly said that Democrats had been so busy passing out golden eggs that they had failed to inquire about the health of the goose.

  5. The concept of protection from lawsuits for employers who make good faith efforts to protect their employees and customers from exposure to COVID-19 is sound. After all, it is difficult to know where one has been exposed. I have not been following the arguments, so I don’t know why it is has failed.

    I am curious about one statement in the post. What is the evidence that “fear of lawsuits is playing a major role in many Virginia business operations remaining closed or limited”?

    The problem of unpaid rents and utility bills is a conundrum. I can see both sides. In an ideal world, (1) Congress would resume the supplementary unemployment payments, perhaps at a lower level than previously (2) the Governor would make more federal COVID money available to folks to pay off their back rents and (3) the eviction moratorium would be lifted. But the U.S. Senate does not seem to want to go along.

    As for the utility nonpayments, at least regarding Dominion and based on past history, as a Dominion customer, I don’t expect to ever see that $300 million in excess profits. So, better to use it to help people worse off than me than to let Dominion keep it and benefit its stockholders.

    • Basically it is testimony from advocates that the fear of liability is holding back businesses and non-profits. They are certainly lining up to support the bill.

      Hey, on the Dominion “excess profits” (which I do think are real but not sure how much.) If not used for refunds, they must be used to pay down the cost of all these new investments. Using them that way also saves consumers money over time, even more really. If $300 million in cash is paid toward the wind turbines it is just that, $300 million. That same $300 million that comes from equity (sale of stock) will cost ratepayers something like double the amount over time (annual double digit profit margin added in).

      So the choice is not just refund to all or a few. The other option is to spend it on those massive capital projects in the pipeline. That’s what Big D promised. We all know what their promises are worth. (Still waiting for the absolutely-certain-to-be-built North Anna 3…we prepaid hundreds of millions for nothing there.)

  6. Steve, Do I read the blog correctly that you’re thinking businesses and government need immunity from paying if employees forced to work get COVID and that those employers also need to be protected from forced to work employee demands for health care, etc. if they get COVID? Do you really think businesses must be protected and workers cannot be protected?

    • Who’s forcing who to work?

    • No, that would be a distortion.

      Do you believe that anybody who gets COVID can only have gotten it at work, or any customer who got COVID can only have gotten it in the store or restaurant? Is there nothing the employer can do that provides a good faith defense that they tried their best to keep everybody safe? The regulations being piled onto businesses now are endless, and constantly changing, yet you would still want them sued into penury if anybody got sick. From an illness that is literally EVERYWHERE right now.

      The useful immunity bills I’ve seen require the plaintiff to show the defendant ignored the existing rules or showed gross negligence, and provide the defendant a good faith defense. No problem with that standard. And the plaintiff should have to show that was where they got sick, not make the employer prove a negative.

  7. They’d kick him out of the Thomas Jefferson think tank if he did not!

    😉

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