Wages are flat because unemployment IS so low

The New York Times had a feature on February 2nd on why wages continue to lag despite the extremely low unemployment rates at the moment.

There is a basic presumption in this article that is no longer valid, however: namely that the unemployment rate today is the same kind of unemployment rate from 10 or 20 or even 30 years ago.

In Wisconsin, the news for some time has been how the state’s unemployment rate and benefit payments to claimants are at record lows. For instance, a January 2018 press release from the Department includes the following observations:

Other indicators of the state of Wisconsin’s economy include:

  • Initial UI claims ended 2017 at their lowest level in the last 30 years.
  • Continuing unemployment claims ended 2017 at their lowest level since 1973.

See also this October 2017 press release. What is notable here is that this decline is well known and part of an apparent plan.

As previously noted here, this decline is occurring because of Department efforts at making it harder for the unemployed to qualify for unemployment benefits and then disqualifying them for not jumping through some state requirement fast enough or alleging unemployment fraud for nothing more than simple claim-filing mistakes.

But, the data in Wisconsin does not explain what is happening nationally. The National Employment Law Project has already noted how unemployment has changed significantly across the nation the last few years. But, thanks to the efforts of some smart folks in Pennsylvania, national unemployment data is now available in a highly convenient format and which produces eye-catching charts.

NOTE: I cannot say enough good things about this unemployment data explorer. Pretty much any unemployment data currently being collected is now available for quick analysis in a chart. Moreover, you can easily see and download the data being used to create the charts. Excellent work.

This data provides some charts that can compare what is happening from state to state. For instance, separation data (how claims are denied because of a quit or a discharge for which misconduct/substantial fault is found) presents the following set of charts:

50-state denial rates from 2005 to 2017

The red line in these charts is the national rate. As obvious, this chart shows that there is a great deal of variation from state to state. And, because there have been big changes in the number of claims being filed, this data is somewhat incomplete. SeeEmployer UI taxes declining because more UI claims being denied” (24 August 2016) for an examination of how changes in the number of claims being filed affect Wisconsin’s claim-filing numbers.

But, the variation among the states also reveals some obvious increases in denial rates in Kansas, Maryland, New Mexico, South Carolina, and Wisconsin. On the other hand, Alabama, Colorado, Florida (a surprise), Mississippi, New Hampshire, New Jersey, and New York show significant drops in denial rates.

This 50-state data gets even more interesting when “other” reasons for denying unemployment benefits are examined:

50-state denial rates for other reasons from 2005 to 2017

NOTE: “Other” reasons include, for instance, a claimant not being able and available, not completing the required job search actions for that state, not attending call-in or meeting requirements a state has mandated, or not registering for various state-mandated services. Wisconsin specific data on these issues “other” denial reasons is available here from this prior post on the financial impact of Wisconsin’s substantial fault disqualification. Outside of able and available status, these “other” reasons generally encompass requirements an individual state creates as part of its claim-management bureaucracy for supervising the unemployed.

Again, the red line in this chart is a national average of cases being decided for “other” reasons. As evident here, there has been an increase (and even an explosion in some states) in “other” denial reasons the last few years in Florida, Louisiana, Massachusetts, Michigan, Mississippi, Montana, New Mexico, New York, Ohio, Oklahoma, Pennsylvania, South Carolina, and Tennessee. Indeed, the national trend of these “other” cases increasing over time would probably be much more significant if the extremely large populations of Texas and California were removed from the analysis (Texas has been flat, and California has actually declined significantly). As such, national data is masking significant changes in the availability of unemployment benefits in numerous states.

Of course, this table is simply showing the number of cases being decided for “other” reasons. If all of these cases did NOT lead to a denial of an unemployment claim, then there is essentially no harm, no foul in these cases. But, the actual denial rates for “other” reasons reveal a not-so innocent story.

50-state denial proportion for other reasons from 2005 to 2017

Where California declined and Texas increased slightly and then plateaued, Delaware, Florida, Iowa, Illinois, Indiana, Louisiana, Massachusetts, Maryland, Michigan, Mississippi, Montana, North Carolina, North Dakota, New Mexico, New York, Ohio, Oklahoma, Pennsylvania, South Carolina (showing shocking jumps from year to year), Tennessee, Utah, Wisconsin, and Wyoming have seen obvious increases in denial rates since 2005.

