Month: March 2017

State officials’ efforts to crack down on companies that misclassify direct employees as independent contractors has generated more than $1 million for the state’s unemployment-benefits system over the past few years.

The state began stepping up its enforcement of misclassification laws several years ago. Since then, those efforts have recovered nearly $1.13 million worth of in unpaid unemployment-insurance taxes, penalties and interest, according to a report on the state’s unemployment fund released by the Wisconsin Department of Workforce Development on Wednesday.

Worker misclassification is believed to be particularly rampant in the construction industry, where frequent seasonal layoffs can blur the line between a permanent employee and someone hired for a particular job. Industry officials say deliberate misclassification not only deprives the state of unemployment taxes and other resources; it also gives dishonest companies an advantage by enabling them to avoid the sort of costs that their more scrupulous rivals often end up rolling into bid prices.

The state reported Wednesday that auditors found 8,613 misclassified workers at Wisconsin companies last year. The same year saw tipsters use a state-run website to report 59 instances of suspected misclassification.

Those tips led to 44 separate investigations, according to the DWD. On average, every audit conducted by the DWD discovers 10 workers who have been misclassified and recovers $3,605 in unpaid unemployment taxes, according to the Wednesday’s report.

Last year saw state legislators pass a law increasing the penalties for companies that misclassify workers. Violators can now be forced to pay $500 for every employee who was misclassified, although no more than $7,500 for a single incident of misclassification.

Employers who end up having to pay those administrative penalties and nonetheless go on to misclassify workers again are then subject to criminal fines. They can be made to pay $1,000 for every employee who is found to be misclassified, not to exceed a total of $25,000.

Today, the Department of Workforce Development (DWD) presented the 2017 Unemployment Insurance (UI) Fraud Report to members of the Unemployment Insurance Advisory Council (UIAC), covering DWD’s efforts to combat fraud against the UI program in calendar year 2016 and support re-employment of UI claimants. The report shows that the rate of fraud being committed against the UI program dropped by more than a third, while Wisconsin ranked best in the Midwest and second nationally under a federal measure of UI claimant re-employment outcomes.

“Today’s report shows that our efforts to ensure that the UI program supports those who lose their employment through no fault of their own and move quickly to re-employment are working,” DWD Secretary Ray Allen said. “By instituting strong measures to prevent, detect and take action against attempts to defraud the UI system, we are supporting a strong UI Trust Fund, which helps employers who pay UI taxes and claimants who utilize the system properly. Additionally, Wisconsin ranks second nationally at re-employment outcomes for UI recipients, which is a testament to the strong work ethic of Wisconsinites, the continuing improvement of the labor market and our success in developing and connecting där skilled talent to new opportunity.”

Highlights of the 2017 UI Fraud Report include:

• Total UI benefit payments in 2016 dropped 15.5 percent, while fraudulent payments dropped by 35.3 percent.

• DWD’s efforts to rapidly reemploy individuals who must rely on UI benefits during a career change are helping to ensure Trust Fund solvency. According to the United States Department of Labor, Wisconsin ranked 2nd among states when measuring the rate of UI claimants who were reemployed in the quarter following a first UI payment.

• DWD’s efforts to educate claimants and provide free, fast, secure and easy-to-use online services are paying off as non-fraud overpayments dropped by 25 percent in 2016.

• Wisconsin’s efforts to enforce the state’s worker misclassification laws are helping to level the playing field for Wisconsin employers who participate in the UI program. Since its launch, the program has generated over $1.1 million in UI tax revenue from employers who were previously misclassifying their employees as independent contractors.

The report also highlights DWD’s efforts to modernize its online systems and provide UI claimants and employers convenient and easy-to-use online systems. Since the launch of DWD’s modernized online initial claims system in 2014, 93 percent of UI claimants who begin their initial claim online are able to complete the claim without contacting a claims specialist by phone and four out of every five UI claimants accessed DWD’s online portal at least once in 2016. DWD is moving to retire its 1990s-era automated phone system this year as online claim filing activities gain popularity.

