African-Americans are again being targeted for criminal prosecution

There is a new governor, a new Attorney General, a new secretary at the Department of Workforce Development, and a new division administrator for unemployment. But, African-Americans in Milwaukee continue to be targeted for criminal prosecutions for alleged unemployment fraud. Indeed, even as the number of cases have declined, the percentage against African-Americans have increased.

I previously posted about these prosecutions in October 2016 and November 2018.

Here are the 2015 and 2016 cases (click on the table to see details):

First cases

And, here are the 2017 and 2018 cases (click on the table to see details):

Westman and Rusch cases by race and gender

As noted in my previous posts, African-Americans made up 70-76% of all criminal cases, even though they made up only 7% of Wisconsin’s state population and only around 27% of the population in Milwaukee County. The percentage of claimants in the state as a whole who are African-American is around 11-12% of all claimants.

Several legislators have asked for information about these cases and an explanation for why African-Americans are being targeted for these prosecutions See, for example, this letter. Numerous groups have also raised concerns. Formal, public responses to these and other queries have been ignored, however.

The new head of criminal cases for the Department of Justice did present to the Unemployment Insurance Advisory Council at the council’s April 18th meeting in 2019. At this meeting, Deputy AG Eric Wilson explained that criminal prosecutions would only be filed where the alleged fraud was sizable, where civil remedies were inadequate, and where there was a history of previous fraud. In addition, cases would no longer only be filed in Dane County (forcing residents from Milwaukee County and other parts of the state to travel to Madison for every event in their case) but would be filed in the county where the defendant resides. See meeting minutes at 3-5.

Starting in the summer of 2019, the Department of Workforce Development under Caleb Frostman and Mark Reihl and the Dep’t of Justice under Josh Kaul started a new round of these prosecutions being handled by Assistant AG Dan Lennington (click on the table to see details):

2019 cases

While the number of prosections is down from previous years (except for 2016, when there were also 11 prosecutions), the percentage of African-Americans being prosecuted is still around 73%. Anglos make up only 18% of these cases, and persons of color combined constitute 82% of all cases (9 out of 11).

Furthermore, the one defendant outside of Milwaukee County (an African-American women in Manitowac) is still being forced to travel to Dane County for her case. So, the declaration in April of 2019 about no longer requiring defendants to travel to Madison for the convenience of prosecutors only applies to the Milwaukee County cases.

And, it gets worse. One 2019 case was almost immediately dismissed by the prosecutor after being filed. In such circumstances, dismissal is usually because the defendant is not competent to stand trial or is deceased (one of the 2018 cases was dismissed soon after filing because the defendant was declared not competent to stand trial). As the Department of Workforce Development charges unemployment concealment/fraud for accidental or unintentional claim-filing mistakes, many, many folks with learning disabilities have been so charged. So, this near immediate dismissal indicates that the Department of Justice is not really applying any new or tougher criteria in deciding which cases to prosecute.

Indeed, the plea deal set for May 29th in one case (delayed by several months to allow for restitution to be complete) indicates that these cases are still largely being pursued as a means of debt collection despite the Deputy AG’s contrary statements back in April 2019 to the Advisory Council.

Finally, there is still no explanation for why African-Americans are being targeted for these cases wholly out of proportion to their presence in the population or even the unemployed. This racial bias has been going on for four+ years now without explanation.

If Lando was in Wisconsin, he would know what is going on here.

Lando and Vader

FoxConn: Less is less

As part of its deal with Wisconsin for state monies being handed over, FoxConn’s job numbers are put forward every December (but will not be publicly revealed until March or April of 2020).

Last year, FoxConn was short the 260 jobs it needed for 2018 when it only hired 156 employees. For 2019, FoxConn needs 520 jobs, and the company is claiming it has already met that goal.

Note: If FoxConn manages to have 520 employees in 2019, it also gets the 2018 funds it originally missed out on. Good deal for FoxConn, it seems.

