News of the Day

Wisconsin Legislature Votes To End Federal Supplemental Unemployment Benefits

Republicans in the state Legislature have voted to discontinue federal unemployment insurance benefits that were added during the coronavirus pandemic.

The weekly $300 benefits, down from $600 earlier in the pandemic, were set to expire in September. Unless Wednesday’s move is vetoed by Gov. Tony Evers, they’ll end much sooner for Wisconsinites. His administration did not immediately respond to a request for comment on the vote.

The bill passed the Senate without debate. The vote was on party lines, with 20 Republicans in favor and 12 Democrats opposed.

In contrast, there were more than two hours of discussion in the Assembly, where Republicans focused on the challenges facing Wisconsin businesses. More businesses than not have “Help Wanted” signs in the window, Speaker Robin Vos, R-Rochester, noted. Ending supplemental unemployment benefits won’t be a silver bullet to address the lack of workers, but unemployment is meant to serve as a short-term bridge, he said.

“Now, if we were in the middle of a recession or a pandemic where jobs are difficult to come by, I could understand, perhaps, those on the other side who advocate for keeping the bonus unemployment longer,” he said. “But we are now in the most critical season for many businesses in Wisconsin, and that’s the summer.”

Ultimately, the bill passed the Assembly with a vote of 60-37. More than two dozen states have already discontinued the supplemental benefits, which Congress passed three times during the pandemic.

The legislation passed Wednesday ends four types of federal unemployment aid: Pandemic Unemployment Assistance, Pandemic Emergency Unemployment Compensation, Federal Pandemic Unemployment Compensation and Mixed Earner Unemployment Compensation.

Wisconsin Set for ‘Unprecedented’ $4.4 Billion Windfall

As a new estimate puts $4.4 billion more than previously estimated into politicians’ hands for the next state budget, Wisconsin lawmakers face a standoff about how to spend the extra money.

The estimate from the nonpartisan Legislative Fiscal Bureau comes after an initial January estimate, and projects more than $4.4 billion in state revenue than previously thought over the next three years–separate from another $2.5 billion from federal pandemic aid that is entirely up to the governor to spend.

This time, the new estimate includes record-setting state tax revenues from April and May that have shifted the picture of what the post-pandemic state revenue picture will look like. An LFB official called it “unprecedented,” and said the new projection was because of “vastly improved economic forecasts for the remainder of this year and the next two years.”

Gov. Evers responded Tuesday morning by immediately lifting agency budget requirements for the 2020-2021 fiscal year, meaning state departments–like the UW System which had to cut $45 million–no longer have to trim millions from their 20-21 budget. In total, the governor had directed the Department of Administration to find more than $250 million in cuts across 18 state agencies this year, a now-lifted requirement–and money that will have to be spent quickly by the end of the fiscal year.

“I think Democrats are open to a tax cut,” Assembly minority leader Gordon Hintz said in an interview. “I think we have the resources. But let’s maximize the resources that we have…this is a one-time opportunity to reinvest in broadband, reinvest in our infrastructure, get more money in the classroom to address opportunity, address mental health, and then look at ways to put money in more people’s pockets with a targeted income tax cut.”

Republican legislative leadership immediately pushed back on using the extra funds to expand government, calling the windfall temporary and saying the funds should instead find their way back directly to taxpayers.

“If we recklessly spend this new money and grow taxpayer obligations in an unsustainable way, we risk future fiscal stability – a stability Republicans have spent a decade cultivating,” Joint Finance Committee co-chair Howard Marklein said in a joint statement with budget leaders and Senate majority leader Devin LeMahieu.

LeMahieu also took the opportunity to call for ways to use the money to reduce tax burdens. “Hard-working taxpayers gave the state a massive surplus,” he noted.

“This is a temporary jump in tax revenue—sound financial planning would require this money is not spent on more government programs but returned to the taxpayer.” Senate president Chris Kapenga (R-Delafield) said in a statement. “There is no magic money tree, folks.”

According to the Associated Press, Speaker Robin Vos after meeting with Sen. LeMahieu will target a $4 billion tax cut, but isn’t sure yet which taxes will be targeted.

National Average for Gas Enters Fourth Week Above $3

Experts were predicting that gas prices wouldn’t stay above $3 very long, estimating a fall around Memorial Day weekend. But, that isn’t happening; instead, the national average price for a gallon of gas is entering it’s fourth week above the $3 marker.