Secretary Allen noted the decline in UI payments and growth of the Trust Fund are due in large part to the success of Wisconsin’s economy under Governor Scott Walker’s leadership. Key economic indicators include:

• Initial UI claims ended 2016 at their lowest level since 1988. Continuing unemployment claims ended 2016 at their lowest level since 1973.

• Wisconsin’s labor force participation rate outpaced the national rate and ranked among the best in the United States.

• After adjusting for inflation, total private sector wages in 2015 grew 5.1%, the best growth since 2001, and average weekly wages in 2015 increased 3.6%, also the best growth since 2001.

Here are five more often-overlooked features of Wisconsin’s economic upswing.

Wisconsin Works: Our state boasts the highest labor force participation rate in the Great Lakes Region and ninth highest in the country; up from the twelfth spot five years ago. As of January, 68.1% of the state’s population was in the labor force. That’s above the rate for January 2015 and equal to the rate in January 2014.

Wage Growth Comeback: Wisconsin’s total private wages grew 5.3% in 2015. While this is a solid number by itself, remember there was no inflation to artificially pump up the number. Wisconsin’s total and average private sector real wages and salaries increased by 5.0% and 3.5%, respectively; the strongest gains since 1998.

Wisconsin is Less Taxing: Wisconsin’s tax burden has been steadily declining. Our state and local tax burden is now the lowest in over 40 years. In 2000, Wisconsin ranked fourth among the states in state and local tax burden and was 14.5% above the national average. Even as recently as 2010, Wisconsin ranked ninth and was 7.9% above the U.S. average. Today, Wisconsin’s tax ranking has dropped to sixteenth, just a tad, 1.5%, over the U.S. average. Not only has Wisconsin fallen out the top 10 states in tax burden overall, it has also no longer among the top 10 states for income taxes, corporate taxes, sales taxes and property taxes.

The Kids Are All Right: Wisconsin’s millennials are better educated than their parents Lees meer bij and out-work their counterparts in the rest of the country. They are also more likely to be fully independent, either on their own or married.

More than 33.6% of Wisconsinites ages 25 to 34, have bachelor’s degrees or higher, very close to the national average. That is a big shift from their parents and grandparents, as just 27.4% of the state’s population as a whole has that education level.

Wisconsin millennials participate in the workforce at higher rates than their counterparts in the rest of the country. The percentage of Wisconsin residents aged 20-24 years in the labor force is 76.7%; ages 25-29 is 82.2%; and 30-34 is 83.5%. The national average percentages for those age groups are much lower, 64.7%, 75.2% and 76.4%, respectively.

So, it should not be a surprise Wisconsin millennials are more independent than their counterparts in the rest of the country. Nationally, 34% of 18-34 year olds still live with their parents. In Wisconsin, it is 27%.

We’ve Got You Covered: Wisconsin ranks sixth best among the states in health insurance coverage. More than 94% of the state’s residents are covered by health insurance, nationally that figure is 90.6%. Between 2013 and 2015, 195,000 more Wisconsin residents added health insurance. In Wisconsin the dominant form of coverage is employer sponsored health insurance. Wisconsin also ranks sixth in the nation for employer provided health insurance.

These five factors are not meant to be comprehensive. That would be difficult. There are other overlooked metrics that point to why Wisconsin’s economy is performing at its highest level in the past fifteen years or more.

As I said, Wisconsin must be doing something right.

John Koskinen is the chief economist for the Wisconsin Department of Revenue.

U.S. job growth increased more than expected in February and wages rose steadily, which could give the Federal Reserve the green light to raise interest rates next week despite slowing economic growth.

Nonfarm payrolls rose by 235,000 jobs last month as the construction sector recorded its largest gain in nearly 10 years due to unseasonably warm weather, the Labor Department said on Friday. The economy created 9,000 more jobs in December and January than previously reported.

Last month's brisk clip of hiring was accompanied by steady wage growth, with average hourly earnings rising 6 cents, or 0.2 percent.

January's wage growth was revised up to 0.2 percent from the previous 0.1 percent gain. That lifted the year-on-year increase in wages to 2.8 percent from 2.6 percent in January.

