Reading view

There are new articles available, click to refresh the page.

Federal funding cut endangers Wisconsin unemployment system update

Outside view of State of Wisconsin Department of Workforce Development building
Reading Time: 4 minutes

In the early days of the COVID-19 pandemic, when many businesses closed or laid off workers, a massive influx of 8.8 million unemployment claims overwhelmed Wisconsin’s aging unemployment insurance system. 

That created a backlog of hundreds of thousands of claims. Many potential applicants weren’t able to connect to the department’s call center to complete the process, and some Wisconsinites waited months without receiving a single unemployment payment. 

Following those backlogs, the state has made strides to update the system and move away from outdated, decades-old computer systems, said state Department of Workforce Development Secretary Amy Pechacek. 

She said DWD now has a digital portal for people to file unemployment claims and send documents online. The department also uses online chatbots to respond to questions in multiple languages, as well as uses artificial intelligence tools to assist with data entry.

“With these enhancements, the department is now paying 88% of all claims filed within three days or less,” Pechacek said. “That other 12% of claims that go a little bit longer are typically just because we have to do investigations if there’s some discrepancies between what the claimant and the employer are saying.”

In a letter to the Trump administration on Tuesday, Gov. Tony Evers said the administration is blocking nearly $30 million in federal funding to Wisconsin, which could prevent the state from finishing the project and potentially leave it vulnerable to cyberattacks and fraud.

“If the Trump Administration does not reverse course and provide the $29 million Wisconsin expected to receive, the state will not be able to complete its UI system modernization project,” Evers wrote to U.S. Labor Secretary Lori Chavez-DeRemer.

That funding was part of the American Rescue Plan Act, a pandemic recovery law signed by former President Joe Biden, and was being primarily used on anti-fraud measures, according to the governor’s office. Evers’ letter says the U.S. Labor Department “suddenly terminated” the funding in late May. 

The termination halted work on identity authentication tools, a digital employer portal, artificial intelligence enhancements, fraud prevention and cybersecurity tools, according to Pechacek. She said the employer portal was the DWD’s next major rollout and would have made it easier for employers to provide information to the state.

“The employer portal is really one of the largest losses from this federal action,” Pechacek said. “Our employers … have to submit quarterly wage information (and) verify claim information, and some of those components are still very antiquated.”

Evers wrote that the Department of Labor “cited no objections” to those initiatives beyond “an unsupported assertion that they ‘no longer effectuate the Department’s priorities.’”

Pechacek said the state has already spent “slightly over half” of the $29 million. She said those grants were “reimbursement-based,” meaning the state first had to spend the money and then be paid back by the federal government.

“There are seven projects that have now been paused in a variety of different states of completion, so those are sunk costs,” she said. “Without realizing the full modernization effort, we can’t roll those projects out.”

The state appealed the Labor Department’s termination and received a letter from the federal government in late July that “acknowledged the appeal while restating the Department’s earlier basis for termination,” the governor’s letter states.

“The people of Wisconsin deserve systems that function, state of the art, with high integrity and accuracy,” Pechacek said. “We are also going to pursue litigation to reclaim the funds which were rightfully awarded to us already and improperly rescinded.”

In addition to the $29 million in lost funding, the project was using $80 million from a different program under the American Rescue Plan Act, according to a report sent to the Legislature’s budget committee. The document states that the $80 million has not been impacted but is “insufficient to support the full modernization work.”

Pechacek said DWD has also asked the state Legislature to allocate additional state funds toward finishing the effort but said there hasn’t been much movement on that front.

Wisconsin isn’t the only state that’s had federal funding to upgrade unemployment systems clawed back by the Trump administration. In May, Axios reported the White House terminated $400 million of that funding across the country. A July report from state agencies said $675 million in grants awarded to unemployment programs in over 30 states and territories had been terminated.

The U.S. Department of Labor did not immediately respond to WPR’s request for comment. In May, the federal agency told Axios in a statement that the unemployment modernization funding was “squandered” on “bureaucratic and wasteful projects that focused on equitable access rather than advancing access for all Americans in need.”

In the letter, Evers also said failing to complete Wisconsin’s modernization effort would put the state’s unemployment system at risk of becoming overwhelmed again during any future economic downturn. He says that would “create acute hardship for Wisconsin families.”

“It is our obligation to prevent this scenario from coming to pass,” Evers wrote. “I urge you to reverse the decision to defund these critical government efficiency and fraud prevention initiatives.”

Pechacek said the state isn’t reverting back to old technology in the pieces of the modernization that have already been completed in “major areas.” But she said failing to fully finish the effort poses a risk to Wisconsinites because there are still aspects of the system running on an outdated coding language.

“Any time we don’t fully invest in upgrading and reach the programmatic goals that we have set to get fully off of the antiquated systems, we are at risk to be overwhelmed again,” she said. “All of that leads us to be more vulnerable, in a time of significant increase of accessing the system, to the cyber attacks, to fraudulent efforts, to being compromised.”

This story was originally published by WPR.

Federal funding cut endangers Wisconsin unemployment system update is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.

