"The recovery has been losing steam over the past several months; employment increased by over 170,000 during May and June but we've only gotten back another 75,000 since then," Ryan Long, labor market economist for the state Department of Workforce Development, said in an email.
"Total employment in the state is actually down by 16,000 since September."
And while, you may have heard that unemployment dropped from 6.0% to 5.0%, I’m not going to buy that large drop over the courswe of one month. Especially since the drop was driven by a 22,700 decline in the labor force, which covered for a decline in employed Wisconsinites by nearly 10,000.
Now, the decline in Wisconsin's unemployment rate from 5.4% to 5.0% between September and November might reflect reality, because it seems to represent a normality that levels out a big labor force increase in late Summer. It also indicates that there's still a lot of slack in the work force, with unemployment rate is far worse in some parts of the economy compared to others.
In Wisconsin, the two-sided nature of the economy is even more apparent. There actually has been job growth in construction in our state over the last year, and about half of the state’s manufacturing’s losses in the early part of 2020 have been recovered, with a sizable jump of 4,200 jobs recorded in November.
But the state has seen heavy losses in bars and restaurants, and state and local governments have also seen cutbacks.
November already indicated that the jobs market was stalling out, but the next jobs report that drops in a couple of weeks will likely be more alarming.
"The bulk of the impact from the most recent spike in COVID cases will show up in the December data, which will likely be dragged down further by the lack of hiring at retailers and renewed shutdowns at restaurants and entertainment venues," [Marquette econ professor Abdur] Chowdhury said.
Concerns are widespread.
“Before trends improve on both the pandemic and the economy, we’re in for a rocky ride," said Mark Hamrick, a senior economic analyst at bankrate.com. "Data on jobless claims and retail sales raise alarm about the near-term outlook."
While new jobless claims did fall by a seasonally adjusted 89,000 last week, the figure was still above 800,000 for the 3rd straight week after being below 800K for the 7 weeks before that. And a decline in both incomes and consumer spending for November gives serious warning signs about the Holiday shopping season in sectors that have already taken a lot of hits in 2020.
This is why I think we're in an arguably more dangerous economic situation than we were in as COVID first broke out this Spring. We could comprehend a lockdown of 6-8 weeks, save money, and then rely on a good amount of the jobs coming back as stimulus kicked in and people headed back out to spend money.
But in Winter 2020, we're now seeing that many jobs in certain service sectors are never coming back, people are still social distancing, the stimulus is much less (if it even happens at all), and COVID is as pervasive as ever. So how does Wisconsin get back the 227,000 jobs that we are still down compared to where we were in February?
I took a look at the summary of the stimulus part's provisions, but I am NOT going to read the 5,600-page total bill (you can click here if you feel the motivation to check it out).
As unemployment claims continue to pile up and increase as Winter comes, the bill has a $300 a week enhancement would begin next week. But it is NOT retroactive, and would only go through March 14. That might get some people through the next 3 months, but as the Washington Post's economics writer notes, there will still likely be many people yet to vaccinated by that point, and many still out of work when that bonus runs out.
The $900bn relief deal is 2nd largest in US history and will help a lot this winter.
But... -The delay caused 8 million to fall into poverty -The aid doesn't last long, esp. for unemployed -No direct state & local aid -More $$ likely needed in 2021https://t.co/PCqe6KFAZKpic.twitter.com/kBhqjhmCKs
But at least millions of Americans won't be cut off, as the bill continues unemployment programs that were slated to end on Saturday.
Extends Pandemic Unemployment Assistance (PUA) to March 14, 2021 and allows individuals receiving benefits as of March 14, 2021 to continue through April 5, 2021, as long as the individual has not reached the maximum number of weeks.
•Increases the number of weeks of benefits an individual may claim from 39 to 50.
•Provides for appeals to be at the state level.
•Provides states authority to waive overpayments made without fault on the part of the individual or when such repayment would violate equity and good conscience.
•Provides a transition rule for certain individuals transitioning between PUA and the Pandemic Emergency Unemployment Compensation program.
•Limits payment of retroactive PUA benefits to weeks of unemployment after December 1, 2020.
However, there's a provision about PUA that's likely to cause even more barriers to benefits for applicants, and paperwork for workers at the Wisconsin DWD.
