Wisconsin Unemployment Backlog Could Last To October

MILWAUKEE, WI — A backlog of more than 700,000 unemployment claims could last until October as state officials grapple with unprecedented numbers of people filing for unemployment amid the ongoing coronavirus pandemic.

"We've all seen the consequences of deferred action, and we need to make sure our system is prepared for the next time Wisconsinites need to access the economic lifeline of unemployment insurance," Caleb Frostman, Wisconsin Department of Workforce Development said this week.

Those consequences are illustrated by a Waukesha man who was laid off more than a month ago.

According to a WISN 12 report, Matt Pugel told the television station that he was laid off in late March and filed six unemployment claims — one a week. He also said he's called Workforce Development Centers more than 300 times in the past month to get an answer on his unemployment. So far, he says he's received no answer whether he's going to be getting unemployment.

Frostman said they're working as fast as they can to add more staff, yet those hirings take time due to a lengthy vetting process. In the meantime, Frostman said his existing staff's work in determining eligibility on nearly two million weekly claims in eight weeks "represents eight months of work."

Officials Look For Answers

While some state officials say it's all on the Department of Workforce Development to fix the problem, others say their inability to handle the unprecedented number of claims stems from years of neglect at the legislative level.

“I don’t blame the Department for being overwhelmed. The influx of claims is a situation that few could have handled regardless of resources,” State Sen. Van Wanggaard (R-Racine) said in a statement Thursday. “But there comes a point when you need to make progress, and need to stem the tide. I’m glad that DWD will be adding staff, adjudicators and call centers to help with the situation in the next couple of weeks. But this is like the little Dutch boy putting a finger in the dam after the town has flooded.”

Fellow State Sen. Robert Wirch, (D-Somers), put the onus on Republican leadership for not taking the time to bolster the state's unemployment system when they had the chance.

“Nothing was done for six years to update that antiquated technology,” Wirch said in a Wisconsin State Journal report. “Republicans control how the money is spent and the budget, and they chose not to put money in to upgrade the unemployment system.”

According to state unemployment data, between March 15 and May 10, 2.4 million weekly claims were filed in Wisconsin. By comparison, state officials received 311,000 weekly claims during this same period last year, representing a 670 percent increase.

Of the 2.4 million weeks claimed, state officials said about 1.7 million have been paid, representing 72 percent of all claims.

The remaining 28 percent of all cases — about 700,000 in total — are divided among people who were ineligible, who are under suspension for previously being overpaid on a claim, or who simply haven't had their claims processed yet. Of the 700,000 remaining cases, more than half are people waiting to have their claims processed, Frostman said.

Fund Running Out Of Money

Wisconsin's officials earlier this month said they're growing concerned that the state's Unemployment Insurance Trust Fund could run out of money.

State officials said Wisconsin will exhaust its funds based on how many claims they see next.

As of early May, the Trust Fund balance stood at $1.8 million. State officials say they're experiencing unprecedented claim volume.

Officials drew up three hypothetical scenarios ranging from a high of 255,000 payable claims per week to a low of 85,000 payable claims per week. The impact of a third, middle scenario, is also included, which assumes 170,000 payable claims per week.

Under the scenarios, exhaustion dates range from Oct. 2020 in the high-claim scenario to Sep. 2021 in the low claim scenario.

"Due to the uncertain future impacts of COVID-19, it is unknown if Wisconsin will continue to experience this high volume of claims and for how long this may occur," officials with the State Department of Workforce Development said. "For this reason, it is difficult to project when or even if the Unemployment Insurance Trust Fund may exhaust and Wisconsin will need to borrow from the federal government in order to pay benefits, as it did during the Great Recession."

According to an ABC News report, if Wisconsin does have to borrow from the federal government, they'll be drawing from the U.S. Federal Unemployment Account, which contained $78 billion as of Thursday. Nine states not including Wisconsin are believed to be on track to borrow $38 billion by July.

The analysis below is based on the following assumptions:

An average weekly benefit amount of $325; 85 percent of claims will paid from state Regular Unemployment Insurance; and 94 percent of benefits will be charged to the Unemployment Insurance Trust Fund.