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, seethe 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.
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.
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.
Previous posts detailed the length of time and number of cases in the unemployment backlog in part 1, some of the mistakes by the Department that allow cases to be re-opened in part 2, a place for stories and advice about how to find assistance in part 3, how most claims in Wisconsin — and unlike in other states — are being denied and thereby creating a ginormous backlog in hearings in part 4, and in part 5 how the Department’s big push to fix the backlog in December 2020 was creating a hearings backlog and not addressing the root causes of all the delays.
Hard data regarding the Department’s handling of initial claims is now available about that big push for clearing the backlog.
As evident here, December 2020 saw a marked increase in first payments of initial claims, around 2.5x the number of payments in November 2020. Unfortunately, the number of first payments declined by half in January 2021.
This increase in first payments for December, however, is good news because the hearings backlog did not skyrocket. Previously, I had feared that the hearings backlog would be at 25,000. At the end of January 2021, the hearings backlog had only climbed to 15,915, up from 15,744 in December 2020.
So, kudos to the Department for clearing some cases by getting those cases approved.
Still, systemic problems with the processing of unemployment claims remain. This first payment data indicates that the effort to clear the backlog was a one-time event. TMJ4 reports that the processing delays have arisen in part because the Department added a bunch of new staffers with minimal training who then focus on specific issues rather than looking at the big picture.
Second, way too many initial claims are still NOT being paid. Through January 2021, Wisconsin has only made first payments of 27.98% of 147,260 PUA initial claims. For comparison, North Carolina has made first payments in 60% of 415,747 PUA initial claims, and New Jersey has made first payment of 76% out of 707,167 PUA initial claims.
For initial claims of regular unemployment benefits, Wisconsin has only made first payments of 30.85% out of 1,248,186 initial claims through the end of January 2021. Prior to the pandemic, the percentage of initial claims that ended up with a first payment in Wisconsin was 38.81%. So, Wisconsin is actually paying out fewer initial claims during the pandemic than from before the pandemic.
In comparison, Colorado’s first payments during the pandemic are at 64.20% out of 775,053 initial claims. Prior to the pandemic, the percentage of initial claims with first payments in Colorado was at 65.40%. In North Carolina, 44.82% of 1,642,172 initial claims for regular unemployment benefits during the pandemic led to first payments (prior to the pandemic, North Carolina was paying 45.25% of initial claims for regular unemployment benefits). Only New Jersey has seen a sharp decline in first payments for regular unemployment claims, paying 38.29% of 2,025,278 initial claims, down from 51.72% prior to the pandemic.
So, the claim-filing problems in Wisconsin are more severe than in any other state, including states like New Jersey and Colorado that still have COBOL-based mainframes on the back end of their claim-filing systems. The majority of initial claims in Wisconsin simply are NOT being paid at all.
Third and more troubling, there is now a major backlog with unemployment hearings that shows no signs of being cleared anytime soon. During the pandemic, the number of appeals filed per month have averaged 4,138 per month, while the number of appeal tribunal decisions has averaged 2,958 per month, more than a thousand less than the number of appeals. In January 2021, that gap declined to around 500 more appeals than decisions.
So, the size of this hearing backlog of around 16,000 cases now means that claimants will likely have to wait eight or more months for their cases to be heard.
And, the number of initial claims is still running more than 2x higher than normal. As a result, there are plenty of cases still in the pipeline.
Out of 63 SSDI-PUA claimants I am currently working with, 21 are still waiting for their benefits, now a year into the pandemic. Only 26 (less than half) have been paid their PUA benefits without additional hiccups (and most of them were not paid until August and September of 2020). Most of the 21 claimants still waiting for any payment have yet to even have a hearing.
As usual, John Oliver explains how truly broken unemployment is throughout the nation:
The failures in the unemployment system is a national problem. What has happened in Wisconsin is simply a “leading” indicator of how just how broken the system is. This propublica description of the claim-filing problems in North Carolina, for instance, also describes many of the same issues in Wisconsin about changes on making claim-filing more difficult, reducing already low employer taxes even further, and cutting off eligibility through additional claim-filing requirements.
