Pandemic-induced business disruptions spawned Great Depression-era unemployment, permanent closures of businesses and a new way of engaging in commerce. Economists have said the recovery moving forward will depend on how well the virus can be contained.
The months ahead will be critical for Indiana’s next governor, whether incumbent Republican Eric Holcomb or his Democratic challenger, Dr. Woody Myers. Whoever is elected will grapple with how best to balance managing the coronavirus with mitigating its economic fallout.
IndyStar reached out to both candidates to discuss the issue and other economic matters critical to the state’s future, such as labor and racial disparities.
Holcomb’s campaign declined the interview request and instead provided answers via email. Myers discussed the topics via Zoom. The candidates discussed how they would approach the pandemic in the months ahead and whether government shutdowns and mask mandates have gone far enough or too far.
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The pandemic economy
Early in 2020, the economy was going strong. The U.S. was amid the longest economic expansion in history. In Indiana, the unemployment rate sunk to a 20-year low of 3.1% in January, below the national rate of 3.6%.
By mid-March, everything changed.
Holcomb ordered nonessential Indiana businesses, such as retail stores and restaurants, to close and limited public gatherings to curb the spread of the coronavirus. Indiana’s April unemployment was 17.5%.
Some Hoosiers were critical of Holcomb’s orders, saying they had gone too far.
Holcomb later unveiled a five-stage plan called “Back on Track” to initiate a phased reopening of the economy. Indiana moved into Stage 5 in late September after seeing improvement in the state’s coronavirus numbers.
Holcomb in his email to IndyStar said his administration took the necessary steps to slow the spread of COVID-19 and manage the pandemic’s economic fallout. “Back on Track,” he said, is an adjustable, data-driven approach that balances public health with the economy.
“We’ve struck this balance with such actions as reopening restaurants and retail establishments at limited capacities, our mask mandate, the public education efforts around hand washing and social distancing, things of that nature,” the governor said. “The (falling) positivity (rates) and spread rates show our actions are working.”
He also pointed to other government measures that supported businesses during the pandemic, including the allocation of tens of millions of federal stimulus dollars for businesses and the creation of the Indiana PPE Marketplace to ensure small businesses had personal protection equipment to operate.
Yet if coronavirus cases rise during the winter, as predicted, and the virus becomes harder to control, would Holcomb or Myers roll back the reopening and mandate another shutdown? That depends.
“From day one of this pandemic — actually before day one, because we had a taskforce together before the first positive case in the state — I’ve relied on the physicians, scientists, and epidemiologists to give me the right counsel before we make decisions,” the governor said. “We’ll continue to do that and adjust our Back on Track Plan — as we’ve been doing since we announced the plan — as events and data warrant.”
When asked whether Indiana reopened too soon, Myers resoundingly said yes. Should cases soar in the weeks ahead, he said he would first institute a mask mandate with an enforcement mechanism before taking more intrusive steps such as shutting down nonessential businesses. Myers said the enforcement mechanism could involve a warning or being asked to leave a business.
“Whether that requires the police or not is a separate question,” he said. “The businesses are falling into line on this mask issue far faster than I think many people expected. That will create the norm that we need. Masks in school, masks in businesses and masks in public.”
Grading the Indiana Department of Workforce Development
The abrupt onset of the pandemic’s economic crisis caused unemployment to soar to levels not seen since the Great Depression.
With heightened joblessness and company-imposed wage reductions came a need for greater support from the state. More than 1 million initial unemployment insurance claims have been opened in Indiana since the week ending March 21.
Not all have been approved. Since March 1, the Indiana Department of Workforce Development has paid out roughly $5 billion under the state and federal programs to nearly 670,000 Hoosiers. Of that amount, more than $1.2 billion was in state benefits, draining Indiana’s unemployment trust fund. The state has requested $300 million in federal loans to pay unemployment insurance claims through November.
DWD has received a considerable amount of criticism for its ability to adequately respond to the spike in unemployment insurance claims. Hoosiers have complained about a host of matters, including dropped calls and long wait times at DWD’s call center and their benefit compensation stopping.
Holcomb declined to grade the office’s ability to manage the crisis.
Myers gave the DWD a D minus.
“It certainly has not shown that it’s capable of handling this emergency. It’s certainly shown that its means by which it deals with the public is inadequate,” Myers said. “There should have been an investment made in previous administrations, and including this one, to upgrade their ability to communicate with the public to prepare for an emergency. That’s one of the things that government’s supposed to do is to be ready for emergencies.”
How would he revamp the office?
Myers said start with leadership, though he doesn’t know all of the constraints DWD Commissioner Fred Payne works within.
“I’m a doctor. You don’t do surgery before you’ve done a history, a physical examination and a few lab tests. You have to examine the patient and then decide what operation is required and or what medications are required. That’s how I’d approach DWD,” he said. “I’d do an analysis.”
Holcomb offered a positive assessment.
“I wholeheartedly believe our DWD — and all state agencies really— have done a tremendous job under unprecedented circumstances to adjust on the fly to ever changing rules and results during this pandemic,” he said.