These other reasons for the most part did not exist until very recently and almost none go back a decade in significant numbers in any one state. The Wisconsin data on this issue, for instance, is telling: cases involving profiling registration requirements were in single or low double-digits until 2015 when they sky-rocketed to hundreds and then thousands. What this last chart reveals is that numerous states have essentially created numerous mechanisms for disqualifying claimants even when those claimants are initially eligible for unemployment benefits.

Given that we are all human and can only take so much abuse before moving on, it is extremely likely that most folks have simply stopped filing unemployment claims because of the obstacles states have placed on their eligibility and not because they have found the jobs they have wanted all along.

So, if states are making it much, much harder to receive unemployment benefits when filing a claim, then the low unemployment rates of today are NOT comparable to the low unemployment rates of yesteryear or even to unemployment rates of a decade or so ago. Instead of creating a question about how low wages and low unemployment rates can co-exist, the low unemployment rates of today may actually be placing a brake on wage growth: the state unemployment policies at issue here increase the supply of individuals looking for any work in place of their missing unemployment benefits. That increase in the labor supply, as a result, creates downward pressure on wages. At least, that is what I learned in labor economics 101.

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Tips for filing for unemployment benefits in Wisconsin

As noted here and here (and too many others to list), filing for unemployment benefits in Wisconsin is dangerous. Any mistake you make on a claim can lead to a concealment/fraud charge by the Department of Workforce Development against you.

So, if you must file for unemployment benefits, here are some key things to do when filing.

Read the Worker’s Guide

Download and read A Worker’s Guide to Unemployment Law. Most of the information presented here is from that guide.

Be self-reliant

Do not rely on the Department’s on-line system to explain or inform you about what is going on with your claim. The on-line system is intended to provide the Department with information about you and your claim and does not provide much, if any, information about why the Department is taking some action or how it will do so. To get actual information about what the Department is doing, you need to call or review decision documents that are mailed to you.

NOTE: At some point, the Department should make decision documents available to you via its on-line system. Until then, the on-line system is limited in providing actual information about your unemployment claim. And, keep in mind that when on-line notices arrive, there will also be significant consequences to you. The story in Michigan about on-line only claims notice indicates dire problems with missed appeal deadlines for claimants in Wisconsin when that kind of notice arrives here.

Obviously, you also need to be your own record-keeper. For every conversation you have with a Department staffer, take detailed notes of what you say and what is told to you. If you have trouble with taking notes, record those conversations.

The unemployment system right now is geared to punish you for any mistakes you make. The Department, on the other hand, has limited its liability for those mistakes and will certainly deny any responsibility for its own mistakes. The best way you can hold the Department accountable is if you have your own records to back up your claims about mistaken advice you may have received.

Register at https://jobcenterofwisconsin.com/

Create a user-id and password and upload a resume to this website as soon as you file an unemployment claim. As Laura Hoffman, UI Hearing No.17002961MW (16 Nov. 2017) indicates, benefits will not be paid until this step is completed. The quality of the resume is unimportant, so do not delay in order to get the resume done right. You can always revise the resume later.

Be able and available for work

To receive benefits, you must be available for full-time work, and usually you must be available during daytime or first-shift hours or the hours in which your type of work is typically performed. For example, a bartender might be disqualified for restricting availability to first-shift work rather than nights and weekends, while a bank teller might be disqualified for restricting availability to nights and weekends.