Reporters have informed me that claimants are only winning around 30% of their appeal tribunal decisions after an appeal of an initial determining denying their claim (roughly the same percentage prior to the pandemic). That percentage is terrible. Almost all of the denials I am seeing are without any factual or legal merit but occur because the investigator has found a piece of information on the initial claim or a weekly certification to be less than perfect for establishing eligibility. This low win rate for unemployment hearings indicates that the biases against allowing benefits to claimants remain solidly in place: administrative law judges are looking for reasons and evidence for getting claims denied rather than explaining and helping claimants to get those denials over-turned.
So, having representation for these hearings is even more vital now, given the complexity of Wisconsin unemployment to begin with when coupled to the all of the new federal benefit programs that have been added.
I have done a video interview with the Wisconsin state bar where I plead for more lawyers to get involved with these unemployment cases.
Update (28 Jan. 2021): TMJ4 is perhaps the only media outlet in the state that actually describes what happened at the hearing over current problems with unemployment claims and how any computer updates are not a viable solution for those currently dealing with this mess.
I am scheduled to testify before the Senate Committee on Economic and Workforce Development this Wednesday, January 27th, at a public hearing starting at 10am, concerning Wisconsin unemployment.
Given the general lack of information about what is actually happening with the unemployment crisis, I have provided the committee a 199pp. PDF of the materials and a 3pp. letter describing those materials.
Some of the charts and tables in the informational packet include:
The year of 2007 should be considered a base year for how a healthy unemployment system in this state should function.
Notice that during the Great Recession first payments of benefits for the most part continued to be timely.
Except for Minnesota, Wisconsin has had fewer PUA claims that many other states and has paid far fewer PUA claims as a percentage than other states. New Jersey, like Wisconsin, has a COBOL mainframe for their unemployment claims. Yet, New Jersey’s handling of PUA claims shows incredible success compared to Wisconsin.
Update (27 Jan. 2021): My testimony and the testimony of others, including the Department, is available here. My testimony starts around 11am (an hour into the hearing), and runs 30-40 minutes. Here is a recap of my remarks about how disabled workers are being treated:
$1.1 billion is the amount available in the unemployment trust fund at the end of December 2020. $1.1 billion that is not helping anyone but just sitting in a bank account.
Unemployment in Wisconsin is recognized as an urgent public problem, gravely affecting the health, morals and welfare of the people of this state. The burdens resulting from irregular employment and reduced annual earnings fall directly on the unemployed worker and his or her family. The decreased and irregular purchasing power of wage earners in turn vitally affects the livelihood of farmers, merchants and manufacturers, results in a decreased demand for their products, and thus tends partially to paralyze the economic life of the entire state. In good times and in bad times unemployment is a heavy social cost, directly affecting many thousands of wage earners. Each employing unit in Wisconsin should pay at least a part of this social cost, connected with its own irregular operations, by financing benefits for its own unemployed workers. Each employer’s contribution rate should vary in accordance with its own unemployment costs, as shown by experience under this chapter.
So, money to pay rent and groceries, to dine out in restaurants, just to spend on consumer goods — WHEN there is a state-wide lack of consumer spending because of a worldwide pandemic — is not going out to the unemployed workers in this state who need it.
One group in particular has been hit hardest — the disabled.
Wisconsin is one of only two states that denies unemployment benefits to those who receive SSDI benefits. This eligibility ban was premised on the belief that only 50 workers would be affected by it.
That belief was not true. In any given year, there are 150,000+ SSDI working in Wisconsin (for 2019, see Table 27 at this link). To put that number in perspective, in the December 2020 jobs report for Wisconsin, there were 128,100 construction workers in this state, a ~22,000 short of the workers who receive SSDI benefits.
Wisconsin is allowing its employers to lay off these 150,000+ disabled workers and face no consequences for such layoffs. If unemployment was automobile insurance, then Wisconsin would exactly be saying that drivers could run over disabled people without any consequences to their auto insurance premiums. This is obscene.
So, a $1.1 billion unemployment trust fund has been built up on the backs of 150,000+ disabled workers in this state who by law cannot receive those unemployment benefits, against this explicit provision in Wis. Stat. § 108.01(1) (emphasis supplied):
Whether or not a given employing unit can provide steadier work and wages for its own employees, it can reasonably be required to build up a limited reserve for unemployment, out of which benefits shall be paid to its eligible unemployed workers, as a matter of right, based on their respective wages and lengths of service.
