Unemployment benefit payments continue to decline

The Advisory Council met yesterday, September 17th, and much information was put forward, including current financial reports for the state’s unemployment system.

As noted previously, unemployment taxes are slated to decline. Next year, 2016, will see a reduced tax schedule for employers, as the reserve fund had $735.4 million at the end of July 2015 and should meet the requirements for a reduced tax schedule next year.

The most stunning news, however, is that benefit payments continue to decline markedly. The Department’s Financial Outlook Report released in April 2015 reported that “UI benefit payments in 2014 were the lowest since 2000.” See Report at 21. Now in September 2015, the Department reports that: “Benefit payments charged to the reserve Fund were $371.2 million through July compared to $445.4 million last year.” See UI Reserve Fund Highlights at 1. This level of benefit payments is “$90 million below what is expected” and “has not been seen in Wisconsin since the 1990s,” the treasurer for the state’s unemployment funds told council members. In support of this observation, the financial report included this graph on the last page.

ER taxes relative to total benefits paid

This chart shows that all benefits paid to claimants are taking a deep dive since the recession. Part of the decline is the end in 2010 of federal extended unemployment compensation benefits. But, if the end of those federal benefits told the whole story, then the decline in benefits should level off and possibly increase as employers go through cycles of hiring and layoffs. But, there has been no leveling off in Wisconsin. Rather, benefit payments continue falling off of a cliff. Keep in mind as well that these dollars are not adjusted for inflation or cost of living increases. So, this drop in benefit payments is even more devastating to claimants trying to pay rent and buy groceries than pictured here.

For why this decline in payments is occurring, the main reasons appear to be the Department’s efforts at charging concealment against claimants for their mistakes and the new substantial fault disqualification standard. See Why employer UI taxes are down: concealment and substantial fault. The Department is essentially making it harder for those losing their jobs to qualify for unemployment benefits. And, those that do qualify are increasingly facing concealment charges six to nine months after their claims have ended, forcing them to repay all benefits previously received, pay additional penalties for their mistakes mislabeled as concealment, and then forfeit years of future unemployment benefits as an additional penalty. In short, unemployment benefits do not really exist anymore for those who lose their jobs, and this outcome is by design.

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Missouri cuts its unemployment eligibility

Statement from Christine Owens, executive director of the National Employment Law Project, on the Missouri legislature’s actions to prohibit local minimum wage increases and further slash unemployment insurance in today’s veto session.

“Amidst a continuing crisis of stagnant wages, with real wages falling most steeply for the lowest-paid workers, it was appalling today to see a super-majority of legislators in Missouri—all of them Republicans—vote to override Governor Jay Nixon’s veto of a bill that strips local governments of the right to enact higher minimum wages and other economic benefits for their citizens.

“By votes of 114-46 and 23-9, the Missouri House and Senate both achieved the dubious distinction of corralling two-thirds majorities to force enactment of HB 722—the so-called plastic-bag-ban preemption bill—which was rewritten to prohibit local wage and benefit ordinances as well.  In doing so, they weakened local democracy, imposing their own lesser judgment on local communities that were fully within their right to seek improvement of wages and living standards.

“Federal and state inaction on raising the minimum wage prompted the cities of St. Louis and Kansas City, Missouri to enact higher local minimum wage ordinances this summer—to $11 by 2018 and $13 by 2020 respectively.  The fact that they did so by August 28 should protect those ordinances from the direct effect of HB 722’s enactment, even as the same business lobbies that pushed through the veto override attempt to block or roll back those ordinances through court challenges and other legal maneuvers.  But other cities in Missouri will now have no authority to improve the wages of their lowest-paid citizens, thanks to this veto override.

“It is deeply disturbing that a super-majority of Missouri’s legislators think that keeping wages down for the lowest-paid workers, and suppressing local democracy, should be among their highest priorities.  It is simply shameful.

“But it is not surprising, given the devotion these same legislators have displayed to the cause of slashing jobless aid for the state’s unemployed workers.  In an unprecedented move, the state senate also voted to override the governor’s veto of HB 150 — a bill that institutes a sliding scale for the number of weeks of unemployment benefits. The bill cuts the maximum weeks of jobless aid to 13 when the state’s unemployment rate is less than 6 percent, as it has been for the last 12 months.

“This move will place Missouri second to only North Carolina, at 12, for fewest weeks of unemployment benefits in the nation.  The legislature had already cut maximum weeks from 26 to 20 back in 2011.  The backers of that cut argued that federal unemployment benefit extensions were available to make up the difference — so, they asserted, no big deal.  Incredibly, this year the backers of these even more draconian cuts continued to assert that jobless workers would have federal extensions available, when, in fact, no federal benefits have been available since the end of 2013.

“For procedural reasons, the legislature’s legal authority to override the governor’s veto of HB 150 in today’s veto session is in serious doubt.  Senate Republican leaders chose to pursue the override today anyway, so their action will likely be challenged in court and possibly be nullified.  That would be the just result.  Losing a job is tough enough for unemployed workers and their families.  Let’s put a stop to this needless piling-on by heartless politicians.”