Policy choices with unemployment

Right now, there are many, many unemployment claims being filed in Wisconsin. But, the problems folks in Wisconsin are having with their claims arise to a great degree from policy choices being made about how those claims should be processed and how the Department decides to enforce federal and state legal requirements.

Last week, the NY Times Upshot examined claims data for all 5o states and concluded that, in general, states have made it harder to get jobless benefits.

The story included three charts indicating in various ways how unemployment eligibility and payments have changed for each state. Here are those charts with Wisconsin marked by a green dot. As evident in these charts, Wisconsin has made it much harder to get unemployment benefits.

Here, we see that in 2007 roughly 50% of Wisconsin’s unemployed received benefits in 2007. Now, in 2019, that percentage has dropped to around 30%. This drop is actually greater than the drop in Florida noted in the article. Indeed, it seems that only North Carolina, the other state noted in the article, had a greater drop.

Here, we see that in the weeks from mid-March to mid-April 2020 in Wisconsin around 13% of the employees have applied for unemployment benefits. But, less than 10% of those applicants ended up receiving unemployment benefits. The change here is not that stark. But, Wisconsin does not fare all that well on this issue when compared to its neighbors Michigan and Minnesota.

Here, we see where Wisconsin has instituted another dramatic change. In 2007, less than 2% of weekly claims were being denied for failing to meet continuing eligibility requirements. In 2018, however, the percentage of claims being denied for this reason was nearly 8%, a four-fold increase.

Indeed, Wisconsin’s efforts on this front exceed that of Florida, a state notorious for creating these obstacles. And, while other states like Mississippi, South Carolina, and others were even more effective than Wisconsin in getting claims denied for these reasons, the shift in Wisconsin is even more extreme when considered in light of Wisconsin’s role in creating the unemployment in the first place.

Note: see this post for how states have used these obstacles to unemployment benefits to suppress growth in wages.

Essentially, Wisconsin and other states have completely turned away from the goal of providing economic security for the unemployed. It does not need to be this way. As evident in these charts, not all states are like Wisconsin, Mississippi, or Florida.

In 2007, unemployment in Wisconsin was once quite similar to Massachusetts. Today, the weekly benefit rate in Massachusetts is around $600 a week, and more than 50% of the unemployed still receive unemployment benefits in that state. Wisconsin took a much different path. The question is what path Wisconsin will take next.

Will Wisconsin continue to be like Mississippi and Florida and North Carolina? Or, will Wisconsin return to the kind of unemployment system the state originally created.