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Jobless' loss, taxpayers' gain in Wisconsin

By   /   April 5, 2012  /   No Comments

By M.D. Kittle | Wisconsin Reporter

MADISON — Wisconsin’s improving unemployment numbers will cost thousands of out-of-work individuals income, but the end of federal extended unemployment benefits could save the nation’s taxpayers millions of dollars per month.

The Wisconsin Department of Workforce, or DWD, has notified 7,761 people collecting unemployment insurance under the federal Extended Benefits program that their unemployment will end after Saturday.

DWD said the cut in benefits is “due to the continued improvement in the state’s unemployment rate.”

Critics of Republican Gov. Scott Walker’s administration dispute the “continued improvement” assessment, but Workforce Development officials point to a long list of signs that recovery is taking hold after several months of anemic economic activity.

Extended-benefit recipients at the end of the line in the old system, which granted total state and federal benefits up to 86 weeks, are to be dropped from the rolls because the Badger State’s jobless numbers in recent months have turned around.

The state’s three-month average seasonally adjusted unemployment rate, between December and February, fell to 7 percent, triggering an end of the 13-week Extended Benefit program. Out-of-work Wisconsinites now will be able to collect unemployment benefits for a maximum of 73 weeks, according to DWD spokesman John Dipko.

Wisconsin’s average jobless rate for the first three months of 2012 was at its lowest level since December 2008, January 2009 and February 2009, when the average rate was 6.5 percent, Dipko said.

Wisconsin Budget Project, a left-leaning online research organization, last month decried the “irony” of the situation.

“… Wisconsin’s jobless workers are being penalized by a drop in the unemployment rate that has occurred even while there has been little or no increase in net jobs available in the state,” wrote WBP director Jon Peacock.

Wisconsin’s economy suffered through six straight months of employment contraction in the second half of 2011, before private-sector payrolls added 13,800 jobs in January and another 4,000 in February, according to preliminary estimates from the U.S. Bureau of Labor Statistics.

DWD pointed to a number of areas of improvement in the economy:

  • Unemployment claims have dropped by 34 percent since 2010, including a 19 percent decline last year.
  • job listings on JobCenterofWisconsin.com topped 38,000 on Thursday.
  • The Federal Reserve Bank of Philadelphia recently projected the Badger State’s economy to grow 1.95 percent over the next six months, outpacing many other areas of the nation.

Savings benefits

While critics blasted the cut in benefits in Wisconsin, taxpayers nationally will begin saving millions of dollars this month.

The state has been paying out — in federal money — about $8 million per month to individuals receiving extended benefits, according to DWD’s Division of Unemployment Insurance.

Oregon and Washington this week announced that their improved jobless numbers will push thousands of unemployment insurance beneficiaries off the rolls, too.

Unemployment has been costly on the U.S. debt as the national jobless rate topped 9 percent for months during the roughest times of the worst recession in decades.

Unemployed Americans collected more than $430 billion in jobless benefits between 2008 and 2011, according to the Bureau of Labor Statistics.

Congress added another $30 billion cost to extended benefits this year, following a showdown on a bill extending the payroll tax and assistance for the out-of-work.

Benefit disincentive?

Beyond the fiscal cost, one policy expert said, is the disincentive of extending unemployment benefits.

“There’s something about the option of free money from the government; people prefer not to work,” said James Sherk, senior policy analyst of Labor Economics at the Heritage Foundation, a conservative research institution. “The greater problem is, it changes the types of work people look for, encouraging people to be more selective in the jobs they search for.”

While Sherk said it is understandable displaced employees desire to stay in their professional fields and fear moving to find work, he said there remain realities about sectors, such as construction and finance, that don’t look to return to their pre-recession strength for some time.

Walker has been of the same mind.

"I am of a mindset that a further extension of benefits won't create a single job or encourage citizens to rejoin the workforce," the governor said in a letter last April to the state's Unemployment Insurance Advisory Council.

But even as the economy improves nationally and the jobless numbers fall, there remains a fair amount of discouragement in the job market, with people abandoning the search, BLS research shows.

DWD’s Dipko said the agency and other public and private sector partners are working with long displaced employees to connect them to the services that will help them get back to work.

Sherk, as many Republicans have, stressed unemployment benefits should be tied to conditions, such as requiring beneficiaries who have dropped out of high school to get their GEDs.

“If you don’t have a GED, (the requirement) is going to make you a lot more employable,” he said. “If someone is slacking … they drop off the rolls.”

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