You're also likely aware of the $600 payments, which are per person (so $1,200 for a couple), and then another $600 for each "qualifying" child. Not exactly enough to pay the rent, and nothing compared to what we could be doing for people in need (and others), but I'm not going to turn it down.
But hey, unlike unemployment, at least you don't have to apply to get the checks!
Pet of the reason is that people don’t notice that the checks are not means tested is because this is the rare case where the state shoulders the administrative burden of determining eligibility rather putting it on the individual. Maybe we should do it more often! https://t.co/vXSf0dLBzJ
While there isn't a formal pot of money being given to state and local governments, the money for child care providers is a block grant, and the $25 billion in rental assistance is intended for state and local agencies. renters, and the CDC's eviction moratorium is extended to January 31.
On the education side, CARES programs that assist schools are going to continue, with about half of this $163 billion being in the form of "flexible funding" to governors and other non-federal officials to help schools cope with the COVID World, and the other half being set aside in specific programs for K-12 schools and higher education.
With hunger becoming an increasing concern, this stimulus gives $11 billion in additional farm supports, a bump of 15% in SNAP benefits through June 30, $400 million to pay dairy businesses to send products sent to food banks and other hunger programs (seems noteworthy to bring that up in Wisconsin) and more money for other smaller agriculture and nutrition programs.
As to aid to businesses, there's a provision that mirrors one that Gov Evers did at the state level in Wisconsin, targeting funds for entertainment businesses that have been especially hammered in the COVID World.
Authorizes $15 billion for the SBA to make grants to eligible live venue operators or promoters, theatrical producers, live performing arts organization operators, museum operators, motion picture theatre operators, or talent representatives who demonstrate a 25 percent reduction in revenues.
In addition to the transit aid, there's also $15 billion in extra aid for airline workers (which are passed through by the airlines), and $1 billion for airline contractors. It looks like the airline aid requires them to call back employees that had been furloughed and/or not laid off through the COVID-related slowdown in travel, and keep the same amount of service that they had before COVID drilled the industry.
But one hard-hit sector that isn't getting anything is bars and restaurants, who will now have to try to survive a COVID Winter without specific aid. Instead, those businesses and others will be pushed into applying for a second round of PPP funds. On a positive note, small businesses that already got PPP to be able to get another loan of up to $2 million if they lost 25% of business in 2020.
And there is also an expansion of what business owners can write off, including additional software, PPE to meet new regulations, supplier costs, and "property damage due to public disturbances that occurred during 2020 that are not covered by insurance" (which one of these is not like the other?). But that's only going to go so far, and will take a while to get out to the people that need the PPP help.
So at first glance, it at least is something in a time when tens of millions of Americans are still suffering. But the short time frame of many of the programs along with one-time checks of $600 aren't going to be enough to get us out to a post-COVID World. Which means more is going to be done in order to keep any growth going, or to stop us from falling (further?) into recession before Spring.
There's more to break down as we go along, but that's the main stuff that jumped out at me, and feel free to chew on plenty more as this 5600-page bill flies its way through Congress.
U.S. Sen. Ron Johnson (@SenRonJohnson) blocked $1200 survival checks to struggling families.
His net worth is $39,000,000 and previously voted for a failed $21.6 billion Trump border wall. He offered his 'concerns'; called COVID19 an act of God as he denied people assistance. pic.twitter.com/Jq6YLjZTpN
Johnson objected to the vote. Under Senate rules, one senator objecting to Hawley’s motion, which required unanimous consent, is enough to block the vote from moving forward.
The Wisconsin senator cited rising deficit concerns and criticized Hawley and Sander’s bill for repeating stimulus checks under the CARES Act, which were sent out when the job market was in worse shape. Millions of jobs have since recovered, he noted.
And almost just as many millions of jobs have not been recovered, RoJo.
Side note - why do we have these idiotic rules in the Senate where 1 dimwit can hold up a bill for days? And where the "districts" are based out of boundaries that were set 200-250 years ago in random places, with no accounting for how many PEOPLE might live there? But I digress...
Here's more of why Sen. Johnson blocked a vote on the $1,200 payments.