The unemployment rate fell one-tenth of a percentage point to 4.7 percent, even as more people entered the labor market, encouraged by the hiring spree. Economists polled by Reuters had forecast employment increasing by 190,000 jobs last month.

With the labor market near full employment, wage growth could speed up as companies are forced to raise compensation to retain employees and attract skilled workers. According to economists, wage growth of between 3 percent and 3.5 percent is needed to lift inflation to the Fed's 2 percent target. But inflation is already firming, in part as commodity prices rise.

All sectors of the economy, with the exception of retail and utilities, expanded payrolls in February. Manufacturing employment increased 28,000, the largest increase since August 2013, as rising oil prices fan demand for machinery. Construction payrolls surged 58,000, the biggest gain since March 2007, boosted by warmer weather. Retail sector employment fell 26,000 after a gain of 39,900 jobs in January.

Assembly Republicans are poised to pass a bill that would limit union influence on bids for public projects.

The Assembly is set to vote on the measure Thursday. The bill prohibits state and local governments from requiring contractors bidding on their projects to enter into collective bargaining agreements called project labor agreements.

The bill's sponsor, Rep. Rob Hutton, says it gives non-union firms more opportunities to bid on public projects. Opponents say the bill is the latest Republican attack on unions. Both sides acknowledge few places in Wisconsin currently use project labor agreements.

The Senate passed the measure last month on party lines. If the Assembly passes it, it will go to Gov. Scott Walker for his signature.

More than 20 other states have passed similar legislation.

In 2016, voters in 54 Wisconsin school districts approved $1.35 billion in borrowing for new construction projects. That amount was the highest in at least 25 years and about 30% greater than the inflation-adjusted $1.04 billion approved in 1996, according to a new report from the Wisconsin Taxpayers Alliance (WISTAX). WISTAX is a nonpartisan, nonprofit organization devoted to public policy research and citizen education.

Although reasons for school borrowing vary, growth is a factor: Over the past five years, in districts where student numbers rose, 55% held debt referenda. Over those same years, voters have approved almost $3 billion in new borrowing. However, that is less than the inflation-adjusted $4.7 billion approved during 1996-2000, the last period of major school construction. Debt referenda in 2016 were unusual in several other ways.

According to WISTAX research, the 83 proposed were the most since 2001 and 64 approved the most since 2000. The percentage passed (77.1%) was the highest since at least 1993. In February and April of this year, districts are asking to borrow another $707.9 million for building projects.

The surge in new borrowing comes at a time when referenda to exceed state-imposed revenue limits are passing at record rates. In 2016, 81.7% of these referenda were approved, nearly double the average during 1996-2010 (44%).

Districts seeking revenue limit exceptions are different from those seeking new borrowing in at least one key aspect: They are likely to be suffering declining enrollment. Of 171 districts with revenue limit referenda in the past five years, 130 (76%) had falling student numbers—the reverse of districts seeking new debt.

As chair of the Ways and Means Committee, Rep. John Macco has held five public hearings on taxation in Wisconsin.

In an interview with the Wheeler Report, Macco said the hearings were an opportunity for the committee to understand the tax structure in Wisconsin, allowing all the committee members to have a fundamental understanding of where the revenue comes from, who pays it, how it’s handled, and where it goes. Macco said he was glad the committee concluded by having the Towns, Villages, Municipalities, and Counties testify last because it brought everything together. Macco emphasized that he thought the committee hearings were a success, saying committee members had excellent questions, and it deepened everyone’s understanding of the issues.

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Since opening in early June 2016, the new International Arrivals Terminal at Austin Straubel International Airport has seen a significant rise in traffic through what is becoming a hotspot for corporate and private traffic. The last seven months alone of 2016 say 277 flights clear US Customs.

The new facility has enabled the airport to expand it’s capabilities for international traffic services such as a fully operational USDA-approved auto-clave to handle regulated international trash.

The new terminal also provides space and upgraded technology for CBP officers to operate in facilities that meet the federal security standards.

As this trend continues, Austin Straubel Directors believe this momentum will bring international commercial charter aircraft capabilities within reach sooner than most expected.

For the official statement on this progress, click here.