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Jobless rate drops, but not because more are working

Arizona jobless rate inches up

The state’s jobless rate shrank by close to 45% last month.

But a good portion of the drop in the seasonally adjusted unemployment rate from 10.7% in July to 5.9% in August has nothing to do with a bunch of Arizonans suddenly finding work. It’s because some gave up.

A lot of them, in fact.

By contrast, the employment levels – the number of folks actually working – went up by just 32,109.

What makes all that significant is that the unemployment rate is a simple question of math.

Surveyors ask people if they’re working and, if not, are they looking. Those two figures combined create the labor force.

Put simply, if the number of people who say they’re looking drops sharply, that changes the whole ratio. And the unemployment rate goes down.

And Doug Walls, director of research administration for the Arizona Office of Economic Opportunity, said the state’s labor force participation in August – the number of people working or looking for work as a percentage of the total adult population – dropped to just 58.5%. That’s the lowest rate on records going back to 1976.

So where did those people go?

“There are a lot of different reasons why an individual might exit the labor force,” he said. That can include not just retiring but loss of a job and waiting for it to return.

“We’re not able to dive into those and break those out at this time,” Walls said, with no current data on people who the federal government classifies as “discouraged workers.”

And Walls said that there have been large fluctuations in the labor force in the past few months.

Other figures from Thursday’s report also suggest that the 5.9% jobless rate is a continued weakness in Arizona’s labor market.

There was a gain of 79,200 jobs between July and August. But 44,600 of those were in state and local education – usually folks not on contract like bus drivers, cafeteria staff and custodians – typical at this time of the year. And another 6,900 of the jobs gained were at private schools, largely postsecondary education institutions, also typical for August.

Factor those out and it puts the month-over-month job growth in the private sector at just 23,500. And it still leaves private sector employment in Arizona at 94,700 less than the same time a year earlier.

 

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Arizona governor gets good, bad marks for virus response

President Donald Trump meets with Arizona Gov. Doug Ducey in the Oval Office of the White House in Washington, Wednesday, Aug. 5, 2020. (AP Photo/Andrew Harnik)
President Donald Trump meets with Arizona Gov. Doug Ducey in the Oval Office of the White House in Washington, Wednesday, Aug. 5, 2020. (AP Photo/Andrew Harnik)

In early August, Arizona Gov. Doug Ducey beamed  in the White House as he basked in praise from President Donald Trump  for his handling of the COVID-19 outbreak. Arizona’s response to the virus, Trump said, was a model for other states.

Just a few weeks earlier, Ducey was being vilified as Arizona hospital beds filled with infected patients and hundreds of people were dying each week. Arizona was the leading virus hot spot in the nation and the Republican governor was getting the blame.

The governor’s management of the coronavirus though the pandemic’s initial low stages to its extreme onslaught and back to lows again holds stark lessons for other states as their leaders oversee reopenings of universities, K-12 schools and businesses into the fall.

Whether Ducey deserves credit or blame for alternately controlling and unleashing the virus is not in doubt — observers say he’s earned both.

Ducey for months has tried to juggle conflicting virus priorities of politics and public safety while attempting to minimize the economic harm from closing businesses and to rein in a unique, fast-spreading and sometimes lethal virus in a state with a strong libertarian fabric.

Wearing masks, staying home and keeping safe social distances, as in some other places, became a sticky conflict point among many headstrong Arizona residents.

Parlor games like darts and pool are prohibited under social distancing rules during the pandemic. (Photo by Klara Kulikova/Creative Commons)
Parlor games like darts and pool are prohibited under social distancing rules during the pandemic. (Photo by Klara Kulikova/Creative Commons)

Like many governors, Ducey took the early prevention step of shutting down much of the state’s economy and invoking a stay-home order in March.

But he reopened the economy in May with little or no enforcement of new rules like limits on bar capacity. Bars and nightclubs in Tucson and metro Phoenix were packed the weekend after the lockdown was lifted.

A surge of new infections hit the state just 10 days later and Arizona hospitals were packed with the sick within weeks, nearing their capacity to treat patients.

On June 1, Arizona had confirmed more than 20,000 virus cases and had 917 deaths. They continued rising over the summer, with cases topping 200,000 in late August, and deaths surpassing 5,000.