Under the CARES Act, around 160 million Americans received a stimulus payment, totaling over $270 billion out of the $2.2 trillion relief package passed in March.
“Anything we consider for this additional package [...] ought to be far more targeted,” Johnson said from the Senate floor on Friday. “We are mortgaging our children's future. I think we need to be very careful about mortgaging it further when we aren't doing it in a targeted fashion.”
This is where I remind you that Ron Johnson had no problem with "mortgaging our children's future" when he backed the GOP Tax Scam of 2017.
Anyway, the tax cut Johnson voted for in 2017 blew a $2 trillion hole in the deficit but Johnson voted for it because it personally benefitted him. https://t.co/JYmXjWfmow
A US Senator that actually knows something about economics and the US budget called out (Mo)Ron's idiocy on the Senate floor right after RoJo shot his mouth off.
Hey WisDems, you taking notes on this? You might want to spend a few of those millions you got in 2020 to remind the typical low-info Wisconsin voter about what a callous fool their Senior Senator is.
It’s a relatively mundane report from the Census Bureau, but I think the list of “Selected Services Revenue” tells you just how much we’ve lost in 2020, and how widely different the effects of the COVID World has been in certain sectors of our economy.
As you can see, there are industries that still had revenues be down 30-70% in September 2020, before COVID made its most recent surge which led to further shutdowns and limitations. But if you're in software and delivery services, things are better than ever.
You can also see these disparities in November's retail sales report, which dropped on Thursday and showed that an already-shaky situation in brick-and-mortar retail was getting worse.
Advance estimates of U.S. retail and food services sales for November 2020, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $546.5 billion, a decrease of 1.1 percent (±0.5 percent) from the previous month, but 4.1 percent (±0.7 percent) above November 2019. Total sales for the September 2020 through November 2020 period were up 5.2 percent (±0.5 percent) from the same period a year ago. The September 2020 to October 2020 percent change was revised from up 0.3 percent (±0.5 percent) to down 0.1 percent (±0.2 percent).
Very bad sign for the Holiday shopping season that so many brick-and-mortar types of stores rely on. The declines in the last 2 months were especially severe in the types of stores that used to be the places where people would do their Holiday shopping at the mall.
And while overall retail sales are higher from where we were this time last year, a retail sector may be much worse or better than they were in late 2019, because of how buying habits have changed in the COVID World.
But you know what's going gangbusters as 2020 ends? Stuff that richer people can buy to enhance their wealth. While many retail areas flail, we're in a Bubbly home construction boom.
Housing starts rose 1.2% to a seasonally adjusted annual rate of 1.547 million units last month, the Commerce Department said on Thursday. That lifted homebuilding closer to its pace of 1.567 million units in February. Economists polled by Reuters had forecast starts holding steady at a rate of 1.530 million units in November. Homebuilding surged 12.8% on a year-on-year basis.
Permits for future homebuilding raced 6.2% to a rate of 1.639 million units in November. Permits typically lead starts by one to two months.
Single-family homebuilding, the largest share of the housing market, rose 0.4% to a seasonally adjusted annual rate of 1.186 million units, the highest level since April 2007.
Single-family starts have increased for seven straight months. The housing market is defying slowing economic growth, thanks to pent-up demand and historically low mortgage rates. Recent data have shown a moderation in the labor market and consumer spending half-way through the fourth quarter as the country battles a fresh wave of Covid-19 cases.
This situation feels ominous for 2021. Not only will the reduced spending and increased layoffs in several service sectors be a significant headwind, but you gotta think that at some point eveyrone will have gone into their new home, with little demand left to keep up this level of production. And any confidence boost from a COVID vaccine is likely to be counteracted by the fact that A LOT OF PEOPLE HAVE NO MONEY AND NO SECURITY.
We can't continue with a country where the economic realities are so different for groups of tens of millions Americans. You can already sense the seething anger as stimulus talks drag on, and many are going to (rightfully) demand for those who have thrived in COVID World to give redirect some of the gains they've been able to grab while so much of the country has been suffering.
As Congress continues to discuss stimulus possibilities, more Americans are getting laid off as Winter deepens. One week after a jump in new unemployment claims by a seasonally-adjusted 144,000 (and 238,000 overall), the number went even higher in the 2nd week of December.