“Have we been perfect? Of course not. But I’m proud of the adjustments DWD made, the amount of staff we onboarded to handle the exponential growth in claims and the constant adjustments we make every day to improve service even as we now are back down to a 6.4% unemployment rate, lower than any state we touch and the national average.”
Stabilizing the labor force
The pandemic is likely to have a lasting impact on the economy. Some jobs are permanently lost.
The crisis has created a labor supply issue as some working U.S. mothers cut back hours or exited the labor force to accommodate children staying at home. The pandemic also has disproportionately affected Black and brown people and low-income families who could not afford child care options.
Stabilizing the labor force is necessary for the health of the economy, economists have said.
Neither Holcomb nor Myers offered specifics on how they would approach that.
The governor, who labeled child care an essential service during the pandemic, said his administration is continuing to look at ways to strengthen the work-life balance for professionals with children.
“Long term, this is exactly why we expanded paternity leave for state government employees, and I pushed to add pregnancy accommodations for expectant mothers throughout the state,” Holcomb said via email.
Myers said child care options in Indiana are inadequate and new options are needed.
“The government — state and local — needs to participate with the private sector to figure out how to create them,” he said.
Holcomb called workforce development the defining issue of the decade.
“We’ve got over 100,000 jobs open right now throughout the state many of which require advanced training and, even during the pandemic, we’re bringing more of these high-skill, high-wage jobs to Indiana,” the governor said. He touted his Next Level Jobs program, which he expanded with the use of CARES Act funding.
The program offers Hoosiers free job training for high-growth, in-demand careers. It also incentivizes businesses to hire, train and retain new employees.
Holcomb said 15% of those taking part in a Workforce Ready Grant, one branch of the program, are Black. The governor said his administration allocated roughly $25 million to help employers upskill and reskill workers and new hires. Of that amount, $3.8 million went to 84 minority-, woman- and veteran-owned businesses.
“We’re constantly looking for areas to increase awareness and access to these transformational programs,” he said. “We follow the data, listen to business leaders, work with our entire K-12-through-higher-education ecosystem, and then share how a pathway can fit each individual’s circumstance.”
The governor said his newly created chief equity, inclusion and opportunity officer would examine whether minority communities are aware of the Next Level Jobs program and their participation level.
Myers disagrees with Holcomb’s assessment, saying the state’s workforce initiatives are not as effective as they need to be. Myers said his conversations with executives revealed that post-high school job training programs are not as utilized as they should be. The drug crisis also contributes as prospective workers fail drug tests, he added.
That requires a cultural change, Myers said.
“For our young people especially realizing how their decisions regarding recreational drugs interfere with their work opportunities and their advancement is vitally important as well,” he said. “It’s as important as the training that you need in order to run the robots that run the factory.”
Myers said he would target Hoosiers having difficulty accessing the state’s job training program. He would offer mentorship programs and expand the state’s 21st Century Scholars program, which provides tuition assistance to income-eligible undergraduate students.
Myers plans to put his efforts into focusing on low-income individuals, Black and Hispanic communities, and those living in urban areas and rural areas.
Addressing racial and economic disparities
2020 has been a year of reckoning. COVID-19 highlighted economic and racial disparities in Indiana and elsewhere.
Indianapolis officials announced in August that 75% of Black households and 65% of Latino households suffered pandemic-related job losses.
Rather than outlining an economic agenda for Indiana’s Black residents and other minority groups, Holcomb said racial inequities are among the many reasons he created the chief equity officer cabinet position. Although currently unfilled, the position will work with every state agency to address racial disparities.
That person would explore ways to connect minorities to jobs, maximize government outreach within minority communities to the Next Level Jobs program and communicate housing programs to Black and Latino Hoosiers.
“We have a number of programs and opportunities through the state to address these issues but, for various reasons that stretch back decades, we’re not doing a good enough job of broadly connecting with the communities those are designed to served,” Holcomb said. “That’s going to change. We will collect more data than ever before on these disparities and be able to truly act directly on those issues in a measured, data-driven way.”
He also noted that his administration has allocated $500,000 in CARES Act dollars to get the word out in ways to support minority-owned businesses and entrepreneurs. His administration also has partnered with Indiana Black Expo Inc. and its statewide affiliates to expand education and community outreach.
Myers said his economic agenda for the Black and Hispanic communities includes improving K-12 education, creating equal opportunities for job trainings and criminal justice reform. He supports pre-K programs and mandatory kindergarten to develop kids and ready them for school, especially in high-risk communities.
“The investment is worth it,” he said. “My job as governor will be to make sure that investment has a big return. All of the experts tell me that’s where you should put your energy and your money.”
Myers said he plans to use the Indiana Economic Development Corp. as the primary source to support Black and Latino businesses struggling because of the pandemic.
He also said one cabinet position should not be responsible for doing that.
“I’m going to have department heads throughout the state government, all of whom assume responsibility for diversity, inclusion and fairness,” he said. “I’m not going to hire anybody that doesn’t understand that that’s a major part of their job.”