Thursday, April 30, 2015

Higher Wisconsin layoffs =/= higher unemployment?

In the wake of numerous Wisconsin businesses closing around the state, WKOW Channel 27 in Madison ran this report yesterday.
By the end of last week Wisconsin employers had already notified the Department of Workforce Development (DWD) of 3,543 planned layoffs, putting the state on pace to eclipse 10,000 in 2015.

That would be the highest number of layoffs announced in Wisconsin since 2011, when Gov. Scott Walker first took office. The total number of layoff notifications topped 9,000 that year.

By comparison, employers notified the state of 6,511 layoffs in 2012, 7,029 in 2013 and just 6,186 layoffs in 2014. The state records the notifications on the date when they are informed about the layoffs, which can then sometimes take effect over the course of a year or several years afterwards.

Many of the 2015 layoffs will impact hundreds of employees here in South Central Wisconsin. Last week alone, 93 employees at the Eaton Corp. plant in Watertown and 119 workers at McCain Foods in Fort Atkinson were told they will be out of a job by the end of the year.
Since there are so many layoffs going on, you'd think that would translate into sizable unemployment claims, even in light of the rest of the country having the lowest number of new claims in 15 years. But that's not the case, as Wisconsin claims also continue to go down in 2015.

So what's going on here? Is it because the WKOW story is based on WARN notices, with the actual closings and new claims not coming till later? Is it because small businesses are becoming more successful in Wisconsin, and therefore not laying off as many people? Or is it related to this, which we found out about last December?
A new state report says state Department of Workforce Development call centers blocked almost 1.7 million calls from people looking to claim unemployment benefits in the year that ended June 30.

The Legislative Audit Bureau issued findings Tuesday showing that DWD placed people in hold queue when call center staff were busy. If more calls were received than the queue would hold, the callers were told to call again later. The findings indicated that the vast majority of blocked calls were made between December 2013 and January 2014.

DWD officials say claims typically spike in winter in cold-weather states such as Wisconsin and the number of calls blocked isn't an indication of the actual number of callers, saying the same callers often call back multiple times.
The DWD has claimed this "blocked calls" issue has been fixed, but something's not adding up between the large amount of layoffs and small amount of unemployment claims. And given this administration's habit of hiding bad information as long as possible (note that we haven't seen the March revenue numbers yet), would you be surprised if the problem was still going on?

Let's see how this plays out in the next couple of months.


  1. While I don't doubt what you've speculated is possible, especially with this group, the most likely cause is a drop in the labor participation rate. We get the national numbers for that, but I've never seen them for Wisconsin. Of course when it goes down it's because people are too discouraged to even get into the workforce at all. And if they've been put on hold or hung up on over and over that might be a bit discouraging.

    1. Labor participation rate would only affect the unemployment rate (which went down in March due to 8,300 leaving the work force). It wouldn't necessarily change the disconnect between higher layoffs and lower claims.

  2. The UI Call Center issues in December 2013 and January 2014 truly were an aberration -- due to a spike in volume of calls due to Congress letting UI extended benefit programs lapse in the first week of January. At that time, anyone who was on an extended benefit program (passed the regular 26 weeks of UI) stopped receiving payments.
    If people aren't claiming unemployment these days, it's not because they can't get through to the call center. More likely all the layoffs haven't taken effect yet, or people are getting other jobs right away, or maybe there is a drop in the labor participation rate as mentioned above.

  3. Well Jake,

    The announced tax collections were up in March 38% over last year following February's 40% increase. So I suppose it's safe to say that Fitzgerald will now turn down all the cuts Walker is proposing based on the fact that Wisconsin's economy is operating about 40% ahead of last year. That is truly a remarkable turn of events don't you think? Almost completely and utterly unprecedented in economic history. I guess we shouldn't be worried that these numbers seem to have large adjustments, and need updating on a regular basis. I wonder what the "gold standard" is for tax collections?
    Seriously, how can these numbers even be believed? A 100% increase in personal income tax collections? a 22% increase in corporate tax collections? Two months in a row? I suppose this is what you get when you continuously cut the budget of the agency that is supposed to keep track of this data. I suppose we should be thankful if this doesn't prompt calls by Walker for additional large tax cuts to businesses and high income taxpayers.

    1. Doc- The income tax numbers are easy to figure. This is due to lower refunds, which is the result of the lower withholding amounts starting in April 2014. In fact, my (very rough) estimate indicates that we should be up 110 million in March based on that factor alone.

      Combine that with the fact that Feb and March are your largest refund months, and the total number is small, so it makes the % increase that much bigger. Same goes for the corporate tax refunds (whose collections are still down for the year).

      Bottom line, on first glance, there looks like no major revenue surprise coming.

    2. Thanks Jake, I'm just struck with the fact that an Administration that successfully diverted the state media's attention away from the monthly job reports because they were "subject to variance", required adjustment, and whose release needed to be accompanied by a lot of superfluous "explanations" in the reports, could publish these critical numbers (Fitzgerald specifically said he would be looking at them to decide the budget cuts) that contain wild variations with past trends, and without so much as a sentence of explanation to make an informed comparison. And, judging from the silence of the state media, they are going to get away with it.