Republicans propose 'transforming' Wisconsin unemployment system into re-employment program

Republican-authored bill being circulated for co-sponsors would effectively overhaul Wisconsin’s unemployment system, with a focus on getting more individuals off unemployment benefits and “reemployed.”

The GOP ideas include drug testing those claiming unemployment benefits, providing cash payments to businesses that hire the long-term unemployed — meaning those who have collected benefits for more than 27 weeks — and directing job seekers to apply for specific job positions.

However, some measures in the proposal — including one that would force Gov. Tony Evers to direct federal COVID-19 stimulus dollars to businesses that hire the long-term unemployed — may set the bill up for a veto as the Democratic governor has rejected similar GOP measures related to the use of federal funds in the past.

Rep. Warren Petryk, R-Town of Washington, and Sen. Roger Roth, R-Appleton, said in an interview with the Wisconsin State Journal the legislation aims to “transform” the state’s unemployment insurance system, which has struggled to quickly process an influx of claims brought on by the COVID-19 pandemic, into a more individualized process that focuses more on getting people back to work.

“It’s good for the employee; it’s great for the employer because they’re struggling to find workers right now and it’s great for the state of Wisconsin,” Roth said. “The quicker we get people into jobs, the less they’re drawing on unemployment insurance and the more they are able to support their families and support our economy.”

The Republicans said they hope to bring the proposal before a committee this fall.

Jennifer Sereno, spokesperson for the state Department of Workforce Development, said the department has “significant concerns” about the GOP proposal due to the anticipated reporting burden for employers, potential costs associated with the bill and a lack of a sustainable funding source. Sereno also said the department is already carrying out several provisions detailed in the proposal, including providing reemployment services and work-search requirements.

“While DWD already is performing a number of key functions called out in the proposal, other requirements may not align with Wisconsin’s labor market challenges,” Sereno said.

Sereno added that Wisconsin’s nonfarm jobs have returned to 96% of pre-pandemic levels in February 2020 as the state’s economy continues to recover from the ongoing pandemic.

“However, Wisconsin employers in all sectors are finding it difficult to fill jobs due to a workforce gap driven by low birthrates, high retirement rates and low, if not negative, net migration and immigration flows,” she said.

The state reported last month that Wisconsin’s unemployment rate remained at 3.9% for the month of August — the same level it has been since April. The state’s labor-participation rate increased from 66.4% in July to 66.5% in August.

Evers’ spokesperson Britt Cudaback said the governor has some concerns regarding the proposed bill, but did not provide specifics.

The bill

One of the primary measures in the bill would change language in state statute referring to “unemployment insurance” to “reemployment assistance” and require DWD to create a Division of Reemployment Assistance, according to an analysis of the bill by the nonpartisan Legislative Reference Bureau.

Under current law, unemployment claimants are required to conduct at least four work-search actions each week, although DWD has the ability to require an individual to conduct additional search actions in a week. After a claimant’s initial week of benefits, the individual must provide DWD with information such as job application materials, if requested, and take part in a public employment workshop, training program or similar reemployment service, according to LRB.

The proposed bill would require claimants to make at least two direct contacts with potential employers as part of their four work-search actions starting with their third week of benefits. Claimants living in Wisconsin also would need to keep a resume posted on DWD’s job center website starting with their second week of benefits.

Under current law, DWD provides claimants with a list of potential job opportunities, but does not have to require individuals to apply for specific positions. The bill would require the department to provide such a list to claimants, who would need to apply for those positions in order to satisfy the work-search requirement and be eligible for benefits.

“You’ll have folks who take jobs to make sure they don’t get financially punished, but it may not end up being the right fit for anyone,” said Shawn Phetteplace, state manager for the Main Street Alliance, which represents small businesses across Wisconsin. “We should be improving the (unemployment) system, improving the tech, improving the way that it’s implemented.”

Another provision in the bill would require DWD to immediately promulgate rules requiring claimants to undergo drug testing in order to be eligible for benefits.

“We really feel that we need to help people that have substance-abuse challenges and the only way to identify them is through drug testing so that is an important aspect of the bill,” Petryk said.

The legislation also would require the governor to provide employers with up to two $1,000 payments for hiring a person who has been unemployed for more than 27 weeks. The payments would be to help cover costs including wages, training and benefits. The bill dictates that those funds would need to come from the federal American Rescue Plan Act.

A fiscal estimate for the bill was not available Wednesday, but Petryk said the required use of federal funds would sunset when ARPA dollars are exhausted or expire.

Changes underway

The GOP proposal comes as state officials continue to roll out updates to how DWD manages its unemployment claims, which skyrocketed in the early months of the pandemic and hampered the department’s ability to quickly process, adjudicate and pay out claims.

DWD last week launched a customer service chatbot called Mattie Moo on the department’s job center website The chatbot was developed through a partnership with Google and directs employers and prospective employees to resources including employment and unemployment data, programs for young adults and veterans, apprenticeships and the dislocated worker program for individuals who have lost their jobs.

Other upcoming changes to the unemployment process include updated call centers, which are expected to be fully implemented by February 2022, and a virtual career center that aims to better connect job seekers with prospective employers in the state. The department also has increased the number of administrative law judges, who preside over the appeals process for unemployment claims, from 17 before the pandemic to more than 60.

DWD last Wednesday also announced a $16.5 million contract with Madison-based software development company Flexion Inc. to begin updating the department’s decades-old computer system.

The state anticipates a full overhaul of Wisconsin’s unemployment system will cost as much as $80 million. After multiple failed attempts to secure state funding from the GOP-led Legislature for the project, Evers now plans to fund the entirety of the effort using federal coronavirus stimulus funds.

Evers and state Democrats have also said addressing workforce challenges must include a focus on reducing other barriers to employment, including lack of childcare, transit and affordable health care.

“While I am genuinely open to discussing ways to improve the system, I would be cautious of any legislative attempt to undermine the UI system by adding hurdles to slow down the process when it is relied upon by so many,” said Rep. Katrina Shankland, D-Stevens Point.

Back in July, Evers allocated $130 million in federal stimulus funds to help connect unemployed people with work opportunities with hopes of addressing ongoing workforce shortage challenges across the state.

Under the governor’s plan, $100 million would go toward a workforce innovation program that would offer up to $10 million in grants to at least 10 local and regional collaborations that develop initiatives to help employers and workers connect. Another $30 million has been provided to DWD to administer a worker-advancement initiative through local employers and create a worker-connection program to assist individuals attempting to find work.

"You’ll have folks who take jobs to make sure they don’t get financially punished, but it may not end up being the right fit for anyone."

Shawn Phetteplace, Main Street Alliance