The number of Americans applying for unemployment benefits rose again last week to 885,000, the highest weekly total since September, as a resurgence of coronavirus cases threatens the economy’s recovery from its springtime collapse.
The Labor Department said Thursday that the number of applications increased from 862,000 the previous week. It showed that nine months after the virus paralyzed the economy, many employers are still slashing jobs as the pandemic forces more business restrictions and leads many consumers to stay home. The number of claims was much higher than the 800,000 that economists had expected.
Before the coronavirus erupted in March, weekly jobless claims had typically numbered only about 225,000. The far-higher current pace reflects an employment market under stress and diminished job security for many.
We also saw a rise of 40,000 in new claims under the PUA program, which is intended for gig workers and others who can’t get “regular” unemployment benefits.
Put that together, and there are a whole lot of Americans that were filing claims last week.
Bottom line: Unemployment claims are rising again, a key sign the economic recovery is in trouble.
Week ending Nov. 7 = 1.02 million new claims Week ending Nov 14 = 1.07 million
Week ending Dec 5 = 1.38 million new claims Last week = 1.39 million new claims https://t.co/a9v3D14Nmk
It’s especially alarming to see PUA rise, because that program is schedule to expire after next week unless an extension can be agreed to in a stimulus package (which still hasn’t been formally released as of Thursday night). Another 5.5 million that were receiving regular unemployment benefits for more than 26 weeks are also in danger of being cut off.
This chart reflects the number as of the end of November, the last date for continuing claims data for all of the large-scale unemployment programs. And you can see a jump of 1.3 million people that were receiving benefits in the week of Thanksgiving.
Interestingly, Wisconsin had an improvement in its figures last week, as new unemployment claims in our parts dropped back to 14,478 after jumping to 21,700 the week before. Continuing “regular” claims also went back below 100,000, declining by more than 7,400 and getting under 97,000.
But we also found out that Wisconsin has more people at risk of being cut off in 9 days, including more than 4,000 additional Sconnies filing PUA claims, and more than 5,000 individuals going on the 26-39 week PEUC program. Most shockingly, the number of Extended Benefits (EB) claims in Wisconsin rose from 21 to more than 10,800 in 1 week, reflecting those receiving benefits for more than 39 weeks.
That jump in EB came in the last week in November, and seems to coincide with the Wisconsin Department of Workforce Development notifying the public that long-term unemployed individuals could file for EB. The problem is that Wisconsin fell off the EB program last month, which means that these claims only reflect weeks up to the start of November.
And if no stimulus gets through, you're looking at 111,000 claims that would not get paid after next week. Combine that with the end of expanded food assistance benefits, and the prospect of plans changing if those individuals got their insurance through Obamacare, and it’s a scary time for a whole lot of people in the state.
While a large number of his constituents are in peril, what is Wisconsin’s Senior Senator concentrating on?
And what are the members of our gerrymandered State Legislature up to at the same time, when the states are facing extra burdens and costs to keep their residents afloat?
After our first tree was taken down, we have put up a new tree in the Capitol rotunda! Thank you to everyone who has been sending us ornaments! Merry Christmas!! pic.twitter.com/smgRECqrMe
Today featured a hearing at the state's Joint Audit Committee on how the Department of Workforce Development handled the huge jump in unemployment claims that came with the outbreak of COVID-19. Given that many Wisconsinites had to wait several weeks to receive their unemployment benefits, there was plenty for legislators (especially GOP legislators) to complain about.
Department of Workforce Development Transition Director Amy Pechacek sat before the Joint Legislative Audit Committee, in regard to this week's audit and two others that probed the department's operations...
"It is clear to me that the operational challenges at UI (unemployment insurance) have grown over time," she said in a prepared statement. "While the dedicated staff were able to work around these issues during times of stability, the impact of the COVID-19 pandemic on our state has exposed long-standing challenges that proved too much to overcome in the timeframe needed to best serve the people of Wisconsin."
Pechacek took over the DWD in late September after then-Secretary Caleb Frostman was fired by Gov. Tony Evers.
The audit this week found the department sent the majority of unemployment claims into adjudication, while they determined each applicant's eligibility. In most of those cases, the department either had the information needed to process the claim or failed to request it from the previous employer or the applicant themselves.