There are some factors to watch out for when filing an unemployment claim:

  • Education: Students almost never qualify for benefits if their classes are during daytime hours or occurring during the hours in which their type of work is usually performed. Even if the student promises to drop out if he or she gets a job, he or she will likely be found to be unavailable. Only if the student is taking classes that will not lead to a degree and is not a full-time student can a person still be considered able and available for work.
  • Disabilities: Disabilities that restrict your hours of work or the kind of work you do are NOT disqualifying. See Eaton v. R & D Drywall, Inc., UI Hearing No. 08004119MD (27 July 2009), Wright v. Independence First Inc., UI Hearing No. 09607759MW (8 March 2010), and Dugenske v. New Haven of Oshkosh, UI Hearing No. 12403278AP (12 Feb. 2013) (claimant with a physical and/or psychological restriction is only required to be able to work on a part-time basis and does not need to work full-time in order to qualify for unemployment benefits). But, if you receive SSDI benefits because of that disability you are completely barred from receiving unemployment benefits, even if laid off from full-time jobs.
  • Transportation: You cannot overly restrict the geographic areas in which you are willing to work. Depending on your labor market and the type of work involved, most people are expected to travel anywhere from 15 to 25 miles each way. Certain jobs, such as construction work, may require up to a 50-mile commute. So, expect that daily driving by car or use of public transportation as part of being able and available for work. If your car breaks down, there is no public transportation, and you do not have access to other cars, the Department will consider you to NOT be able and available for work.

Do four job searches a week and expect an audit

You need to do four job searches each week and report those searches on every weekly claim certification. Use the UCB-12 form for tracking each week’s job searches. And, keep copies of these forms for 52 weeks (because the Department will audit you at some point).

Per Bodo Viliunas, UI Hearing No. 15607525MW (4 March 2016), the following actions count as one of those four job searches:

  • Applying for work with employers who have available openings (a second application to the same employer within four weeks is not allowed, unless the application is to a new, different job, the employer’s customary practices allow for multiple applications to the same job opening, or the employer is a temporary help employer).
  • Taking examinations for suitable work, such as civil service or a similar kind of test, such as a WorkKeys exam.
  • Registering for suitable work with a public or private placement facility, including a union.
  • Mandatory Job Center of Wisconsin registration.
  • Posting a resume on an employment website (only one posting per website is normally allowed).
  • Following the recommendations of a public employment office or similar re-employment services, including participation in reemployment services.
  • Attending non-mandatory re-employment services operated by DWD.
  • Registering with placement facility or head hunter.
  • Meeting with a career counselor.
  • Participating in a job interview.
  • Participating in weekly professional networking group connected to your profession.

Again, expect that your job search efforts will be audited. Insiders at the Department inform me that, besides dedicated audit teams, all claims workers at the Department need to review a specific number of claims each week as part of their regular job duties. In other words, the Department has made finding claimant “mistakes” a priority for everyone working there.

When audited, you (not the employer) will need to supply some kind of confirmation from the employer about your job application. That confirmation is best handled by keeping the e-mail message you receive from the employer or website and submitting that e-mail message to the Department as proof of your job application.

Of course, the Department will probably not allow you to forward that e-mail message to the Department staffer auditing your job search records. Rather, you will likely need to print the e-mail confirmation and fax or mail that message to the Department staffer. As one insider explained this auditing procedure to me: It is annoying for everyone, and there is no reason for this no e-mail policy other than claimant inconvenience.

Take advantage of your canvassing period

You may have up to six weeks from when you became unemployed in which you can turn down work which is a lower grade of skill or at a significantly lower rate of pay than you had on one or more recent jobs without losing your eligibility for benefits. During your canvassing period you will be able to turn down jobs that do not pay as well as your old job (less than 80% of your old wage) or require less skill but you may be found ineligible if you turn down a job offer for a position similar to your old job.

After the canvassing period ends, however, you need to accept reasonable job offers. Benninger v. Spherion Atlantic Resources LLC, UI Hearing No. 04004083MD (17 December 2004) (“a sliding scale approach has been applied to determine whether an employee had good cause to refuse an offer of work after the six-week canvassing period”). What is reasonable is in the eye of the beholder, however, so generally plan on accepting any job offers you receive after your canvassing period is over.

Temp agency assignments trigger numerous disqualification opportunities

Not only do you need to contact your temp agency for a new assignment whenever your current assignment ends, but you also need to contact your temp agency each week you claim unemployment benefits if that temporary job agency is your last employer. That is, once employed at a temp agency, you have an on-going requirement on each week of your unemployment claim to continue to contact that temp agency for new assignments. See this post for the details.

