Hiring in a tough labor market, economic uncertainty, and issues related to pandemic recovery were in the spotlight at the National Conference of State Legislatures annual conference last week.
The conference drew hundreds of state lawmakers and staff from all over the country to Colorado, where they heard from experts, participated in panels and refilled the tank for the legislative journey ahead.
For advocacy organizations that operate at the state level, the NCSL conference was a good indicator of what state lawmakers are thinking about right now, as they look ahead to legislative sessions next year.
As a sponsor of the conference, Quorum/Capitol Canary sent a team to Denver and heard firsthand what lawmakers are thinking and what states are facing in the coming months. Here are some of the topics that dominated conversations.
States Have Workforce Issues
Like many other industries, states are having trouble adjusting to a labor market that was radically reshaped by the pandemic. Workforce losses have become a problem.
From December of 2021 to May of 2022, state job openings were the highest they have been in two decades, said Joshua Franzel, an expert in state and local government and managing director of MissionSquare Research Institute. State and local governments have seen the number of people quitting and retiring increase dramatically. This year, 53% of state and local hiring directors reported seeing employees accelerate their retirements, up from 12% in 2009, Franzel said.
Franzel pointed to a survey showing 69% of state HR directors said quit rates were higher this year than last and 60% said retirements were up. Large majorities said that jobs in nursing, engineering, policing, building inspections, corrections and other fields are getting harder to fill.
“We’re seeing more and more localities and state governmental units, either informally or formally, assess what percentage are eligible to retire in the next two years or five years,” Franzel said. “In some cases, it’s 60% 70%.”
States are Showing Budget Surpluses
An NCSL analysis shows that many states are showing a budget surplus this year. Revenues from income taxes, sales taxes and corporate taxes exceeded expectations in many states, so much so that many are considering tax relief for their residents.
“State budgets are in great shape, at least for now,” said Mandy Rafool, director of NCSL’s fiscal affairs program.
But that doesn’t mean there is not a high level of economic uncertainty. Nicholas Sly, assistant vice president and economist at the Federal Reserve Bank of Kansas City, told lawmakers and staff that this is an unusual time for America’s economy. Inflation is running above historic norms, but unemployment is far lower than normal, Sly said. Add in the pandemic recovery, Russia’s invasion of Ukraine, China’s activity in Taiwan, two quarters of negative economic growth, and the federal government’s anti-inflation measures and there is good reason for uncertainty.
However, Sly said there are many reasons that the current climate is different from the financial crisis of 2007, which is the last time America experienced a recession. Many households can better weather the current economic climate; banks are still in a position to lend; and many businesses are flush with cash, he said. “It’s much stronger than before,” Sly said, adding that, “there’s a foundation for an economic recovery.”
Still, with an election coming and Americans feeling the bite of rising prices, one lawmaker asked Sly a question that was no doubt on the minds of many: what do public officials tell their constituents?
“The first thing, and it’s really important, is to say that we hear you,” Sly said. “We understand the household experience out there, and here are the steps we are taking to restore stability.”
SCOTUS May Give States More Work
After the U.S. Supreme Court eliminated the federal right to a legal abortion, effectively giving states jurisdiction over reproductive rights within their borders, legislatures have been moving fast to address abortion and related issues.
Morgan Ratner, a former clerk to Chief Justice John Roberts who serves as special counsel at Sullivan & Cromwell’s Litigation Group and has argued eight cases before the high court, said that is not likely to end soon.
Ratner says there could be cases ahead involving abortion medication, employer health plans that cover abortion and issues relating to the Emergency Medical Treatment and Labor Act, which ensures that people visiting an emergency room receive treatment. “I think … a series of abortion follow-ons is what we’ll likely see,” she said.
There were also cases related to gun rights, free speech, administrative law and other topics decided by the court that could impact state law, she said. And there are more coming. Cases that could appear before the court in the next term involve affirmative action, election law and discrimination.
“This term was a blockbuster and, amazingly, the next term is already shaping up to be a blockbuster as well,” Ratner said.
The Pandemic is Impacting Medicaid
Medicaid, the joint federal and state program that provides health coverage to low-income adults, children, pregnant women, older Americans and people with disabilities, played a big role in the public health response to the pandemic.
States took on what is known as a continuous coverage requirement in return for additional federal money, said Gretchen Hammer, former director of Medicaid in Colorado. “If a person enrolled in Medicaid, they would maintain that coverage until the end of the public health emergency … making sure that if they did have COVID, or had complications from COVID, they would have access to care,” she said.
However, because America’s pandemic response has stretched over years, millions of people have been added to Medicaid roles. “We are all facing a pretty significant challenge in the Medicaid world,” Hammer said. “At the end of the public health emergency, there will be millions of people in every state who require their eligibility to be what we call ‘redetermined.’”
How that takes place, and what happens to those who leave Medicaid without other coverage options, could be a major issue for states when the federal government ends the public health emergency.
“This is a massive undertaking,” Hammer said, “perhaps the largest shift in eligibility since the implementation of the Affordable Care Act.”