Wisconsin drivers are still below a $3 average, paying around $2.88/g. This is 3.1 cents higher than last month and 94.4 cents higher than this time last year. According to a Gasbuddy expert, part of the high price tag has to do with demand.

“According to GasBuddy data, gasoline demand last week eclipsed the prior week, when millions of Americans were gearing up for Memorial Day travel, not an easy feat, but highlights that economic conditions are ripe for continued growth in demand, contributing to prices holding at high levels,” said Patrick De Haan, head of petroleum analysis for GasBuddy. “s OPEC has maintained a slow but steady increase in oil production, that additional production is quickly being gobbled up by a global economy that continues to recover.”

Now, barring any future problems to supply and demand, De Haan says gas prices are likely to hover around the low $3 mark through July 4.

May Jobs Report: 559,000 Jobs Added, Unemployment Rate Falls to 5.8%

Employers added 559,000 jobs in May, the Labor Department said Friday, missing the addition of 650,000 jobs that analysts surveyed by Refinitiv were expecting. April’s reading was revised higher by 12,000 to 278,000.

The unemployment rate, meanwhile, declined 0.3 percentage points to 5.8%, its lowest since the pandemic caused businesses to shut their doors in March 2020.

Despite the gains, the U.S. economy has 7.6 million, or 5%, fewer workers from its February 2020 pre-pandemic level.

“Only a few months ago we had expected to see several months’ worth of gains north of one million as the economy reopened, but labor supply is bouncing back much more slowly than demand,” said Paul Ashworth, chief U.S. economist at research firm Capital Economics.

The labor force participation rate was little changed at 61.6% and has remained between 61.4% and 61.7% since last June. The reading was 1.7 percentage points below where it was in February 2020. Average hourly earnings rose 15 cents to $30.33 while the average workweek held at 34.9 hours for the third month in a row.

U.S. companies have had a difficult time finding workers as a supplemental unemployment benefit of an extra $300 per week has encouraged many to stay home. At least 25 states have announced plans to end the benefits earlier than their September expiration.

Economists say the labor market’s recovery could continue to run below its potential until the benefits are phased out.

“With unemployment benefits set to fade in the fall, we may be waiting until the end of summer before we see clear evidence of a fundamentally healing labor market,” said Seema Shah, chief strategist at Principal Global Investors.

Assembly Speaker Looks to Crack Down on Those who Skip Job Interviews

Wisconsin should get tougher on unemployed people who apply for jobs to meet work search requirements but then skip out on the interview, Assembly Speaker Robin Vos said Wednesday.

Vos, the owner of a food packaging business, said during the pandemic that he was fearful he would go bankrupt. Now Vos said he’s also battling worker shortage problems and is offering gift cards to employees who show up to work on time five days a week.

Vos, in a back and forth with a business owner who described job applicants skipping out on interviews, questioned whether Wisconsin should do more to combat that. “It seems like in Wisconsin we don’t do a very good job to report a no-show for an interview and doing something about it,” Vos said.

Republican legislative leaders, along with the state chamber of commerce, trade groups and local economic development groups, are advocating for the state Legislature to repeal a $300 unemployment supplement and other enhancement programs enacted during the coronavirus pandemic.

Wisconsin Republicans last month reinstated a work search requirement for the unemployed, a move designed to get more people back into the workforce. The Assembly was scheduled to vote next week on a bill ending the $300 payment and other federal enhancement programs.

Governor Evers Defends Additional $300 a week in Federal Unemployment

Governor Tony Evers defended the additional $300 a week in federal unemployment benefits being allocated in response to the COVID-19 pandemic.

His position comes despite business groups calling on him to immediately stop the payments.

Critics argue the additional money is a major factor in the state’s workforce shortage.

“First of all, I’d like to see proof that the people struggling on unemployment, that if they all came back to work suddenly this problem is solved,” Evers said outside the state Capitol. “It’s an issue I’ve seen no data on, none whatsoever.”

Republican lawmakers are moving legislation that would end the additional federal money.

The governor appears likely to veto it. “I’ll take a look at it,” Evers said when asked Tuesday.

The additional $300 a week in federal benefits is set to expire on Labor Day.

State to Give 84,000 Wisconsin Small Businesses $5,000 grants by End of June

Some 84,000 Wisconsin businesses have been invited to apply for a $5,000 grant to be distributed by the Wisconsin Department of Revenue and Wisconsin Economic Development Corp.

