State Estimates Employers will Save $637 Million on Unemployment Taxes by 2018

Recently, Gov. Scott Walker  touted the savings of $637 million in unemployment taxes for businesses paying into the state’s unemployment program.

The majority of those savings, $482 million since 2013, are the result of an improving economy and roughly a quarter come from changes made to unemployment tax schedules since 2016. Walker says the state went from having the highest tax to the lowest over the last three years, resulting in $155 million in savings, including an estimated $20 million in the 2018 tax year.

Funding for the unemployment trust fund comes from roughly 140,000 covered employers in the state, meaning the savings from tax schedule changes amounted to about $1,100 per employer over three years and the improving economy savings resulted in $3,440 per employer over five years.

Walker pointed out that the state’s unemployment trust had a $1.4 billion deficit in December 2010 and was one of 30 states to use federal loans to pay benefits during the Great Recession, but now has a $1.3 billion positive fund balance as of June 30.

“With a significantly improved business climate, economic growth and smart UI system reforms, employers are adding jobs and Wisconsin workers are finding good-paying opportunities to support themselves and their families,” Walker said.

After hovering around 4.2 percent for much of 2016, the state’s unemployment rate has steadily fallen over the first five months of the year to 3.1 percent in May. Month-to-month declines in unemployment have picked up since the start of the year, averaging a drop of about 6,100 or 5.3 percent.

Employment, meanwhile, has averaged a 0.5 percent increase from one month to the next this year, a jump of about 14,000.

Walker also touted reforms to the state unemployment program instituted in recent years. Those changes included a rule making a failed or refused drug test count as a failure to accept suitable work, although those who do fail could keep their benefits by enrolling in drug treatment and completing a job skill assessment.

The changes also lowered the wage threshold for suitable work by 5 percentage points and require those with an expectation of reemployment to job search if they were going to be laid off for more than eight to 12 weeks.