Previous posts detailed the length of time and number of cases in the unemployment backlog in part 1, some of the mistakes by the Department that allow cases to be re-opened in part 2, a place for stories and advice about how to find assistance in part 3, and how most claims in Wisconsin — and unlike in other states — are being denied and thereby creating a ginormous backlog in hearings in part 4.
“Since the start of the pandemic, our top priority at DWD has been ensuring that all eligible unemployment claims in Wisconsin are paid as quickly as possible,” Pechacek said. “Today, I am proud to say we have reached our goal to clear the backlog of claims. The tireless work of DWD staff has made it possible for UI to resume its seasonal level of timeliness in January. I look forward to implementing further enhancements to our UI processes to continue to improve services to Wisconsinites who are out of work through no fault of their own.”
The Department’s previous weekly data reports provide running totals of claimants paid unemployment benefits, initial claims that were filed, and the number of claimants still waiting on their claims to be adjudicated. When combined into one document, simple math in a spreadsheet allows for weekly changes in these totals to be tracked, and those weekly totals reveal that the “backlog” has largely been “fixed” by denying initial claims.
The first, brown line shows the weekly change in the number of initial claims filed by week. This data was reported in May 2020, whereas the rest of the data was not first reported until August 2020.
The green, triangle line reveals the number of claimants by week reported by the Department as being paid regular unemployment benefits. Until late December, this weekly number was the lowest being reported.
The purple, triangle line shows the weekly change in the number of claimants who were either not paid or denied regular unemployment benefits (initial claims minus paid claimants). Until early December, this number kept increasing until it plunged to under 5,000 for the 12/15/2020 data release.
The red, hourglass line shows the weekly change in denied claims (initial claims minus paid claimants and then minus claimants still waiting on adjudication). This number jumped markedly for the 9/29/2020 data release, then continued to increase by 10,000 a week to over 16,000 a week by the first December report. And, each subsequent week in December saw an even greater number of initial claims being denied, such that in the last two weeks there were more claims being denied than initial claims being filed (a difference of more than 10,000 for the final week of data).
Initial claims and claimants are not exactly interchangeable numbers, as there are circumstances where an individual claimant can have more than one initial claim. But, initial claim data is generally understood as a good proxy for the number of claimants in an unemployment system, and so is the statistic used in unemployment circles to assess how many actual people are filing claims because of job loss, especially since weekly claims data only really measures the number of claimants who have had their claims approved and are receiving benefits or are in the process of receiving benefits.
Because the Department has continued to rely on weekly claims data, the Department has under-reported the claims backlog and has completely missed the growing number of claims getting denied.
In a late-October memo to then Transition-Secretary Pechacek, I wrote the following about this counting problem:
Currently, the Department has been reporting weekly claims data as descriptive of how the Department has managed its pandemic response (more than 90% of weekly claims have been paid is a common talking point of the Department’s). Weekly claims data provides a measure of the financial drain on the unemployment trust fund and says little to nothing about the actual number of initial claims that have been filed with the pandemic or how many of those claims have actually been processed by the Department. Weekly claims data only indicates the number of weeks of benefits that have been claimed and so provides a measure of the “draw” on the unemployment trust fund. This statistic says nothing about the number of people who have denied their claims and those still waiting on their claims to be decided.
If you want to know how the Department is actually doing with its processing of unemployment claims, the traditional measures are around first payments and the average number of days needed for various steps (first payments, adjudication, and appeal tribunal decision). While the Department refuses to provide this data in response to queries, the Department must provide this data to the Dep’t of Labor. As a result, anyone conversant with unemployment has access to this data.
The picture this data paints is horrendous. Through the end of August, Wisconsin reports 918,757 initial claims connected to the pandemic (initial claims filed in March through August) and only 294,571 first payments for those same months, a percentage of 32.06%. Prior to the pandemic (the months from January 2018 through February 2020 — two years and two months), there were 632,728 initial claims and 245,558 first payments, a percentage of 38.81%. Not only are these percentages some of the lowest in the nation, Wisconsin may be the only state that has actually experienced a decline in first payments during the pandemic.
Note: Dep’t of Labor data for PUA claims filed from March thru August indicate that Wisconsin has paid 30.96% of 103,511 PUA initial applications. The percentage in other states is starkly better: North Carolina with 257,718 PUA initial claims is at 74.45%, Minnesota with 108,110 initial claims is at 86.87%, and Florida is at 88.91% for 329,289 PUA initial claims. Even Illinois with 335,533 initial PUA claims is at 45.15% (and without any August data).