No, not good. And even though
the LAB audit on unemployment claims says that the huge backlog that started in March has gone down, there are still people waiting weeks if not months for their funds, and some are appealing their denial of benefits.
We determined the average number of days that DWD took to pay initial claims for regular program benefits that individuals filed from the week of March 15, 2020, through the week of August 30, 2020. We excluded claims filed in subsequent weeks because it is likely that insufficient time had lapsed for DWD to pay a number of these claims. Our analysis includes only those claims that DWD had paid as of October 10, 2020. As of October 10, 2020, DWD had paid 493,504 of the 662,731 individuals (74.5 percent) who had filed initial claims for regular program benefits since March 15, 2020. DWD paid 53.2 percent of initial claims in two calendar weeks or less, but it took more than five weeks to pay 24.7 percent of these claims.
As shown in Figure 2, the average amount of time that DWD took to pay regular program benefits for initial claims filed in August 2020 was considerably less than the average amount of time it took to pay benefits for claims filed in March 2020. DWD took an average of 39.5 days to pay benefits for initial claims filed during the week of March 29, 2020, and an average of 8.5 days to pay benefits for initial claims filed during the week of August 30, 2020.
We found that DWD placed into adjudication the initial claims of 514,026 of the 662,731 individuals (77.6 percent) who filed claims from March 15, 2020, through October 10, 2020. DWD may place a given claim into adjudication because of multiple issues. As of October 10, 2020, 96,623 of the 514,026 individuals (18.8 percent) still had initial claims in adjudication….
DWD’s program adjudicators resolve claims placed into adjudication. To help resolve the large number of claims placed into adjudication beginning in mid-March 2020, DWD hired additional adjudicators, temporarily reassigned staff from other DWD divisions and other state agencies to work as adjudicators, and contracted with a firm to provide staff to work as adjudicators. As shown in Figure 3, the total number of adjudicators increased from 175 during the week of March 15, 2020, to 563 during the week of September 20, 2020.
While acknowledging the increased staff, LAB pointed directly at DWD as being at fault for why Wisconsin workers did not receive benefits in a timely manner. LAB looked at a sample of 268 Wisconsinites that filed their first claims in March or April 2020, but hadn't been paid as of late June. The LAB said that 250 of those cases had been resolved as of November, but that a lot of the reason for the delays were that DWD workers and officials didn't make decisions and act on unemployment claims when they had a chance to do so.
We estimate that DWD was responsible for 11.0 of the 13.0 weeks (84.6 percent) that it took, on average, to resolve the initial claims of the 250 individuals. For example, DWD was responsible for time that elapsed before it requested information it needed from individuals and employers, and for time that elapsed after it had the information necessary to pay or deny program benefits but did not do so. In contrast, DWD was not responsible for time that elapsed while it waited for individuals and employers to provide information it had requested....
DWD had not resolved issues even though it had the information to do so, and an average of 5.5 weeks elapsed for each such instance;
DWD had not requested information it needed from individuals, and an average of 6.5 weeks elapsed for each such instance; and DWD had not requested information it needed from employers, and an average of 8.5 weeks elapsed for each such instance.
This gave legislative Republicans the opportunity to hammer on Governor Evers, as the guy ultimately in charge of state operations.
Findings from the nonpartisan Legislative Audit Bureau show what so many around the state knew to be true - the Evers admin and DWD failed to help those most in need during the pandemic. Unfortunately, my office is STILL getting calls from people waiting on their UI benefits.
Today's audit of DWD made it clear that making sure people had the money they needed at a time of crisis wasn’t a priority for Governor Evers or his administration. https://t.co/TIXPpVcxjK
For that last one, Bertie DAHHH-ling might not be the best authority on what was going on at DWD.
On Sept. 18, the day Frostman announced his resignation, Darling tweeted: "Once again, Governor Evers took his time to react and again it's a little too late."https://t.co/cefFDpq1w2https://t.co/cCMoY2fbns
But I digress.
Part of the reason for the backlog is that there was a mountain of new unemployment claims that started to hit in March, and they are still quite a bit higher at the end of 2020 than what we had at the start of 2020.
And DWD did ultimately hire up, which helps explain the drop in the amount of time that it took for Wisconsinites to get benefits.