Some believe Ducey reopened so early because Trump made a visit to Phoenix in early May to visit a plant making protective masks. Ducey’s decision to quickly remove restrictions instead of using a measured approach has also come under criticism.

Regina Romero
Regina Romero

“It wasn’t phased in – it was just ‘boom open it all up’ – timed to when Trump came to Arizona,” said Regina Romero, the Democratic mayor of Tucson. “And I felt very strongly that it was too soon, that it was timed for political purposes and not based on science and public health.”

Kristin Urquiza made local and national headlines when she blamed Ducey for the death of her 65-year-old father, Mark Anthony Urquiza of Phoenix, who died of the virus June 30. She said her father was serious about taking virus prevention steps until Arizona’s reopening, when he resumed his normal life and headed to a karaoke bar with friends only to get infected.

“His life was robbed. I believe that terrible leadership and flawed policies put my father’s life in the balance,” Urquiza said in July ahead of her appearance at the Democratic National Convention, where she criticized Trump.

Ducey has brushed off the criticism, repeatedly saying that his decisions are informed by science and data from health experts.

Mark Anthony Urquiza
Mark Anthony Urquiza

In late May, Ducey pushed back on reporter questions about videos from old town Scottsdale on Memorial Day that showed crowds of hundreds of people partying in the nightclub district. He repeatedly avoided criticizing businesses and people ignoring social distancing guidance and stressed that most people were following the rules.

At that point, the state had fewer than 1,000 new virus cases daily.

“Thank you to the people of Arizona for being responsible,” Ducey said. “We wouldn’t have these numbers if people weren’t being responsible.”

But Ducey simultaneously ignored advice from health officials outside his administration. Just seven days after his stay-home order ended on May 15, the president of the Arizona Medical Association physicians group sent Ducey a letter urging him to crack down on bars and nightclubs that weren’t enforcing social distancing guidelines.

“Now, there is clear proof of overcrowded bars, people elbow to elbow, increasing significant risk of potential spread and a resurgence of the virus,” Dr. Ross Goldberg wrote in a May 22 letter obtained from Ducey’s office by The Associated Press under a public records request.

Goldberg in his letter urged Ducey to take enforcement action, but it did not happen.

Case counts rose exponentially and by mid-June the state was a national virus hotspot, logging more than 3,000 cases a day and on its way to a June 29 peak of more than 5,400 new daily cases.

Bob England
Bob England

“The reopening that we saw in May came much faster and all together than I think any of the public health folks would have recommended,” said Dr. Bob England, the former director of the Pima and Maricopa County health departments.

By June 17, Ducey’s hand was forced into making politically unpalatable decisions.

Ducey early on had banned local governments from taking steps beyond what the state was ordering, but reversed course by allowing cities and counties to impose mask requirements. At the end of June, he re-ordered bars, nightclubs, movie theaters and water parks to close.

By late July, and a month later Arizona was no longer a virus hotspot. Bars and nightclubs that serve food and other venues in much of the state were allowed to reopen with limited capacity.

But this time, bars that violated limits on capacity and bans on dancing or violations of mask orders were subjected to a state crackdown: Several were closed by state health authorities and their liquor licenses were suspended indefinitely.

Dr. Eric Toner, a senior scholar at the John Hopkins Center for Health Security in Baltimore who has been setting health care preparedness policy for pandemics for decades, gives Ducey credit for acting this time to prevent big bar scenes.

“You have to be actively looking for non-adherence to the guidelines, and you have to be vigorous in enforcement,” he said.

But Toner said Ducey deserves criticism for failure to act earlier against packed bars.

“I think that’s probably the biggest factor in why Arizona’s cases got so big,” Toner said. “It was a delayed response, a slow response by the state government to the spike in cases.”

Toner warned that Arizona’s responses can serve as lessons for other states.

“Governments need to be very responsive and not wait for things to get bad – because once they get bad then it’s going to take weeks or months to recover,” he said.

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Judge says restaurants’ to go liquor sales illegal

liquor

A little-noticed provision in a court ruling this week on bars and alcohol sales could end up curtailing business at some restaurants and force them to close.

In her decision Tuesday, Maricopa County Superior Court Judge Pamela Gates upheld the actions by Gov. Doug Ducey in keeping bars closed while allowing restaurants to remain open and continue to serve alcohol. She said that was within his authority to protect public health.

