The national economy has been slow to emerge from the Great Recession, and Bureau of Labor Statistics data show that Wisconsin has had the slowest rebound in employment of any state during 2011 and 2012. Yet despite the ongoing need for assistance for those desperately seeking work, the last Wisconsin budget bill cut benefits that are intended to help unemployed and underemployed workers and their families. Those cuts include the following:

Unemployment insurance (UI) benefits – The budget bill has reduced UI benefits for jobless workers by more than $41 million per year by initiating a one-week waiting period before the newly unemployed become eligible for benefits. For a worker who is unemployed for ten weeks, the waiting period amounts to a 10 percent cut in benefits. Changes made by Congress are having even greater effects for the longer-term unemployed, because fiscal conservatives insisted upon phasing out federally-funded Extended Benefits. (See “Honey, I Shrunk the Unemployment Benefits.”)Wisconsin Works (W-2) – The W-2 program, which replaced the old welfare system, serves unemployed parents who typically have little work experience and are ineligible for UI benefits. It provides monthly cash payments in exchange for participation in work programs. Since the program’s inception in the 1990s, W-2 payment levels had been frozen and have been eroded by inflation, but the Governor’s budget exacerbated that problem by cutting W-2 benefits by $20 per month. That bill also made a number of other harmful changes to W-2, such as giving the local agencies the option of denying paid W-2 placements for unemployed workers applying for the program if the agency deems them to be “job ready.” (See our July 2011 blog post for more about the W-2 changes.)

Transitional Jobs Program – Unemployed non-custodial parents are ineligible for W-2, but about 2,000 such parents are currently served by a pilot program know as Transitional Jobs. However, effective on July 1, 2012, the budget bill ends the funding for that successful program.

Child Support – The budget makes a substantial cut in funding for child support enforcement, and that could be especially harmful for unemployed parents who rely on child support payments. The $12.5 million drop in combined state and federal funding could reduce collections by about $85 million over the next two years, if collections fall by the same percentage as the cut in spending for enforcement activities. (See our July 2011 blog post.)

Earned Income Tax Credit (EITC) – Families of unemployed or underemployed parents are likely to be eligible for the Earned Income Tax Credit, provided the family still has some earned income. However, the budget bill cuts that tax relief by $56 million over 2 years by reducing the credits for families with two or more children. The change hits families with three or more kids the hardest. A single mom who has three children and is making the minimum wage lost $518 (21% of her current credit) in tax year 2011. Families with two children lost up to $154 per year.

BadgerCare – For unemployed parents, the change to BadgerCare that is likely to have the most damaging effect is a Walker Administration proposal that is still being reviewed by federal officials. If that proposal is approved, it would reduce the services covered by BadgerCare and significantly increase co-pays – up to a cap of 5% of income for families between 100% and 150% of the federal poverty level, and with no cap for families above that income range.

The combined impact of all of these changes is creating tremendous hardship for many parents and families who have been unable to find employment during the prolonged economic downturn. But with state revenue recovering and the state now expecting a surplus in the current biennium, these cuts can be reversed. Voters should ask candidates for public office where they stand on these extremely important issues for struggling Wisconsin families.

Jon Peacock

This is one in a series of blog posts providing perspectives on some of the state policy changes and fiscal decisions made during the past legislative session, and the impact they are having on Wisconsin’s children and families. We hope the public will consider these impacts and will urge candidates to talk more about these issues as elections approach. The views expressed in each post are solely those of the author and do not necessarily reflect the positions of WCCF or the opinions of authors of any of the other posts.