And, denial rates have actually increased since the pandemic started, particularly for reasons that have nothing to do with an actual separation from work (i.e., a failure to follow a Department claim-filing requirement).
The data for when the Department first pays unemployment claims shows a major breakdown here as well. The Dep’t of Labor requires that 87% of all first payments must be made within 14 days (waiting week) or 21 days (no waiting week) and 93% within 35 days. See UIPL 21-04 (18 May 2004) (available at https://wdr.doleta.gov/directives/attach/UIPL21-04.pdf). First payment rates have plummeted in Wisconsin.
This combination of more claims being denied alongside the increased delays in paying claims that are eventually approved creates a second bottleneck at the adjudication stage. For the months from March through August of this year, only 52.58% of appeal tribunal decisions have been issued within 30 days and 78.73% on average have been issued within 45 days.
Note: The Dep’t of Labor threshold is 60% and 80% of these decisions, respectively.
These numbers are only going to get worse. At the end of August 2020, there were 9,655 cases pending before appeal tribunals, roughly 9x the number of pending cases that existed on a monthly basis prior to the pandemic. Granted, many of these cases are nonsensical and lead to quick hearings (since the administrative law judge is simply recognizing the obvious, like the claimant was laid off because of the pandemic). But, the administrative sludge created by this crush of cases is having its natural effect of short tempers among staffers at all levels and claimants giving up in the face of these mindless obstacles. As I explained in “Unemployment delays, part 1” (16 Sept. 2020) (available at https://wisconsinui.wordpress.com/2020/09/16/delays-part-1/):
“At the end of March, some major problems and bottlenecks in the claims-filing process were identified [https://wisconsinui.wordpress.com/2020/03/31/claims-and-phone-calls/]. Other than what was noted then, many of those bottlenecks continue to exist.
“On May 12th, as the claims piled up, processing delays were enormous [https://wisconsinui.wordpress.com/2020/05/12/backlogs-with-claims/]: a month was needed just to process a faxed or mailed document for an unemployment claim and more than a week just to get a document recognized by the hearing office after being received.
“Now in mid-September it still takes around 30 days for a claim document sent by mail or fax to be processed. And, information sent to a hearing office still takes 5+ days to be processed. Furthermore, while the clogged phone lines to reach a claim specialist have been opened up, it is now incredibly difficult to contact the hearing office by phone. In my experience, it takes numerous phones calls over a day or two and then a hold of 30 to 70 minutes or more before I can get through to a hearing office staffer.”
And, there is no glimpse of a decline in unemployment claims anytime soon. Right now, initial claims are on the rise, and the trajectory of the pandemic in the nation and in Wisconsin indicates that the situation is likely to get worse (week 11 was 1:1).
As of week 42, nearly 1 million initial claims have been filed in Wisconsin, and there are close to 120,000 PUA claims that have been filed (the approximate number of regular initial claims paid in all of 2019 or 2018). The unemployment system as currently designed and implemented is designed to stymie successful claims. Whereas before the pandemic folks simply gave up on unemployment and found low-wage work as a substitute, those job options are no longer available at the moment. So, not only will there never be a clearing of the claims backlog under the current system, but a tidal wave of cases will be created at the hearing stage regarding people will be challenging the unjust denial of their claims. Major change in how the Department handles unemployment claims is the only way to escape a new meltdown and political fallout.
On 14 December 2020, the Legislative Audit Bureau released an audit report on the Department’s claims-processing delays. The results of that audit bares out what I indicated back in October.
First, the audit revealed that the number of claimants waiting on their claims was much larger than being reported by the Department:
As of October 10, 2020, DWD had paid 493,504 of the 662,731 individuals (74.5 percent) who had filed initial claims for regular program benefits since March 15, 2020, but it had not paid the remaining 169,227 individuals (25.5 percent). DWD may not have paid these individuals because it had not yet resolved their claims, it had denied their claims, or the individuals had withdrawn their claims. The data we obtained from DWD did not indicate the reasons why DWD did not pay these claims.
Report 20-28 (Processing Certain Unemployment Insurance Claims) at 6. In comparison, in its October 13th report, the Department indicated that the weekly claims “in process” were only 8.12% of the weekly claims filed — a figure three times smaller than the actual number of claimants still waiting on their claims.