But, media reports by Jake, Murphy’s Law, the verge in October, and the verge in December indicate that FoxConn is doing little more than moving shells on a table: there appears to be nothing actually going on other than some relatively small construction of warehouse-type buildings even while the company claims that everything is fine.

Indeed, the verge’s December review scuttles any possible thought that FoxConn is doing anything considered to be manufacturing at all. All the buildings FoxConn has bought are still empty, and plans that originally should be nearing completion are delayed again and again (the latest is that LCD manufacturing of any kind will not start until 2022).

As a neighbor of mine remarks, FoxConn is a complete mystery. Nothing the company is actually doing seems to make any sense whatsoever from the perspective of trying to be a viable project of some (or any) kind.

As Jake noted on January 1st of this year, even Mt. Pleasant, which still formally embraces FoxConn, is holding off on transferring to FoxConn more of the land that the village previously bought from homeowners for the project. Given FoxConn’s lack of activity, there are questions over whether FoxConn will ever use all of this land. As Jake observes, Mt. Pleasant is facing an additional $112 million of debt in 2020, and so it is facing some serious debt problems:

Take a look at that $86.2 million in debt principal and $9.0 million in interest. Basically Mount Pleasant has to pay off one debt payment by borrowing more money, and they also plan to keep adding $48 million in sewer and other water work, along with other expenses. So $8.4 million in taxes from Foxconn compared to $143 million in expenses that are earmarked to their specific TID district? And a lot more in new debt expenses for the future? Doesn’t seem like a good deal to me.

Even with the extra borrowing, they’re still bleeding the Foxconn district’s balance down from $103.3 million to less than $72 million, which means that if more money and tax base isn’t returning to the Foxconn district in the next few years (and that seems increasingly unlikely), there’s even more debt and more borrowing that’ll have to happen.

Or…the Village will go bankrupt because it can’t (or won’t) keep going further into debt to keep pumping false hope into this white elephant. At that point, state taxpayers would likely be asked to bail out Mount Pleasant, based on this provision that is part of the Fox-con package approved by the GOP Legislature in 2017 and signed by then-Governor Walker.

Given that FoxConn has quietly (see the verge’s December reporting) transferred control of its Wisconsin operations to a subsidiary called Foxconn Industrial Internet (Fii) that is NOT part of the original FoxConn deal, it seems that FoxConn is preparing to walk away and leave Wisconsin suing a shell company that has few to any assets in Wisconsin for all of the broken promises.

I have a bad feeling about this.

Update (10 Jan. 2020): Corrected some typos and re-wrote sections of the paragraph on Mr. Pleasant’s debt problems.

Economic indicators at the end of 2019

As usual, I am piggy-backing on the good work Jake is doing.

The economy of late

Over the past several weeks, Jake has been posting extensively about the economic reports being released.

Gold standard job numbers

Reports on these numbers are a daily occurrence of late. As of Friday, Dec. 6th, the Department is touting Wisconsin as a national leader in job growth.

Yes, Jake notes, wages are up, but there are some holes to this news that means no one should be popping champagne corks just yet. Jake observes that these job numbers actually under-report the growth that was being reported in the monthly jobs reports. The recent rise in unemployment during the latter half of 2019, in addition, could either indicate a hotter, more competitive job market or a job market that is beginning to cool down.

Jake also points out some of the key takeaways from the Wisconsin’s Shifting Job Market report from the Wisconsin Policy Forum. This report provides an examination of the job growth (or lack of growth) in Wisconsin over a ten-year period, from 2008 to 2018. As Jake explains:

The Policy Forum goes on to note that the Madison area has done exceptionally well in this 10-year time period for overall job growth, and in particular in these high-paying, educated/skilled positions.

For example, the Madison metro area has experienced strong job growth in general since 2008, with employment growing by over 54,000 overall (16%) and in 17 of the 22 occupational groups. Perhaps most strikingly, employment in highly coveted computer and mathematical occupations—which include software and web developers and computer programmers—has led the way, growing faster than in any other group.