It's still not great, but it's helping. And let's be honest here - WisGOPs would never have accepted a large increase in DWD staffing or investment in technology until so many of their (white) constituents started to be put in dire straits because they couldn't get their benefits.
Of course, let’s not forget that as the unprecedented levels of claims were being filed online and followed up on via phone,and new programs like PUA and the 26+ week unemployment benefit package were getting rolled out, DWD was getting slammed with calls before they had the time to staff up to deal with all of these sudden demands. And they weren't getting much guidance given from the Feds, or time to carry them out.
While DWD and out-of-work Wisconsinites continued to struggle, the gerrymandered State Legislature didn’t lift a finger to actually try to pass anything that might remove barriers or speed the process along, and instead chose to go on an 8-month paid vacation. In fact, it was the WisGOPs who put numerous barriers in place to make applicants jump through hoops to get benefits and DWD staff have to do extra investigation and follow-up instead of merely handing the money out first and then checking back later if the details were sketchy and/or didn't add up.
That’s not to say that there weren’t serious lapses at DWD – it's not acceptable to wait that many weeks to get benefits, regardless of the situation. Once hundreds of thousands of Wisconsinites were getting laid off each week, getting the money out the door on routine cases should have become the first priority over wasting time on paperwork where boxes were checked as proof certain safeguards were made. It also illustrates the difficulty of having to put a number of specific circumstances into figuring out how it fits under a blanket of rules.
The buck ultimately stops with Evers, and while I think he has handled some parts of the response to the COVID recession very well (particularly in saving funds for later so that they could be used in Fall and Winter as the Feds dithered, and then giving aid to hard-hit industries like restaurants, hotels, and live music venues), keeping large numbers of Wisconsinites from benefits was a mess that needed to be mitigated sooner than it was.
But let's also admit that many of those delays were the direct result of WisGOPs putting in rules against unemployment "fraud" in a transparent racially-tinged attempt to stir up resentment among rubes. Which is why I found myself viscerally angry at the cheap shots being levied by dishonest WisGOPs today.
Because WisGOPs don't really care about fixing the problem, or in running government more efficiently or effectively. They just want to make Evers take the blame for the pain that their bad policies of the 2010s led to in 2020. And I don't expect them to put out any kind of solution in the next 2 years that will make things easier for laid-off Wisconsinites to get the benefits they are entitled to.
I was planning to go into economic/policy stuff today, but around 12:30, something big happened in Wisconsin.
This is my home, this is my city.. I’m blessed to be able to be a part of the Milwaukee Bucks for the next 5 years. Let’s make these years count. The show goes on, let’s get it. 🤎🙏🏽 pic.twitter.com/895tCBE9RK
5 years, $228 million to stay in Wisconsin, between the ages of 27 and 31. Wow.
It's a game-changing move for the Bucks to keep 2-time league MVP Giannis Antetokounmpo, and not just for the NBA (many teams based their plans and salaries in the hope the Bucks could not sign Giannis, making him become a free agent in Summer 2021). It also feels like a big boost for the Bucks franchise and the City of Milwaukee, as both were frequently shrugged off by Coastal media as "small-market", which media said would somehow lessen the team's chances of keeping Antetokounpo because it allegedly wasn't as glamorous to play in the Cream City as other places.
But this ignored some realities. The first being that the Greek Freak didn't go through the AAU-and-college circuit that the typical American superstar basketball player does. Milwaukee is the city that hosted Giannis when he came to America as a 19-year-old draft pick, so I don't think the thought of "greener pastures in NYC/LA/Chicago/Miami" is as relevant to him.
Maybe this is being naive, but Giannis legitimately seems to be the kind of guy who just wants to play ball and WIN. And be able to be around his family without a lot of hassle.
In a way, I think Milwaukee's smaller-city status worked in its favor here. There aren't TMZ-style tabloid photogrpahers around every street corner, and a major athlete can get around town without having mobs of people running up to him. Obviously, a 7-foot Black man isn't going to able to be anonymous walking down the street, but it's never seemed like superstars such as Ryan Braun, Christian Yelich, or Aaron Rodgers have had to deal with the type of craziness that kept Michael Jordan in his hotel room in most cities in the 1990s (if you watched "The Last Dance", you know what I'm referring to).