Second, the audit revealed that over three quarters of all initial claims were being adjudicated rather than just approved (as typically happens when both employer and employee report a layoff and there are no other “issues” discovered in the documents):
We found that DWD placed into adjudication the initial claims of 514,026 of the 662,731 individuals (77.6 percent) who filed claims from March 15, 2020, through October 10, 2020. DWD may place a given claim into adjudication because of multiple issues. As of October 10, 2020, 96,623 of the 514,026 individuals (18.8 percent) still had initial claims in adjudication.
Report 20-28 (Processing Certain Unemployment Insurance Claims) at 9.
Third, the audit bureau randomly sampled 268 individuals to assess how quickly the Department processed their claims.
our file review found that DWD had resolved the initial claims of 250 of the 268 individuals (93.3 percent) as of November 2020. DWD’s data indicate that 70 of the 144 individuals whose initial claims DWD had denied subsequently filed new claims after April 11, 2020. As of October 10, 2020, 34 of those 70 individuals were paid program benefits.
Report 20-28 (Processing Certain Unemployment Insurance Claims) at 12. The audit bureau concluded:
it took an average of 13.0 weeks to resolve the initial claims of the 250 individuals in our file review. We estimate that it took an average of 11.5 weeks to deny the claims of the 144 individuals and an average of 15.5 weeks to pay program benefits to the 103 individuals.
We estimate that DWD was responsible for 11.0 of the 13.0 weeks (84.6 percent) that it took, on average, to resolve the initial claims of the 250 individuals. For example, DWD was responsible for time that elapsed before it requested information it needed from individuals and employers, and for time that elapsed after it had the information necessary to pay or deny program benefits but did not do so. In contrast, DWD was not responsible for time that elapsed while it waited for individuals and employers to provide information it had requested.
Our file review found more than 950 instances when DWD was responsible for time elapsing while it processed the initial claims of the 268 individuals. The 268 individuals each experienced, on average, more than 3.5 instances when DWD was responsible for time elapsing during initial claims processing. A given claim could have multiple instances if, for example, time elapsed before DWD requested information from individuals or employers, and then additional time elapsed after DWD received the information.
This last point reveals a state agency overwhelmed with so much work that staffers cannot even look at case files in a timely way. Unlike every other state, however, Wisconsin has NOT changed its adjudication process whatsoever in the face of the pandemic (CA: weekly claims allowed every other week; every other state but WI: waiving investigation of benefit year separations for pandemic-related job losses, since employer accounts are not charged for any benefits connected to such job losses).
So, the delays revealed by the audit bureau are a natural consequence of Department staffers still trying to do the same job they have been doing for the last few years alongside the same denial criteria and impulses without any pressure from above to approve claims or altering the adjudication process in light of the tidal waive of claims connected to the pandemic.
Given that most initial claims are being denied, all the problems revealed by the audit bureau are making their way to the hearing office. Simple errors are popping up all over the place, for no other reason than because staffers and administrative law judges are being overwhelmed with their workload. Hearings are generally short — since eligibility facts are already in the investigatory record and just need to be entered into the hearing record. But, getting all those decisions written and properly entered is causing problems I have never seen to this extent before. Almost every case now is falling into limbo because of some processing error that hearing office staffers now are having great difficulty fixing.
My December has been about as bad as it has ever been with this pandemic. And, given the skyrocketing number of claims that were denied in December, I suspect that these hearing office problems are only expanding.
Previous posts detailed the length of time and number of cases in the unemployment backlog in part 1, some of the mistakes by the Department that allow cases to be re-opened in part 2, and a place for stories and advice about how to find assistance in part 3.
job losses are now spiking both nationally and state-wide,
the ensuing loss of PUA benefits at the end of 2020 is a fiscal cliff for millions, and
continuing claims demonstrate that long-term job losses are becoming entrenched.
Wisconsin’s own jobs report for October 2020 reinforced these conclusions, as the state unemployment rate rose markedly because of losses in leisure and hospitality and the public sector.
The actual initial claims data indicates that the pandemic has created a systemic increase in the number of new initial claims being filed every single week.
Since the start of the pandemic, initial claims have leveled off to around 5x what was filed for the comparable week in 2019. There are two noticeable dips where the ratio dropped significantly down below five: first for the weeks 35-37 and again for the weeks 44-47. The reason for these dips, however, are quite different. In weeks 35-37, there was an actual decline in the number of initial claims being filed in 2020. In weeks 44-47, on the other hand, the drop in the ratio is not from a decline of initial claims in 2020 but from an increase in initial claims that were filed in 2019.