* * *

[Manufacturing jobs, on the other hand, have been stagnant or in decline, particularly in the Milwaukee area.] And that trend has not gotten any better in 2019, as the Bureau of Labor Statistics says that manufacturing employment in the Milwaukee metro area is at its lowest level in more than 8 years, with a decline of 2,000 manufacturing jobs over the last 12 months.

That being said, the Milwaukee metro as a whole has rebounded some in 2019, with health care being a huge reasons for its job growth. As have the 2 next largest metropolitan areas in the state, for that matter. While these numbers aren’t adjusted for seasonality (and therefore require a year-over-year comparison), the Madison, Milwaukee and Green Bay areas have done better for adding jobs than the rest of the state.

[One year] Job growth Oct 2018-Oct 2019
Milwaukee metro +11,800 (+1.3%)
Madison metro +4,700 (+1.2%)
Green Bay metro +2,400 (+1.3%)

The down side is that while the remainder of the state outside of those 3 metro areas accounts for just over 1/2 of the state’s employees, it’s actually lost 5,100 jobs (-0.3%) while the Bigger 3 have grown. And many of those [remaining] areas have also been stagnating in population growth with lower educational levels.

The full jobs data for the year from June 2018 to June 2019 also has some revealing information. According to Jake:

Remarkably, [Wisconsin’s] 0.40% rate of [job] growth and 39th-place rankng in the US put Wisconsin 3rd out of 7 Midwest states for private sector job growth, with only Minnesota (+0.61%) and Indiana (+0.70%) doing better than us. So unlike much of the 2010s, we’re not trailing much of our region, but our region is badly below the US rate of growth of 1.25%. Which sounds a whole lot like the 2000s before the Great Recession, which wasn’t good for the Midwest even before the economy caved in.

If you go into Wisconsin’s figures by county, this stat jumps out at you.

Private sector job change, June 2018- June 2019
Dane County +5,033
Rest of State +4,987

Total job change, June 2018 – June 2019
Dane County +6,595
Rest of State +2,745

That’s right, Dane County added more than half the private sector jobs in Wisconsin over that 12-month period, and over 70% of [total] jobs. And literally 1/2 of the 72 counties in Wisconsin LOST jobs between June 2018 and June 2019. Oh, but we’re the crazy hippie moonbats in Madison while the outstate GOPs are the ones in touch with how to grow business in 2019. Riiiight.

FoxConn

Jake has the latest on a Libertarian-leaning think tank pointing out that FoxConn truly is turning into a shadow theater of the absurd:

  • The subsidies granted to FoxConn will depress economic activity in the state for a decade or more.
  • The state is saddled with economic waste because of Wisconsin’s commitments to FoxConn that cannot now go to actual businesses that could use that money productively.
  • A recent Fox-Conn announcement about developing its Green Bay facility contained just a fraction of what was originally announced for that facility (seems to be a pattern with FoxConn) and has been met with a ‘believe it when we see it response.’

Update (10 Jan. 2019): Changed spelling of Fox-Conn to FoxConn.

Unemployment hearing offices in Wisconsin are closing

The Department of Workforce Development has yet to make any formal announcements, but three of four unemployment hearing offices in the state are moving or closing.

As of November 11th, the Madison hearing office has already re-located from the Wisconsin Public Broadcasting building just off of the Beltline to the downtown DWD headquarters in GEF-1.

As a result, no more in-person hearings are being scheduled in Madison, as there currently is no ability or procedure in place for having unemployment, in-person hearings at GEF-1. Neither can parties in Madison unemployment hearings review their case files prior to their hearings and examine documents available to the administrative law judge but kept from the parties (like adjudicator’s preliminary claimant reports).

Staff have been told that in-person hearings may eventually return to Madison in several months. That seems like wishful thinking, however. There simply is no ability or hearing room space in GEF-1 to run the hundreds if not thousand-plus hearings that normally occur.

In 2018, 16,691 unemployment appeal tribunal decisions were issued. If Madison issued a quarter of these, that is 4,173 appeal tribunal decisions for Madison (a conservative estimate, as Madison is probably responsible for at least two-fifths of all decisions in the state). If only 10% of these decisions are done via in-person hearings (an extremely small number, and one likely to be higher given how job growth in the state has been centered on Dane County), that is 417 hearings for which rooms in GEF-1 will be needed (or around eight hearings a week).