But Gates did not look so kindly on a decision by the governor to tell his own Department of Liquor Licenses and Control to look the other way when restaurants decided to sell beer, wine and liquor out the front door, a move that was designed to help the financially struggling businesses.

That directive, the judge said, hardly fits within the actions Ducey is permitted to take in emergencies. And she said Ducey’s decision to suspend enforcement of a liquor law “impermissibly stretches” the governor’s power.

What remains to be seen is whether the governor will rescind that part of his order.

“We are reviewing the ruling,” said Ducey press aide Patrick Ptak.

Pamela Gates
Pamela Gates

But any move in that direction will get opposition from the Arizona Restaurant Association.

In March, Ducey used the emergency powers he had to close all bars and restaurants to patrons. But he agreed to pleas from the restaurant owners to allow them to continue to sell beer, wine and alcoholic beverages to customers who also were getting food to go.

Only thing is, such off-premises sales are illegal under state law. So Ducey instructed agents for the liquor department to simply turn a blind eye to the violations.

Dan Bogert, chief operating officer of the restaurant group, said that move provided a “key lifeline” to restaurants.

“They are helping to keep those places in business and employees employed,” he said.

Since that time, Ducey has loosened the restrictions — at least on restaurants. They can provide dine-in services, but only at 50% of capacity. Bars remain closed unless they agree to operate under additional restrictions.

But the directive to liquor agents to ignore the violations by restaurants of law banning off-premises sales remains.

Ptak said the directive was — and is — justified, calling it one of the “tough decisions” that the governor has had to make.

“This has been a way for many establishments to maintain their operations while continuing to prioritize public health,” he said.

Gates, in her ruling, gave the governor a lot of leeway in deciding the steps he needed to take using his emergency powers to protect public health. That’s why she left undisturbed his orders shutting bars.

“A clear purpose of (the law) is to grant to the governor emergency powers and the authority to establish an agency plan for and coordinate the state’s response to natural or manmade disasters and to alleviate extreme peril to persons or property,” she wrote.

Doug Ducey
Doug Ducey

But telling liquor agents to ignore the law, Gates said, doesn’t seem to fit.

“The court finds the executive order banning enforcement of a Series 12 licensee’s violation of off-premises sales of spirituous liquors impermissibly stretches the governor’s power” he is granted under state laws, the judge said. “Said another way, the court fails to find that the enforcement ban against Series 12 licenses in (the executive order) effectuates the purposes of (the laws on emergency powers).”

Bogert said that restaurants still need the state to keep ignoring the violations of selling alcohol to go.. He said many remain in precarious financial condition.

He said a survey done in July, after in-house dining was again allowed, found that 40% of restaurants said they would be forced to close, permanently, within 90 days.

“And what I’m saying is that number would be higher without the to-go alcohol privilege,” Bogert said.

The only reason any of this came to the attention of Gates is the lawsuit filed by more than 100 bar owners challenging the authority of the governor to shut down their operations, especially while allowing the serving of alcohol to patrons dining at restaurants.

Ilan Wurman
Ilan Wurman

Attorney Ilan Wurman pointed out the only distinction is strictly legal.

Restaurants are issued a Series 12 license by the Department of Liquor Licenses and Control. They must generate at least 40% of their revenues from sales of items other than alcoholic beverage.

Bars, licensed as Series 6 for all alcohol sales or Series 7 for bar and wine sales only, have no such restriction. That is part of the reason it costs so much more to acquire a state license to operate a bar, coupled with the fact that the state issues only a limited number of bar licenses in each county.

And there’s something else: Bars — and only bars — can sell alcoholic beverages to go. Wurman said the governor’s executive orders only added insult to injury, forcing the bars to close while at the same time giving the restaurants they normally compete with one key edge they had.

More to the point, Wurman said there’s nothing in the governor’s executive powers that entitle him to simply suspend enforcement of the ban on off-premises sales from restaurants.

Legally speaking, nothing in Gates’ Tuesday ruling requires state liquor authorities to immediately go out and start enforcing the law. That remains for a future hearing.

But she has now put the governor on notice that she is likely to issue a final order saying he has been violating the law and ordering him to stop if he hasn’t done so already.

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