And it's not like Giannis is lacking for major endorsement dollars playing in Milwaukee, given the national/international way that NBA stars are marketed. He earned a reported $28 million in endorsements in 2019, and Nike has given Giannis his own campaign and shoe line.
In 2019, Antetokounmpo made more from endorsements than he did under his Bucks contract. That's not going to be the case in the future, as Giannis is going to get a significant pay increase under the league's Designated Veteran Player Extension (DVPE, aka a "supermax contract"). Under this rule, Milwaukee had an edge on other teams because Giannis could make the most money by staying with the Bucks, and he is one of only a handful of players to qualify for the supermax, as this greater explainer from The Athletic describes.
The DVPE enables the NBA’s best players to earn the league’s largest possible contract values earlier than usual. After 10 seasons, NBA players can earn 35 percent of their team’s salary cap with 8 percent yearly raises. Opposing teams can offer just 30 percent of their team’s salary cap with 5 percent raises. The DVPE allows teams to give their best player the 35 percent max with 8 percent raises after just eight seasons instead of 10 seasons, if the player has done each of the following things:
• Been named to an All-NBA team or defensive player of the year in either the most recent season or two of the three most recent seasons or won NBA MVP in any one of the prior three seasons.
• Completed seven or eight seasons when the extension is executed.
• Spent those years of service on the team he signed his first contract with or joined the current/offering team during the first four years he was under contract.
While teams can offer a variety of other extensions to their own players, the DVPE has a special set of rules that will become particularly important for this offseason. Antetokounmpo can only sign the DVPE between the start of the next fiscal season and the day before the start of the regular season, a detail wrote into the CBA to avoid the league’s best players getting subjected to constant badgering to sign the extension during the season.
And that deadline was what made the topic of "will Giannis sign an extension?" such a big topic this month, as the NBA season starts one week from tonight. Now that question is answered.
I also caught ESPN's Adrian Wojnarowski talking about how Giannis passed up the chance to have a higher rate of take-home pay if he had signed with teams in states like Texas and Florida that don't have a state income tax. But go back to those Supermax rules, and then project the "35% of salary cap and 8% raises" numbers, and look at what Antetokounmpo is going to make.
The extension is based off a projected $112.4M salary cap.
The projection will not drop and Antetokounmpo at the very minimum is guaranteed $228.2M. https://t.co/uyZVXC1nOE
Now compare that to "30% of $112.4 M salary cap and 5% raises, and it looks like this.
2021-22 $33.7 mil (-$5.6 mil vs MKE)
2022-23 $35.4 mil (-$7.1 mil)
2023-24 $37.2 mil (-$8.5 mil)
2024-25 $39.1 mil (-$9.7 mil)
2025-26 $41.0 mil (-$10.9 mil)
Wisconsin's top marginal income tax rate is 7.65%, and in reality, the actual % tax as a rate of income will likely be closer to 6% for the highest earners in Wisconsin. If you assume a 6% tax bill in year 1, that's $2.36 million, well below the $5.6 million in extra income that Giannis was able to get for staying in Milwaukee. Even take out 37% extra federal taxes on that amount, and that's still $3.5 million extra being taken home in year 1, with that gap growing higher in future years. So the argument of "lower taxes in other places" as an incentive doesn't fly in this situation.
But at a certain point, how much more money do you need? Which goes back to my earlier discussion about Giannis - what place would allow him the best chance to play ball, be with his family, and WIN? When you look at it that way, and combine it with the financial incentives, and it makes sense that Giannis chose to stay in Milwaukee.
I opposed the local and state subsidies that went into building the FiServ Forum for the Bucks a few years ago, and I'd still argue that there are many better uses for tax dollars in the state's largest city than pumping it into that development (especially in a year of over 200 homicides in Milwaukee).
But at the same time, it's unlikely that Antetokounmpo stays in Milwaukee if the enhanced money-making abilities of the FiServ aren't there. And it's going to be pretty damn cool to be seeing a lot of this in my state over the next 6 years.
So now that the Freak is locked up, it's time to get an NBA title back in Milwaukee for the first time in 50 years. With actual playoff games in Milwaukee this year as well!