As Wisconsin still has winter, there are a host of industries (road construction, landscaping, recreation, and others) that lay off their workers on a seasonal basis, and so there is a steady rise in initial claims every year for these Wisconsin workers. As a result, this latest dip in the ratio does NOT represent an actual decline in initial claims in 2020. Rather, all that is happening is that the number of cases in 2020 is simply not rising enough to match the increases from 2019. All told, pandemic-related claims are still much higher than last year, as Wisconsin has experienced an increase of roughly 7x the initial claims from what was previously filed in 2019.
And, most of these 2020 claimants are seeing their initial unemployment claims denied. The percentage of regular unemployment claims leading to a first payment of benefits is actually down in Wisconsin from before the pandemic.
For the months of January 2018 through February 2020, there were 632,728 initial claims in Wisconsin, of which 245,558 led to first payments, a percentage of regular unemployment claims being paid of 38.81%.
Here is the monthly initial claims data for Wisconsin for the months of the pandemic:
So, during this pandemic, Wisconsin is actually paying out fewer claims than it did from before the pandemic. Less than one out of three initial claims are leading to a first payment, whereas before the pandemic nearly two our of every five claims was being paid.
For comparison, here are initial claims and first payment data during the pandemic for several other states:
ST Initial 1st Pay %
NC 1,452,638 700,687 48.24
MI 1,997,061 1,168,887 58.53
FL 3,298,791 1,578,803 47.86
IL 2,037,211 1,063,231 52.19
AR 412,425 179,558 43.54
PA 2,233,652 1,201,647 53.80
IN 1,322,840 553,568 41.85
OR 621,445 357,489 57.53
All of these claims being denied in Wisconsin has led to a staggering backlog in hearings.
Prior to the pandemic, appeal tribunals were issuing around 1,200 to 1,500 decisions a month. Here is what happened with the pandemic:
Month Pending Filed Decided
Oct 12,771 4,480 3,289
Sept. 11,052 4,414 3,063
Aug 9,655 4,860 3,236
July 6,719 4,442 4,083
June 6,309 3,307 3,363
May 6,296 4,922 3,724
April 5,090 6,034 2,492
March 1,520 1,952 1,565
In the last few months, more than 4,000 appeals of initial determinations have been filed every single month. Administrative law judges are now issuing more than 3,000 decisions these same months. But, they cannot keep up, and the backlog of pending cases is, at the end of October 2020, nearly 13,000 cases. If not a single appeal was filed after October 31st, it would still take around four months to clear the current backlog of cases that need a hearing.
For comparison, in Illinois, which has twice the number of initial claims that Wisconsin has, pending cases before an administrative law judge at the end of October numbered just 2,069. Pennsylvania has a backlog at the end of October of 3,950 pending cases — one-third of the backlog in Wisconsin — even though Pennsylvania has handled more than twice the number of initial claims than Wisconsin has.
Given the backlog of cases in Wisconsin, it is no wonder that folks should now expect to wait four to six months for their hearing. Because Wisconsin has kept every possible disqualification alive during this pandemic except for the four job searches a week and so is investigating any and all potential disqualifications — even issues going as far back as January 2019 — the system simply cannot keep up. The more people that are hired at the Department simply means more cases that have to be adjudicated.
So, if not approved for unemployment benefits soon after filing an initial claim, expect to wait several months or longer for a decision. And, if that initial determination does not go your way, expect to wait four to eight months for your hearing after filing your appeal.
All I can offer at the moment is the possible assistance described in part 3 of this series. Unemployment in Wisconsin truly is broken.
Regular UI claims during the pandemic (March-Aug. 2020)
Initial claims First payments Percentage
918,757 294,571 32.06%
Regular UI claims prior to the pandemic (Jan. 2018-Feb. 2020)
Initial claims First payments Percentage
632,728 245,558 38.81%
So, Wisconsin is actually paying fewer initial claims during the pandemic than before the pandemic. It appears that no other state has a similarly significant decline in claims being paid out during the pandemic.
