Thousands of out-of-work Wisconsinites who have been searching for a job for a long time will lose their unemployment benefits at the end of the year, unless Congress acts to renew federal unemployment benefits. According to a new analysis from the Wisconsin Budget Project, 65,500 jobless workers in Wisconsin will lose access to federal benefits over the next six months, as shown in the chart below.
Most states pay unemployment insurance benefits to jobless workers for a maximum of 26 weeks. In times of higher unemployment, Congress authorizes federally-funded benefits that provide assistance to people who reach the limit on their state-financed unemployment insurance. If the program that provides federal unemployment benefits is allowed to end, the maximum duration of unemployment benefits for jobless workers in Wisconsin will drop by more than half, from 54 weeks to 26 weeks.
Today’s job numbers show little improvement in long-term unemployment
Unemployment benefits kept nearly two million people out of poverty last year, but that number has declined dramatically in recent years as policymakers have curtailed benefits available for unemployed workers, according to a recent report from the Center on Budget and Policy Priorities. And it will fall much more dramatically in January if Congress does not renew the federal extended benefits for the long-term unemployed.
In 2012, unemployment benefits lifted 1.7 million people above the federal poverty line, down from 3.2 million people in 2010, as shown in the chart below. Part of that decline in the number of people kept out of poverty stems from the fact that fewer workers are unemployed and therefore receiving unemployment benefits, but a much larger portion of the decline stems from the fact that fewer workers that are unemployed are receiving benefits. According to the report, the number of UI (Unemployment Insurance) recipients for every 100 unemployed workers fell from 67 in 2010 to 48 in 2012. Read more
A Significant Economic Hit to the National Economy and a Gradually Expanding Erosion of Key Programs
Economists expect the federal government shutdown to have significant adverse consequences for the national economy. This LA Times article reports that some project that even just a two-week partial shutdown will cause a reduction of 0.3 to 0.4 of a percentage point from national economic growth in the fourth quarter. That’s particularly a problem when the economic recovery is already so sluggish that job growth has been barely keeping ahead of population growth.
I worry about those economic consequences, but I am also very concerned about the effects of the shutdown on children and families in our state – especially for low-income and vulnerable families. Fortunately, most federally funded programs for those families will continue at least through October, but the consequences could be very serious for vulnerable families if the shutdown lasts well into the fall. Read more
Workers in Wisconsin and across the U.S. must still cope with a relatively weak labor market. That is especially challenging for low-wage workers who are struggling with the declining value of the minimum wage, reductions in employer benefits like health care, and growing inequality. Those challenges are exacerbated in Wisconsin by budget decisions made by state lawmakers.
A new Wisconsin Budget Project issue brief examines how the how state budget choices are affecting low-wage workers in Wisconsin. It focuses primarily on the effects of the new budget bill, but also examines a few instances of how that bill continues or compounds the challenges for low-wage workers caused by the 2011-13 budget.
Some of the major effects include the following policy choices relating to health insurance, child care, taxes and unemployment insurance:
Making health insurance and care much more expensive for many parents now in BadgerCare
The 2013-15 budget bill cuts in half the income eligibility ceiling for adults participating in BadgerCare – reducing that cap from 200% of the federal poverty level to just 100%. Read more
In a long Q & A format interview in the Capital Times, I described a number of the faults of the 2013-15 budget bill. One of the defects I mentioned in that interview is that the bill employs a “Robin Hood in reverse” strategy for allocating resources. Because the article doesn’t provide much explanation of the reasoning behind that charge, I feel obligated to elaborate.
Actually, I think there is a very broad range of reasons for concluding that the recently enacted budget shifts resources from the poor to the rich. A new Wisconsin Budget Project paper explains ten of those reasons, which are summarized more succinctly below:
1) Diverting federal block grant funds for low-income families – The bill siphons off funding from the federal block grant known as Temporary Assistance to Needy Families (TANF) and indirectly uses those funds to build up the state’s surplus, which helped lawmakers enact larger income tax cuts that primarily benefit the wealthy. Read more
A proposal by Republican state legislators could have the effect of cutting the maximum number of weeks of unemployment benefits by half or more.
The new proposal would link the maximum duration of state unemployment benefits to the state’s unemployment rate. In all but the worst economies, the proposal would result in Wisconsin offering fewer weeks of unemployment benefits than the current maximum of 26 weeks. The table below shows the maximum number of weeks of unemployment benefits proposed at each unemployment rate.
If this policy had been in place over the past decade, jobless workers would have had access to far fewer weeks of state-funded unemployment benefits. The chart below shows the number of weeks of unemployment benefits that would have been available during each quarter of the last decade. The current maximum of 26 weeks of state-funded unemployment benefits would have been available only at the peak of the recession, if this policy had been in place. Read more
Small Disagreement Suggests Deep Dispute over Role of Unemployment Insurance Advisory Council
The state Assembly passed a bill Wednesday to approve a bipartisan idea, but in the process rekindled debate about respect for collective bargaining. What made the debate interesting and significant is that it could have been avoided by simply passing the version of the bill approved by the Unemployment Insurance (UI) Advisory Council, with the full support of the labor and business groups on that advisory body.
The substantive merits of the debate, which concerned only a small part of the bill, are far less important than the procedural matter of whether the Legislature decides this session to depart from the long practice of deferring to the recommendations of the UI Advisory Council. The Council uses a consensus process that provides stability to the state laws relating to unemployment benefits and taxes. Both the labor and business groups prefer that stability to the erratic swings in the UI system that could occur if the law is changed significantly every time control of the legislature changes hands. Read more
he automatic budget cuts included in sequestration would harm Wisconsin’s families. But it would be even worse to replace sequestration with deeper cuts in domestic programs, as some members of Congress are advocating.
Work Sharing Bill Could Be the One Easy Issue in a Very Contentious Session on Unemployment Insurance Policy
In the last couple of years, Wisconsin hasn’t exactly been aggressive in pursuing opportunities for federal funding. However, I’m guardedly optimistic that state policymakers will decide to take advantage of federal start-up funds to help initiate a work sharing program that allows employees whose hours have been reduced to collect partial unemployment insurance (UI) benefits.
As I explained in a WCCF blog post yesterday, State Senator Julie Lassa (D-Stevens Point) presented a draft of work-sharing legislation at a recent meeting of the Unemployment Insurance Advisory Council, which advises the Legislature and Governor on UI issues. The council agreed to forward the proposal to the U.S. Department of Labor for review – to ensure that Wisconsin would qualify for federal start-up funding under a law passed by Congress about a year ago that encourages states to adopt this type of work-sharing legislation. Read more
The maximum duration of federally funded unemployment benefits will drop in Wisconsin next month because of a reduction in the state’s unemployment rate over the last several months. We’ve been following this story for the past year, as federal policy changes and a slow decline in unemployment have triggered several contractions in the length of unemployment insurance (UI) benefits.
The decline in Wisconsin’s unemployment rate has followed a roller coaster path this year, which caused the duration of benefits to fluctuate as the 3-month average unemployment rate dropped below 7.0% early last summer and then rose back above that level in the fall. Because it’s again below 7% (currently 6.7%), the maximum length of benefits for the long-term unemployed will drop in February to 54 weeks, from the current limit of 63 weeks.
According to a letter sent to legislators Friday by the Department of Workforce Development, approximately “10,500 Wisconsin UI claimants who exhaust benefits in the federal EUC Tier 2 program during the weeks following February 9, 2013 will not be able to move into Tier 3, per the federal government.”
Although I’m very sorry to see the duration of benefits reduced, I think there’s some logic to phasing down these benefits as the economy improves. Read more