Concerns Over State’s Economic Fallout Grow as $600 Unemployment Boost Set to Expire

President Trump’s administration wants to cap payments at 70 percent of a worker’s pre-pandemic earnings. 

Wisconsin’s economy could suffer massive losses and experience an eruption of evictions and foreclosures as the extra $600 weekly federal unemployment boost expires, Citizen Action of Wisconsin warned during a Friday webinar.

The $600 bonus, originally implemented as part of the $2 trillion federal coronavirus response bill, expires Saturday and there is no guarantee there will be a replacement, as the Trump administration wants to cap payments at 70 percent of a worker’s pre-pandemic earnings. 

That means next week’s unemployment checks could be the last ones with the boost for Wisconsinites. 

The more than 200,000 out-of-work state residents currently collecting up to $970 per week will see their income drop to a maximum of just $370 pre-tax when the benefit enhancement dries up.

“If you take this much money out of the pocket of those individuals, not only does it harm them — not only will it cause a wave of evictions, foreclosures, families that can’t put food on the table — it will take money out of the local economies and create another, secondary wave of unemployment,” said Robert Kraig, executive director of Citizen Action of Wisconsin, during the discussion hosted on Zoom.

If Congress doesn’t extend the $600 per week payment as Democrats want, Citizen Action says it could take up to $3.1 billion out of the Wisconsin economy. That estimate is based on research from the Economic Policy Institute, which estimates more than 65,000 jobs would be lost in the state due to depressed economic activity without the federal supplement.

Congressional Republicans are resisting an extension and have instead proposed an extra $100 per week through the rest of the year. They argue that keeping the increase at $600 per week will disincentivize people returning to work during the pandemic because about two-thirds of those claiming unemployment right now earn more than they did at their normal job.

However, in Wisconsin, the standard unemployment insurance payment maximum is fairly stingy in comparison to other states. The effect of the additional $600 cannot be overstated, said Sen. LaTonya Johnson, D-Milwaukee.

“For so many families, that extra $600 is the difference between stable housing and running the risk of being put out on the streets,” Johnson said.

Statewide, about 141,000 people haven’t received a single unemployment payment due to a backlog caused by understaffing at the Department of Workforce Development and archaic processing systems. A 2014 DWD audit showed a backlog even then, when there was not a simultaneous pandemic and recession. However, Republicans — who controlled all three branches of government at the time — did little to fix it.

And even now, the Legislature hasn’t met to pass a bill in 100 days. Since April 15, Republicans have ignored bill proposals on everything from police reform to fixing unemployment woes.