Advisory Council meeting in August 2021

At the August 17th Advisory Council meeting, there was action on some of the Department proposals.

After coming out of caucus, council members agreed to support Department proposals D21-01 through D21-08, D21-11 (work share modifications), and D21-15 (eliminating unemployment taxes for summer camps and excluding camp counselors who are not students from covered employment).

Full details on D21-11 and D21-15 are available in this previous post.

The support for D21-01 through D21-08 is disappointing, as basic questions remain unanswered about why these proposed changes are needed, including:

• Why are penalties against employers increasing so much in the last four years that the separate fund proposed in D21-01 is now needed?
• Why is the Department in D21-06 re-writing unemployment law to its benefit when it loses key court cases?
• Why the Department in D21-06 is allowing administrative law judges to ignore Commission precedent and unemployment law and regulations without any consequences?
• How will an option to be a fiscal agent in D21-08 actually fix the confusing mess of excluded employment and unemployment taxes that currently exists when a family member cares for another?

In financial news, the unemployment trust fund has $977.5 million as of August 7th.

The Department introduced to council members SB485/AB487, a bill that would exclude uber and lyft drivers from regular unemployment benefits. Strangely, the Department has yet to introduce AB394, a bill that would revamp the over-payment waiver standard to add an equity and good conscience standard to whether an over-payment is affordable or not.

Indeed, there is some interesting data and issues with this latter bill. The Department’s fiscal estimate for AB394 indicates that in the 2018 and 2019 calendar years combined there were only around 350 no-fault over-payments (lack of fault is a precondition for an equity and good conscience waiver). Given that there were 41,197 non-fraud over-payment decisions in 2019 and 44,634 non-fraud over-payment decisions in 2018 (for a combined total of 85,831 non-fraud over-payment decisions, see the 2020 Fraud Report at 9), this number of around 350 is just unbelievable. Less than 0.5% (1 out of every 200 who allegedly made a non-fraudulent mistake) of these cases are without claimant fault?

This conclusion makes even less sense when comparing the number of non-fraud decisions in these years relative to the number of initial claims filed and the number of claimants actually paid unemployment benefits in these years.

                                   2018      2019
Non-fraud cases/Initial Claims    15.95%    14.35%
Non-fraud cases/Claimants paid    34.15%    31.72%

That is, in 2018 and 2019 non-fraud mistakes are around one out of every seven initial claims and one out of every three paid claims. If non-fraudulent mistakes are truly this high (and in years when claim-filing was at an all-time low), then the Department’s guidance to claimants and the claim-filing process are themselves completely broken and inadequate. Claimants are making claim-filing mistakes because the Department is completely inadequate in assisting claimants when they are filing unemployment claims.

But, since the pandemic started there have been no questions or discussion over the claim-filing process at an Advisory Council meeting.

Research results from the Department regarding the labor and management proposals (see this previous description of these proposals) dominated the public portion of the meeting.

Labor’s proposed increase in the weekly benefit rate attracted a great deal of attention from the management side. The Department presented three different scenarios of what the proposed increase would mean, depending on low, medium, and high unemployment — based on the number of weeks of unemployment paid per a typical claim. The management reps, however, want to know an additional variable — what changes in the unemployment rate itself would mean under this proposed weekly benefit rate. The staffer for the Department tried to explain that the three scenarios necessarily implicated a change in unemployment rates (more unemployment claims is correlated with longer periods of unemployment), but the management reps were insistent on seeing numbers directly rated to unemployment rates.

The problem with management representatives’ demand for unemployment rates is that those rates are no longer correlated with the number of unemployment claims filed or paid in Wisconsin. In 2007, the unemployment rate in Wisconsin was 4.8%, but 638,548 initial claims were filed that year and 332,982 of those initial claims (52.15%) were paid.

In 2019, the unemployment rate in Wisconsin was down to 3.3%, roughly 68% of the unemployment rate from 2007. Yet, initial claims in 2019 were down even further to 287,043, and paid claimants were down still more to 129,888. Those 2019 numbers are 45% and 39% of comparable 2007 numbers. In other words, claim-filing has declined to such an extent that it no longer has an historical connection to unemployment rates.

One tidbit in the Department’s research response that went without comment was the disclosure that 2,167 claimants in a typical year win approval of benefits under the 30-day quit to try a new job provision. Since 130,710 claimants were paid unemployment benefits in 2018, this 2,167 figure means that roughly 1 out of every 100 claimants received their unemployment benefits because of this quit exception.

Note: In its research response, the Department reports that 3,425 claimants received unemployment benefits in 2019 under the 30-day quit provision, but that this number was higher than expected because the number of claims being filed increased that year. The number of initial claims in 2019 was up slightly to 287,043 from 279,912 in 2018, hardly a major increase. Moreover, the claimants who were paid benefits in 2019 was actually down in 2019, at 129,888, from 130,710 in 2018. So, it appears that the 30-day quit exception is actually more significant in allowing claimants to receive unemployment benefits that what the Department is reporting.

The other research response that drew ire from management representatives was that the Department indicated that the ability of temp companies to immediately challenge claimant eligibility about missed interviews, declined job offers, and job search contacts was problematic during the initial modernization process. The Department indicated that these management proposals could eventually be implemented and indeed voiced support for them, but that the initial modernization effort could not include them because the modernization request for proposals had already been written and because claimant confidentiality issues would need to be addressed to allow employers to respond in the desired ways. Management reps, however, were unhappy with even this kind of delay. They want to object to claimant eligibility immediately.