July produced ‘a mix of up and down’ numbers for Wisconsin jobs and employment

By: Erik Gunn
Mural depicting workers

Mural depicting workers painted on windows of the Madison-Kipp Corp. by Goodman Community Center students and Madison-Kipp employees with Dane Arts Mural Arts. (Photo by Erik Gunn /Wisconsin Examiner)

Wisconsin’s jobs and employment numbers showed a slightly softening economy in July, following national trends, the state labor department reported Thursday.

“The Wisconsin labor market has cooled a bit along with the national economy. Unemployment remains historically low,” said Scott Hodek, section chief in the office of economic advisors for the Wisconsin Department of Workforce Development (DWD), in a briefing on the July numbers.

Private-sector jobs dropped slightly in July from June, DWD reported. Employment and labor force participation edged down slightly, too, as did the state’s unemployment rate.

“What we’re seeing is that Wisconsin seems to be following the national trend,” Hodek told the Wisconsin Examiner. While the economy is cooling down, “we’re actually still seeing historically low unemployment rates,” Hodek said. “So you’ve got kind of a mix of up and down indicators.”

He pointed to national economic uncertainty as well as the longstanding challenge of Wisconsinites aging out of the workforce faster than younger residents are entering it as likely contributors to the economic cooling. 

DWD pegged the number of Wisconsinites working in July at 3.05 million, a drop of 4,500 from June and down 32,500 from July 2024.

The number of people who were unemployed in July was projected at 98,600 — down 2,200 from June, but up 5,400 from July 2024. The unemployment rate for July was 3.1%.

The labor force shrank in July to just under 3.15 million, a decline of 6,700 from June and a decline of 27,000 from July 2024. The labor force is defined as people 16 or older who are working or seeking work, excluding people in the military or who are in institutions such as nursing homes or prisons.

Wisconsin’s labor force participation rate was 65% of the state’s population 16 or older in July — down 0.1% from June and down just under 1% from July a year ago. Labor force participation remains ahead of the U.S. as a whole, while unemployment is lower, DWD reported.

Employment and labor force participation numbers are projected from a monthly survey of households. A separate survey, polling employers, produces data on the number of jobs in the state.

Wisconsin counted just under 3.06 million nonfarm jobs — an increase of 1,800 over June and 20,200 over July a year ago. Private sector jobs in July totaled more than 2.6 million, a decrease of 3,800 from June but still 15,100 ahead of July 2024.

Construction jobs fell by 500 from June, Hodek said, but remained 3,100 ahead of July 2024. Manufacturing jobs fell by 500, and are down 1,800 from a year ago.

Rosier picture in Wisconsin than broader U.S.

Wisconsin’s jobs report Thursday lacked the drama of the national jobs numbers reported two weeks ago that prompted President Donald Trump to fire the nation’s chief statistician.

On Friday, Aug. 1, the Bureau of Labor Statistics (BLS) reported the U.S. gained 73,000 jobs in July, below analysts’ estimates. The BLS also updated national job numbers for May and June, dramatically reducing both: in June, a gain of 14,000 jobs instead of previously reported 147,000, and in May, an increase of 19,000 instead of the previously reported 125,000.

The national unemployment rate of 4.2% was in line with economic forecasts, CNBC reported. Other indicators nationally added up to “a slow but persistent cooling trend,” the North America regional president at Manpower Group, Ger Doyle, told CNBC.

Trump took to his social media platform, Truth Social, to declare without evidence that the numbers were “RIGGED.” He summarily fired the director of the BLS, replacing her this week with an economist from the far-right Heritage Foundation who has called for a broad overhaul of the agency.

Hodek told the Wisconsin Examiner Thursday that DWD has not received any communications about changes in procedure from the BLS.

“We’ve certainly seen the news and we’re monitoring the situation, of course,” Hodek said. “But we do have confidence in our data and we can’t really speculate on what could possibly happen. We’ll just need to wait and see what the Bureau of Labor Statistics actually does down the road.”

Hodek said that revisions of previous months’ reports are “a normal part of the data process.” The first round of data isn’t inaccurate, but “as you take more time, the data become more accurate,” he said.

“Ideally you want a combination of both —  something that kind of gives you the current edge of where you’re headed, and then as more and better data come in, you get a better sense of what has been happening,” Hodek said.

For example, a quarterly collection of information from the unemployment insurance system “actually covers most employers and it’s very solid data,” he said. “But it lags by half a year.”

Information from that report can be used to further refine the calculations and assumptions that go into the state’s monthly reports.

The monthly numbers for the nation as a whole and for each state go through different calculations and formulas, Hodek said, so it’s not possible to draw direct connections between the state jobs numbers and the national jobs numbers.

It’s also too soon to explain the seemingly dramatic differences between the national jobs picture and Wisconsin’s, he added: “We’ve only got a couple of data points where we saw those large revisions, so that doesn’t really make a trend necessarily yet.”

Hodek doesn’t think Wisconsin is somehow “diverging from the national economy,” however, he said. “In fact, it’s fairly unlikely in general, just because what happens to the national economy and the global economy is going to impact us as well. We tend to follow the national and global trends.”

GET THE MORNING HEADLINES.

❌