For comparison, here is what has happened in other states in regards to how many initial applications for regular unemployment benefits are being paid for the same time periods:
State Pre-pandemic Pandemic
NC 45.25% 50.27%
MI 54.70% 60.53%
FL 45.36% 49.76%
AR 39.60% 45.98%
IN 47.78% 46.77%
IL 56.34% 57.72%
Indiana shows a 1% decline during the pandemic, but at least around half of its initial claims are ending up with payment of benefits. Even Florida (!) has managed to pay out more claims during the pandemic than before the pandemic.
These numbers also reveal that the number of claimants receiving regular unemployment in Wisconsin is much lower than in other states, the same states that are decried in the national press as having terrible unemployment systems. During this pandemic in Wisconsin, less than one-third of initial claims have actually led to a payment of regular unemployment benefits. This decline is from roughly 39% of initial claims from before the pandemic. And, unlike all other states, including those who had massive problems with administering all of their pandemic claims, Wisconsin’s handling of these claims is trending down rather than up.
Because there are errors in the data states report, some of this data is incomplete. For instance, Minnesota reports weekly claims being paid sizable amounts, nearly 91% of all pandemic claims. But, Minnesota also reports only 1.36% of initial claims being paid out. So, first payment data for Minnesota is in error. Another example of an error is the PUA data for Michigan. Even though Michigan is widely-acknowledged leader in paying out PUA benefits, this data for Michigan has zero PUA claims and payments.
These data errors do not appear to explain the claims-filing problems in Wisconsin. The numbers being reported here approximately match what Wisconsin itself is reporting. Moreover, the percentages or proportions of weeks claimed to weeks paid, for instance, match what the Department itself reported on Sept. 1st. So, there do not appear to be errors in what Wisconsin is reporting to the US Dep’t of Labor. The numbers for Wisconsin indicate a very real problem.
Wisconsin’s handling of PUA claims is even worse. Here is Wisconsin and a few other states for which data is available.
State Month Init App First Payment
WI Jul 13,298 17,269
WI Jun 13,044 6,286
WI May 23,887 709
WI Apr 43,585 0
WI totals 93,814 24,264 25.86%
NC Jul 49,478 27,948
NC Jun 54,338 35,799
NC May 111,094 95,538
NC Apr 42,808 32,582
NC totals 257,718 191,867 74.45%
MN Jul 2,877 4,251
MN Jun 4,353 10,089
MN May 14,908 26,682
MN Apr 64,350 46,589
MN Mar 21,622 6,304
MN totals 108,110 93,915 86.87%
FL Jun 133,501 126,769
FL May 126,334 105,885
FL Apr 18,273 338
FL totals 278,108 232,992 83.78%
These numbers are staggeringly awful for Wisconsin. Wisconsin is failing to process these claims even though Wisconsin has the fewest number of claims to process among these states. By the end of July, just a quarter of PUA applicants in Wisconsin had their claims paid out. This number is roughly three times less than what is happening in these other states.
Notably, even Florida managed to pay out some PUA claims in April, whereas Wisconsin did not significantly start processing PUA claims until June of this year. No wonder folks in Wisconsin are still waiting on their PUA claims: Wisconsin is doing very little to process these claims and, unlike other states, is not paying out these claims in any way comparable to what is happening in those other states.
No action whatsoever for almost 300,000 claims
Via its weekly data reports, Wisconsin has been reporting on “weeks compensated” rather than initial claims being paid. As a result, those reports say nothing about the experience of individual claimants who are still waiting for any payments. This ‘data’ being reported by the Department is covering up the significant administrative problems that are going on.
But, some actual data can be gleaned from these reports. The Sept. 14th report, for instance, reveals that there have been 902,717 initial applications for regular unemployment benefits during the pandemic, that 98,309 of these are in adjudication, and that 513,870 of these claimants have received regular unemployment benefits. So, based on these numbers, there are 290,538 initial applications that have yet to have ANY action taken whatsoever — no denial, no approval, no nothing.
Note: Above, over 600,000 Wisconsin claimants are reported as still waiting on first payments. Whereas in these weekly data releases, the Department is reporting only around 300,000 still waiting.
The first page of the August 2020 financial report to the Advisory Council seems to confirm that more than 500,000 claimants have been paid regular unemployment benefits in 2020. But, this report also indicates that “in calendar year 2018 and 2019, the number of claimants paid were [only] 130,710 and 129,888, respectively.” That number matches almost exactly what the Department reported to the US Dep’t of Labor prior to the pandemic.