Gov. Tony Evers authorized $420 million, through funding received by the American Rescue Plan Act, to be distributed to businesses that apply by 4:30 p.m. on June 7.

The businesses selected to be eligible for the grants had to have an annual gross revenue between $10,000 and $7 million.

Last year WEDC distributed $240 million to roughly 60,000 small businesses through funds received from the CARES Act.  Businesses that received funding last year could be eligible again for this new round of funding. Also, businesses that were started in 2020 are also eligible.

WEDC said the state is hoping to start distributing the grants to businesses as early as the first week in June, with the goal of having all the money distributed by the end of June.

Those interested in learning more about the program should visit the Department of Revenue website.

A Key U.S. Inflation Gauge Rose 3.1% Year over Year

A key inflation indicator rose a faster-than-expected 3.1% in April as price pressures built in the rapidly expanding U.S. economy, the Commerce Department reported Friday.

The core personal consumption expenditures index was forecast to increase 2.9% after rising 1.9% in March. Federal Reserve officials consider the measure to be the best gauge for inflation, though they watch a number of metrics.

The index captures price movements across a variety of goods and services and is generally considered a wider-ranging measure for inflation as it captures changes in consumer behavior and has a broader scope than the Labor Department’s consumer price index. The CPI accelerated 4.2% in April.

That increase in inflation came with a sharp deceleration in personal income, which declined 13.1%. But that actually was less than the 14% estimate. Personal income had surged 20.9% in March following the latest round of government stimulus checks.

 

Unemployment Claims Fall to New Pandemic Low of 406,000

New applications for regular unemployment benefits fell in late May for the fourth week in a row as the U.S. economic recovery from the waning coronavirus pandemic induced companies to hire more workers.

Initial jobless claims sank 38,000 to 406,000 in the week ended May 22, the government said Thursday. That’s the fewest number of requests for compensation since the onset of the pandemic nearly 15 months ago.

New requests for compensation are down sharply from about 900,000 in early January. The number of new applications had been running in the low 200,000s before the viral outbreak last year, however.

Another 93,546 applications for jobless benefits were filed last week through a temporary federal relief program. These claims had peaked last year at well over 1 million a week but have now dwindled to a pandemic low.

The number of people already collecting state jobless benefits, meanwhile, fell by 96,000 to a seasonally adjusted 3.64 million in the week ended May 15. These are known as continuing claims.

Some 5.2 million people who have exhausted state compensation were also getting extra federal benefits. The federal program ends in September.

Altogether, the number of people reportedly receiving benefits from eight separate state and federal programs totaled 15.8 million as of May 8. These claims had topped 30 million early in the crisis.

Fewer than 2 million people were getting benefits before the pandemic erupted.

Wisconsin Republicans Reject Special Session on Medicaid Expansion

The Republican-controlled state Legislature took no action Tuesday during a special session called by Gov. Tony Evers to expand Medicaid in Wisconsin and accept $1 billion in additional federal funds.

Governor Evers called the special session last week and proposed a bill that would add Wisconsin to a list of 38 other states and Washington, D.C., that have expanded Medicaid since 2014, when it was first offered as part of the Affordable Care Act. The expansion would extend Medicaid health benefits to 91,000 additional people in Wisconsin by raising the income cap from 100 percent of the federal poverty level, which is $26,500 for a family of four, to 138 percent, or $36,570.

“I think we should be doing everything we can to make sure our economy bounces back from this pandemic, and this special session was about finding common ground and getting bipartisan support for our efforts,” Evers said in a prepared statement. “Clearly, it’s disappointing Republicans don’t seem to take that responsibility seriously, and they’ll have to explain to Wisconsinites why they made the decision they did today.”

Wisconsin Republicans have for years opposed the expansion, calling it an unnecessary increase in welfare and arguing it could saddle Wisconsin with additional costs in the future, if federal support were to decrease.

“Wisconsin provides quality, affordable coverage for all those who need it and expanding the program would simply lead to more people on a taxpayer funded government program and more expensive private plans for others,” Assembly Speaker Robin Vos, R-Rochester, and Senate Majority Leader Devin LeMahieu, R-Oostburg, said in a letter to the governor Tuesday. “Expanding Medicaid as you have proposed is unneeded and even reckless in a state that has no coverage gap and has an effective reinsurance program.”