If you fail to contact that temp agency about available assignments each subsequent week you claim unemployment benefits, the temp agency can inform DWD of your lack of contact. You will then have to prove that: (a) either you actually did contact the temp agency by having phone logs or copies of e-mail messages and letters showing that contact, or (b) the temp agency failed to inform you of this requirement when you last worked for it.

Speak with a DWD staffer always

The claimants’ handbook in Wisconsin is a confusing document to read — full of legalese and jargon — about a claim-filing process that should be simple and easy but is hardly that. Cf. the Wisconsin claimants’ guide to Iowa, Minnesota, or Massachusetts, for example.

So, the only way to make sure you are not making a mistake on your weekly claims certification is to ask a Department staffer about all the questions you are answering each week (the weekly claim certification now involves 20-40 questions and should usually take at least half an hour to complete). As noted below, the information needed to file an unemployment claim can be incredibly complex. For those who are not lawyers or accountants, you probably do not have the same understanding of what you need to report as the Department does. And so, you need to ask questions or simply talk to someone about your claim-filing, simply because you may not have any idea that you are doing anything wrong.

The Department, however, presumes that you know everything to file a proper unemployment claim. Do not play this game with the Department and demand to speak with someone about what information you need to file and how you should be filing that information.

Track and report (a) any and all work you do and and (b) any and all income you receive in a week

The formula for determining a person’s unemployment benefit encourages folks to work on a part-time basis when collecting unemployment benefits. Part-time work, however, opens up opportunities for weekly claim-filing mistakes that the Department will pounce on and allege fraud.

Each weekly certification requires you to report your part-time work and income as earned in a given week even though you may not be paid until a following week or even several months later. So, you need to track your hours of work and your earnings independent of your employer, because you need to report this information to the Department before your employer actually pays you.

NOTE: For unemployment purposes, part-time work and wages are when you work less than 32 hours in a week or earn less than $500 that week. As an independent contractor (difficult to qualify for under Wisconsin unemployment law), you must report your independent contractor status and are ineligible for all unemployment benefits when doing more than 15 hours of independent contractor work in a given week. Independent contractor earnings, however, do not count at all against your unemployment benefits.

But, Wisconsin makes the claim-filing process even more complicated because the state requires you to report your part-time income and hours of work according to various kinds of categories of which you may have no knowledge or even lack any awareness.

The Department does not track paid-time off or PTO pay, for instance. But, the Department does want you to report that PTO pay and hours. And, you need to report sick time and pay, vacation time and pay, holiday time and pay, performance bonuses, disability and insurance benefit payments and the work-time included in such payments, and termination or dismissal pay of any kind. So, you need to make legal determinations just like an attorney about how something like PTO pay in your case translates to what the Department wants reported. And, you need to report this hourly information even if you are paid on a part-time salary basis or a part-time commission of some kind.

NOTE: You also need to report any missed hours of work, see Kunze v. City of Stevens Point Transportation, UI Hearing No. 13003015MD, 13003016MD, 13003017MD, and 13003018MD (29 November 2013) (any missed shift for which due notice by the employer was provided constitutes work and wages that need to be reported on each weekly claim certification), which could include missed hours or pay because of illness, missed holiday hours and pay, and even missed vacation hours and pay as well as other kinds of possible pay and work hours. Missing a shift to take a child to a doctor’s appointment constitutes missed work that needs to be reported as if you did not miss that shift.

In other words, there are many, many ways for you to make a mistake on your weekly claim certification. And, as noted ad nauseam here, the Department will consider any mistake you make as equivalent to unemployment fraud and charge you for that alleged fraud. The only way to get any protection from that mistake is get some advice from a Department staffer about how to file a correct claim. Even if that advice is wrong (which it probably will be), you can point out how your mistake was based on that bad advice and so avoid a charge of fraud down the road.

NOTE: In its push to go on-line, the Department has scaled back phone help by limiting access to staffers to only a few days a week and eliminating use of a toll-free number (except when reporting claimant fraud) in lieu of 414-435-7069. Indeed, the Department is making the phone system so difficult to use that you now have to call just to learn when you can call on your designated day.

Of course, the Department will deny ever giving out bad advice. So, having a record of that bad advice will be essential to your defense against the fraud charge that the Department will lodge against you for your claim-filing mistakes.

