Reserves in Wisconsin’s jobless fund grew last year following one of the largest drops on record during the pandemic era, according to the Wisconsin Policy Forum. The improvement of $232.9 million in 2022 evidences the survival of the state’s pioneering unemployment program and helps avert tax increases on employers.
That said, Wisconsin’s reserve levels remain lower than those of most states and fail to meet key benchmarks of readiness for the next recession.
From Dec. 31, 2021 to one year later, the state saw a 20.7% increase from $1.12 billion to $1.36 billion — a welcome comeback after waves of layoffs and insurance payments to unemployed workers decimated reserves during the pandemic.
DOL’s most recent report on state unemployment funds found Wisconsin could cover around 6.5 months of unemployment benefits at a historically high rate. The state ranks 33rd nationally.
While the unemployment rate remains at near-historic lows, the risk of recession due to Fed interest hikes aimed at quelling inflation persists, and Wisconsin may be unprepared for another downturn.
Policymakers could consider steps to raise the jobless fund balance over time; money from the state budget surplus could be drawn to transfer further income and sales tax dollars to the unemployment fund. Targeted reduction in jobless benefits, expanding the amount of employee wages subject to the state’s payroll tax, or other steps could be considered as well.