It appears that for its weekly data reports, the Department is including some data as a payment where no actual payment is occurring. The benefit amount reduction, or BAR, comes to mind as a possible explanation. The Department has been illegally using this program to deny $600 PUC benefits to claimants because of prior concealment. Furthermore, the Department typically still counts regular unemployment benefits as paid to these claimant even though they are receiving nothing because of a BAR.
In any case, the Department’s own data indicates that just under 300,000 Wisconsin employees are still waiting on their claims to be paid as of mid-September.
Given that the workforce in Wisconsin is around 3 million workers, this number of 290,538 initial applications indicates that roughly one out of ten Wisconsinites are still waiting on the Department to do something with their claim.
And, as the number of claims being adjudicated has been declining on average by around 407 a week during this pandemic according to the Department’s own numbers of claims awaiting adjudication, the unemployed are going to wait for a long, long time until the Department actually processes their claims. No wonder the average number of days from application to payment or denial is increasing in this state rather than declining.
Breakdowns in claims administration
All of these delays create an additional problem for claimants — the claims-processing procedures are even further clogged.
On May 12th, as the claims piled up, processing delays were enormous: a month was needed just to process a faxed or mailed document for an unemployment claim and more than a week just to get a document recognized by the hearing office after being received.
Now in mid-September it still takes around 30 days for a claim document sent by mail or fax to be processed. And, information sent to a hearing office still takes 5+ days to be processed. Furthermore, while the clogged phone lines to reach a claim specialist have been opened up, it is now incredibly difficult to contact the hearing office by phone. In my experience, it takes numerous phones calls over a day or two and then a hold of 30 to 70 minutes or more before I can get through to a hearing office staffer.
Update (17 Sept. 2020): The NYTimes has an excellent primer on unemployment data and the hazards of drawing conclusions from continuing claims (which the Department itself has featured in its weekly data reports). The focus above in this post is on initial claims and first payments, not continuing claims and total number of unemployed or total amounts paid out. Initial claims and first payments should be relatively straight forward numbers.
Update (25 Sept. 2020): The Economic Policy Institute provides an explanation of about how pandemic claims data is inflated in some states and how unemployment rates under-report actual unemployment and both under-employment.
There is no reason to think that Wisconsin is over-reporting its claims data, however, or that Wisconsin’s unemployment rate (which is based on a national survey) is somehow not also under-reporting unemployment and under-employment in this state.
Wisconsin’s rate of job growth started to decline in mid-2016, and has pretty much gone down since then, with the except of a Bubbly 6 months after the GOP Tax Scam was signed into law. But last year was a new depth, with barely more than 5,000 jobs added from December 2018 to December 2019, and we even slipped below 0 in November before a small rebound in the last month of 2019.
Jake compares the jobs picture in Wisconsin with Minnesota, and the comparison does not go well for Wisconsin.
Total jobs added, QCEW 2010-2019
Jake further points out that the 2019 data for Wisconsin reveals that Dane County by itself is providing the job growth for the entire state.
Jobs added, Wisconsin 2019
Dane County +7,446
REST OF WIS -2,367
As Jake concludes:
This data sure seems to indicate that we could learn something by being more like Minnesota and Dane County, because that’s what was working before the COVID-19 recession hammered everyone starting in March. And today’s report is yet another blaring piece of evidence of just how much we have been held back during the Age of Fitzwalkerstan. It needs to be ended ASAP, and it goes well beyond changing who is in the Governor’s office.
Because job growth has been so anemic in Wisconsin, unemployment is that much more important as a wage replacement. But, as indicated previously, Wisconsin’s policies over the last decade have made unemployment much, much more difficult to get. Now with the pandemic and absolutely no jobs available at all, folks who have been suffering under meager job growth the past decade have absolutely nothing to fall back on other than unemployment. And, that system is designed to be difficult and cumbersome.
The Evers administration could start fixing this system by actually following the law rather than subverting it, as it is currently doing by denying PUA benefits to the disabled (see the discussion of SSDI in this post). And, the Evers administration could take a look at what our neighbor in Michigan is doing to make an equally difficult unemployment system at least less burdensome on claimants and the workers who have to administer that system. The results of these efforts in Michigan speak for themselves:
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.
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:
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
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).
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.
Oct 2018 — Oct 2019
+16,500 total jobs, +17,200 private sector
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.