And, this number is just for employee benefit decisions. In 2018, unemployment tax decisions involving employers issued by administrative law judges numbered 223, and at least half of these were probably decided in Madison. So, add at least another 100 cases to the Madison docket that now need to be scheduled at GEF-1.

For comparison, in 2018 there were 219 equal rights decisions by administrative law judges. These cases are almost all heard in either Madison (in GEF-1) or Milwaukee. I understand from the equal rights division that scheduling of hearings at GEF-1 in Madison, where the Madison cases are heard, is tight. So, if less than 219 cases are causing scheduling problems at present at GEF-1, the addition of more than 500 cases to that schedule is simply impossible.

In other words, Madison will only be doing phone hearings for unemployment issues for the foreseeable future. If that should change, expect discrimination hearings to be delayed by months or years (as unemployment hearings need to occur within so many days under federal guidelines and so will have scheduling precedence).

But, the re-location of Madison is only part of the news involving hearing offices in Wisconsin. The even bigger news is that BOTH hearing offices north of Madison — Appleton/Fox Valley and Eau Claire — are being closed permanently. Sometime during the first quarter of 2020, these offices will be shut down. Staff who do not on their own initiative and resources relocate to Madison will be laid off.

The Department has yet to disclose this last piece of news publicly. Understandably, the folks north of Madison are not happy with this news. While phone hearings are common in these offices given the vast territory covered by the offices, many employers and a few claimants took advantage of the opportunity to review case files and attend their hearings in-person even if the other side still testified by phone.

Now, the option to attend their hearings in-person is completely foreclosed to everyone outside of the City of Milwaukee.

And, the reason cited for these drastic changes: declining funds for covering the administrative costs for managing the unemployment system in light of declining claims. Yes, claims have been on the decline for some time. But, the number of hearings has not declined in similar fashion, as the issues for which hearings are needed have increased even as claims have declined.

NOTE: While there were 16,691 unemployment benefit decisions by appeal tribunals in 2018, in 2016 these cases numbered 18,532. In 2014, these cases numbered 21,354. So, the number of decisions have obviously declined. Benefit claims, on the other hand, have plummeted to levels not seen since the 1990s, when the working population in Wisconsin was around a million less than it is now. Back then, Wisconsin still managed to fund more than two hearing offices.

NOTE: While the Department is claiming it is short on funds, as of October 2019, it had $13,122,000 available in its program integrity fund (and after pulling nearly $2.5 million from this fund that month). I know of no restrictions on how program integrity funds can be spent.

Closing of the offices north of Madison and the relocation of the Madison hearing office to GEF-1 for phone-only hearings is a tough pill to swallow for Wisconsinites. Rather than making the unemployment system easier to use, these steps only increase the complexity of the hearing process and make it nearly impossible simply to talk to someone directly about what happened with an unemployment claim.

NOTE: Because phone hearings take considerable planning and are difficult to manage, everyone should review the helpful advice about phone hearings in the Workers’ Guide to Unemployment Law.

Taxes and spending

Jake has a look at the latest WisPolicy Forum report on taxing and spending in the mid-west.

As Jake observes from the report, for the twenty-year period from 1997 to 2017, Wisconsin has led the mid-west in declining tax revenues, a commensurate decline in education spending, and a comparative increase in spending on Medicaid, corrections, and highways. These changes, Jake explains, are tied directly to the policy choices of recent years.

For example, a reason Medicaid spending is higher in Wisconsin because we refuse to take the expanded Medicaid in the Affordable Care Act, which would push those expenses onto the Feds instead of us (on a related note, a Pew report earlier this year placed Wisconsin 45th in the country for federal aid).

On the Corrections side, this is an obvious effect of the “lock em up” mentality of WisGOPs that has ended up with the state spending more on Corrections than the UW System. The “6th in the US” highway spending number can be connected back to a huge increase in local wheel taxes to fix roads that Scott Walker and the WisGOP Legislature refused to pay for.