On-line only claim filing

As of 1 September 2017, the Department mandated that all unemployment claims and all weekly claim certifications be filed on-line only.

As noted when the Department mandated in May 2017 that initial unemployment claims had to be filed on-line, federal guidelines indicate that on-line only requirements are problematic.

This new, more expansive mandate from the Department seems to ignore these cautions from federal authorities about maintaining effective options for those with limited on-line access or limited English proficiency. For instance, the Department seems only to be providing assistance for on-line filing, not any actual alternatives to on-line filing.

At the very bottom of this page, a person having trouble with on-line claims finds this advice:

For help using online services or if you are truly unable to go online call 414-438-7713 during business hours.

The general page about unemployment services also indicates that on-line filing is required. For those who want help with their clams, this advice is offered:

For help using online services call 414-438-7713 during business hours:

Monday — Friday 7:45 AM – 4:30 PM

Callers may be asked to call back on a specific day of the week.

Additionally, this same general page also explains just under the notice about reporting fraud that:

DWD is an equal opportunity employer and service provider. If you have a disability and need assistance with this information, please dial 7-1-1 for Wisconsin Relay Service. Please contact the Unemployment Insurance Division at 414-438-7713 to request information in an alternate format, including translated to another language.

In the claimants’ handbook, the advice for those who might have trouble with the on-line system is tucked away under the Filing a Weekly Claim Certification:

Important Points to Remember When Filing a Weekly Claim:

All questions apply to the specific calendar week for which you are claiming. For example, when asked if you quit a job, you are being asked if you quit during the week you are claiming. If you did not quit during that week, answer “NO.”

If you are truly unable to use online services to file your weekly claim, contact a Claims Specialist at 414-438-5395 during business hours. Claims Specialists are available to assist you.

In a FAQ about benefit filing, the Department explains:

The Unemployment Insurance Division is retiring the automated telephone filing system. Workers must now file online. Apply online at https://my.unemployment.wisconsin.gov. For help using online services call 414-438-7713 during business hours.

So, the Department is having claimants call for assistance to make their on-line claim work and not offering any alternatives to the on-line claim process. Moreover, these phone calls are NOT toll-free and can only occur during limited hours.

For those calling with limited English proficiency, my sources indicate that phone-service interpreters will be added to the call to help explain the on-line filing requirements to claimants. Those with limited access to the Internet — which is most of Wisconsin, as high-speed broadband is still not available to most homes in rural Wisconsin — are being told to file at their local libraries. Indeed, the Department has indicated on numerous occasions to ask librarians for assistance when filing their unemployment claims.

Finally, there are some doubts about the adequacy of the Spanish version of the on-line filing system for Spanish-speaking claimants.

NOTE: There is still no on-line option for Hmong-speaking claimants.

The terms of use for the on-line system declares:

DISCLAIMER FOR TRANSLATION

The Google™ translation feature is provided for informational purposes only. Please be advised that the Department of Workforce Development is unable to guarantee the accuracy of this translation service and is therefore not liable for any inaccurate information resulting from the translation application tool. Please consult with your own translator for accuracy if you are relying on the translation or are using this site for official business.

The US Dep’t of Labor has specifically held in UIPL 02-16 at 9 that machine translation — what google does when it translates — is NOT adequate and that these kinds of disclaimers are just silly. As explained on digitalgov.gov:

Some view disclaimers as the solution to justify an imperfect translation. Ask yourself and your managers: What are we trying to achieve? If an agency provides imperfect information but includes a disclaimer, the agency is essentially saying that it cannot guarantee the accuracy of the information they have provided. If so, how is this:

  • fulfilling a need?
  • fulfilling our mission?
  • serving the public?

Consider how you would react if you were reading information that had a disclaimer that said, very politely, that the agency can’t guarantee the integrity of the translation and, therefore, can’t guarantee the accuracy of the information it is giving you. A disclaimer on translated content works for the agency, but it does not work for the person trying to accomplish a task.