Two things should be added to this post and the WisPolicy Forum’s tax report, however. First, the report is only dealing with changes in averages. So, the big shift in Wisconsin in the tax burden away from the wealthy and onto the shoulders of the middle-class is ignored. And, the over-reliance on property taxes in Wisconsin for funding local government and schools only makes this discrepancy worst, as property taxes based on a flat percentage are inherently regressive.

Second, several taxes are left out of this analysis completely, including unemployment taxes that employers pay on the first $14,000 of annual income paid to each employee. The 2018 Tax Measures Report has all of this tax information. Compared to the other fifty states, Wisconsin’s unemployment taxes are below average:

Tax amounts per covered employee in 2018

2018 Tax Measures Report at 64. As seen here, in 2018 Wisconsin’s average unemployment tax burden for employers was $255. For comparison, Minnesota’s was $340, Michigan’s was $352, and Iowa’s was $318.

Other measures likewise indicate that the unemployment tax burden on employers is exceptionally low in Wisconsin among mid-western states:

Average employer contribution in 2018 for every $100 in wages paid to an employee
Wis. 0.54
Minn. 0.56
Mich. 0.64
Iowa 0.69

For every dollar of tax paid in 2018, the amount going to
Benefits owed / Trust fund surplus
Wis. 0.75 / 0.25
Minn. 0.94 / 0.06
Mich. 0.63 / 0.37
Iowa 1.08 / -0.08

2018 Tax Measures Report at 62, 34, 33, and 26, respectively.

So, Wisconsin has the lowest unemployment tax burden of these four states, and 25 cents of every tax dollar being paid is going into the trust fund (only Michigan is saving more monies than Wisconsin for its trust fund).

Compared to these other states, then, employers in Wisconsin have little to complain about relative to employers in other mid-western states. And, this now very light tax burden in Wisconsin is very much the result of state policies that have made it difficult to impossible for employees to qualify for unemployment benefits or which make it difficult for employees to even files a successful claim.

The Wisconsin October 2019 jobs report is not good

The October 2019 jobs report has almost no information about the monthly jobs picture and mostly discusses labor force participation rates:

The Department of Workforce Development (DWD) today released the U.S. Bureau of Labor Statistics (BLS) preliminary employment estimates for the month of October. The data shows that Wisconsin added 17,200 private-sector and 16,500 total non-farm jobs from October 2018 to October 2019. Wisconsin’s labor force participation rate in October was 67.1 percent, while the state’s unemployment rate in October was 3.3 percent. The national unemployment rate for October 2019 was 3.6 percent.

• Place of Residence Data: Wisconsin’s labor force participation rate in October was 67.1 percent in October, 3.8 percent higher than the national rate of 63.3 percent. Wisconsin’s unemployment rate in October was 3.3 percent, 0.3 percent lower than the national rate of 3.6 percent.

• Place of Work Data: Wisconsin added 17,200 private-sector and 16,500 total non-farm jobs from October 2018 to October 2019. From September 2019 to October 2019 Wisconsin’s private-sector and total non-farm jobs declined by 1,100 and 1,200 respectively.

Luckily, Jake looks at the actual data, and there are a lot of negative numbers:

Wisconsin jobs change
Oct 2019
-1,200 total jobs, -1,100 private sector, -1,300 manufacturing

Sept 2019 revision
-1,200 total jobs, -700 private sector
-700 manufacturing

Revised Sept totals
+600 all jobs, +100 private sector, -2,900 manufacturing

Oct 2018 — Oct 2019
+16,500 total jobs, +17,200 private sector
-7,700 manufacturing

Jake further observes that Wisconsin now has “only 100 more manufacturing jobs in Wisconsin than we had 2 years ago” and that “the number of ’employed’ Wisconsinites has declined by more than 30,000 since peaking in early 2018, and is now at its lowest level in since Trump took office in January 2017.”

Wisconsin has some serious jobs troubles and needs some advice from Yoda.

Yoda