As already noted, this on-line mandate seems little more than an elaborate trap for charging claimants with fraud when they get confused and make a mistake on their claims. The initial screen claimants see with the on-line system — even before they create a user-id and password — makes this goal front and center:

Initial warning screen

Claim-filing in Wisconsin at record low but economy not booming

A June press release from the Department of Workforce Development declared Wisconsin’s record low unemployment rate:

BLS Data: Wisconsin’s 3.1% Unemployment Rate Tied for 7th Lowest in Nation

State’s Labor Force Participation Rate also tied for 5th highest in country

MADISON – Department of Workforce Development (DWD) Secretary Ray Allen released the following statement following today’s U.S Bureau of Labor Statistics (BLS) release showing Wisconsin tied for the 7th lowest unemployment rate in the nation, significantly lower than the national rate. The release also noted that Wisconsin’s addition of 40,400 total non-farm jobs from May 2016 to May 2017 was statistically significant and Wisconsin’s labor force participation rate was tied for 5th highest in the country:

“Not only is Wisconsin’s 3.1 percent unemployment rate a near record-low for our state, but our rate is lower than that of 42 other states, including the neighboring states of Illinois, Michigan and Minnesota, and tied with Iowa for 7th lowest in the country,” Secretary Allen said. “We also are tied for the 5th highest labor force participation rate in the country, ahead of the neighboring states of Illinois, Iowa and Michigan. Under Governor Walker’s leadership, Wisconsin’s employers and communities are reaping economic rewards from a winning combination of a best-in-class workforce and innovative. proven worker training programs.”

Highlights of Friday’s BLS release of state-by-state employment and unemployment data for May 2017 include:

  • Wisconsin’s 3.1 percent unemployment rate tied for the 7th lowest in the nation in May 2017 and was significantly lower than the national rate of 4.3 percent.
  • Wisconsin added a statistically significant 40,400 total non-farm jobs from May 2016 to May 2017.
  • Wisconsin’s unemployment rate decline of 1.0 percent from 4.1% in May 2016 to 3.1% in May 2017 was statistically significant.
  • Wisconsin’s labor force participation rate of 68.8% tied for 5th best in the nation in May 2017.

Other indicators of Wisconsin’s economy include:

  • Both total labor force and employment in Wisconsin remained at all-time high in May, while the number of unemployed individuals was its lowest point since February 2000.
  • The rate of 3.1 percent is the second-lowest rate on record for Wisconsin (the lowest rate was 3.0 percent in May-July 1999).
  • Wisconsin’s January (3.9 percent) to May (3.1 percent) unemployment rate decline of 0.8 percentage points in 2017 is the steepest January-May decline since 1983.
  • Wisconsin’s labor force participation rate increased by 0.2 percentage points to 68.8 percent, while the U.S. labor force participation rate decreased to 62.7 percent in May.
  • Initial UI claims ended 2016 at their lowest level in their last 30 years. Year 2017 initial UI claims are running at their lowest levels since 1989.
  • Continuing unemployment claims ended 2016 at their lowest level since 1973. Continuing unemployment claims in Wisconsin are running the lowest in at least the past 30 years.

Friday’s BLS ‘Regional and State Employment and Unemployment Summary’ report

The last two points deserve particular note:

  • Initial UI claims ended 2016 at their lowest level in their last 30 years. Year 2017 initial UI claims are running at their lowest levels since 1989.
  • Continuing unemployment claims ended 2016 at their lowest level since 1973. Continuing unemployment claims in Wisconsin are running the lowest in at least the past 30 years.

These indicate that people have stopped filing unemployment claims at levels when in 1990 the population in Wisconsin was around 4.9 million and per capita income was $18,072 or in 1975 when the state population was around 4.6 million and per capita income was $6,086. For comparison, in 2014 the state’s population was nearly 5.8 million and per capita income was $44,585. And, from 1990 to the start of 2015, the civilian labor force in Wisconsin increased from 2,567,200 to 3,120,800 persons.

Furthermore, when the unemployment rate was similarly low in the late 1990s, per capita income rose by over 5% most of those years. As recent economic reports from COWS establish, however, income in Wisconsin is currently stagnant for most Wisconsin residents except for the very few at the top of the income ladder.

So, there are big contradictions in the Wisconsin labor force. People in Wisconsin are working and not filing unemployment claims. But, they are not getting any wage increases from employers who should be having trouble finding job applicants and so trying to entice people to switch jobs with offers of higher wages and greater job benefits.

Perhaps the Department has created a system where unemployment is much higher than the data indicates because people are NOT filing unemployment claims but instead taking low-wage, part-time work as a substitute in large part because full-time, high wage work is not available from employers who are not expanding or growing their businesses. COWS 2017 report on working Wisconsin reveals that the wealth and economic gains at the very top obscures the economic stagnation for the rest of the state’s residents. The August jobs report reinforces this conclusion, as Wisconsin job growth this summer remained stagnant (private sector jobs in July were revised to a 600 decline, August preliminary numbers indicate a 5,200 loss in private sector employment, and only June shows an anemic increase of 1,300 jobs after a revision).

 

SSDI budget cuts in Trump’s proposed budget

Wisconsin Workers’ Compensation Experts has a good blog post about the proposed cuts in Social Security Disability Income (“SSDI”) benefits in the proposed Trump budget.

The claimed cuts are allegedly about fraudulent SSDI claims by people who can supposedly work. Actual SSDI fraud is minuscule, however.

Furthermore, SSDI benefits represent crucial wages for disabled individuals based on their prior earnings. As the blog post explains:

Through their contributions to Social Security, workers earn a measure of protection against disability retirement and death. (Disability insurance protects a worker against loss of earnings due to a significant work limiting impairment, and workers earn this protection by having worked and contributed to Social Security.) Many of my work-injured employees ultimately end up on Social Security Disability and this protection is particularly important to older Americans. Most people receiving Social Security Disability benefits are in their 50s or early 60s and most had only unskilled or semi-skilled jobs. Without a college degree, benefits are not significant (averaging about $1,200 per month). However, over half of Social Security beneficiaries rely on these benefits for 75% or more of their total income.

There is also already an existing and widespread program in place to encourage and facilitate SSDI benefit recipients returning to regular work. Ticket to work is a free and voluntary program by the Social Security Administration to assist SSDI benefit recipients with returning to the workforce. The employment support efforts available for SSDI benefit recipients are extensive. Presentations and training about the program are also available. The budget proposal from the current President appears to be little more than a massive cut to benefits and training and support without any acknowledgment of the difficulties disabled folk have in the workplace. Because of Ticket to Work efforts, many SSDI benefits recipients are already working limited jobs. They just cannot find the kind of full-time, regular work they once had prior to their disabilities.

Note as well that in Wisconsin, SSDI benefit recipients are prohibited from receiving unemployment benefits. Federal law, however, prohibits a similar disqualification for individuals receiving regular Social Security benefits.

NOTE: Because prohibitions on regular Social Security benefits are not allowed, the prohibition on unemployment benefits when receiving SSDI benefits also ends when an individual’s SSDI benefits become regular Social Security benefits — i.e., when the claimant reaches his or her Social Security retirement age.

Accordingly, Wisconsin employers have a financial incentive to hire SSDI benefits recipients, as these employees are prohibited from receiving unemployment benefits when laid off regardless of the layoff reason.

For those receiving SSDI benefits, however, the budget proposal represents a second strike: having already lost eligibility for unemployment benefits in Wisconsin, they are now slated to lose their SSDI benefits as well.

Trump’s UI budget proposals

Hat tip to Daniel J.B. Mitchell for this article discussing how the current President’s budget proposal could affect unemployment funding:

Trump’s budget presents new challenge to California’s long suffering unemployment fund
John Myers LA Times    5-28-17
After years of the state being deep in debt to the federal government for a loan covering the unemployment benefits of millions of Californians, state government officials have been promising the system was well on its way to stability.
And then came President Trump’s federal budget plan, with new rules and penalties for states whose jobless benefits outpace available dollars.
To understand what might be coming, it’s important to see where we’ve been. Unemployment insurance (UI) offers a weekly stipend of up to $450 for most workers who lose their job. The payments, for a maximum of 26 weeks, are paid from a payroll tax charged to employers.
Not surprisingly, unemployment payments rise and fall with the economy. In 2009, during the worst part of a recession when the unemployment rate hit 12.5% that October, state and federal government money was needed to keep California’s UI fund solvent. Payroll taxes simply couldn’t keep up with demand.
It’s worth noting that analysts saw this problem coming. State lawmakers made unemployment checks larger and raised the minimum wage in recent years, but the state portion of employer contribution rates hasn’t changed since 1984. The recession turned the problem into a crisis.
By the end of 2012, California owed $10.2 billion to the federal government for loans to the state’s UI trust fund. The debt has slowly been paid off, thanks to economic improvement that’s cut unemployment to 4.8% as of April. There’s also been a temporary surcharge on the federal government’s portion of the employer payroll tax. Current estimates are that the state’s UI fund will again be solvent in 2018.
But the president’s budget may present a new wrinkle. The Trump proposal specifically calls for a new “solvency standard” for unemployment funds, a requirement that states keep enough cash in their UI funds to avoid going into the red.
Here’s where things could get dicey. Because California’s UI fund remains in the red, any new federal mandates would almost certainly mean a new short-term cost to employers. The president’s budget suggests states should have enough money to pay unemployment benefits for six months of an “average recession,” though it doesn’t define what that means. States failing to meet the standard would have new limits on loans— the same kind of loans that kept jobless Californians with money in their pockets during the last recession.
Then there’s the reality that the only real solutions for California’s unemployment fund are to permanently raise the employer payroll tax, shrink the benefits or eligibility rules for workers or some combination of the two. An overhaul suggested by the state’s independent Legislative Analyst’s Office last fall included possibly cutting maximum jobless benefits by $75 a week and denying eligibility to some of the state’s lowest income workers.
So what’s driving the effort in Washington? It doesn’t look as ifit’s about being fiscally conservative. The Trump administration budget suggests new rules on state unemployment funds are in preparation for a proposal to create a federal mandatory paid leave of at least six weeks for workers — similar to California’s existing program, and a new mandate to likely be paid out of state UI funds.
Few state officials would disagree that California’s system for helping millions of unemployed workers was unprepared for the last economic downturn and that big changes to its financing system are long overdue. And so maybe the president’s budget plan — even if it fails to fully take effect — could be the needed spark for Sacramento lawmakers to roll up their sleeves on a long-term fix.
This proposal could well affect Wisconsin as well, despite Wisconsin’s unemployment fund being $1.2 billion in the black at the moment. This danger exists because the fund is still historically underfunded, according to the latest Department presentation. As explained in this presentation, the fund’s current “health” is due not to adequate funding so much as to record lows in benefit payments to claimants. Accordingly, modeling how the fund will behave in the future is difficult at best, and three possibilities are available: the historically low benefit payment levels continue, benefit payment levels return to normal, or something in between. Wisconsin’s unemployment fund only avoids danger with the first possibility.

UI claims-filing trouble in PA

Pennsylvania has experienced an administrative meltdown with its unemployment system that has led to months long waits for unemployment benefits to issue after many state employees were furloughed because of budget shortfalls. The auditor report details how a lack of personnel has led to extraordinary delays by the state in simply processing unemployment claims.

Community legal groups have been complaining about this meltdown for some time. See here and here.

Without additional funding, these problems are only going to get worse. As Community Legal Services of Philadelphia explains in a press release:

As badly as the UC program has served unemployed Pennsylvanians since the furloughs in December, the report indicates that without state supplemental funding, it will get far worse.  It projects that without state supplemental funding of $12.1 million in 2017 and $20.2 million in 2018, three more service centers will be closed and their staff furloughed.  The remaining staff will not be able to do more than process claims, leading to an administrative system conducted solely on-line.  Even communications between staff and claimants will be electronic.

There is precedent for an entirely on-line system.  In 2011, Florida began requiring all UC filings to be on-line.  Since then, UC recipiency has fallen to 1 in 8 unemployed workers, the lowest rate in the country.  See Ain’t No Sunshine: Fewer than One in Eight Unemployed Workers in Florida Is Receiving Unemployment Insurance (NELP 2015).

This experience in Florida provides plenty of caution for Wisconsin’s announced push to go to an on-line only system. As described in this blog, benefit payments in Florida have plummeted under its on-line system.