Michigan’s Unemployment Insurance system worst in Midwest, needs overhaul for new challenges

For Immediate Release
June 10, 2021

Contact:
Alex Rossman
arossman@mlpp.org
517-775-9053

Michigan’s Unemployment Insurance system worst in Midwest, needs overhaul for new challenges

System was outdated even prior to COVID-19; new bills in Legislature would improve outcomes for workers, families and state economy

LANSING—Michigan’s Unemployment Insurance (UI) system lags significantly behind other Midwest states, excluding too many workers and not paying enough in benefits to keep families from falling into poverty, according to a new report from the Michigan League for Public Policy.

The report, Falling Short: Michigan’s Unemployment Insurance Needs Real Reform to Meet the Needs of the 21st Century Workforce, examines the root of Michigan’s problems and provides solutions. The analysis shows that when compared to eight other Midwest states, Michigan is dead last in a number of metrics. Michigan provides the fewest weeks of Unemployment Insurance benefits available to unemployed workers as they look for jobs—just 20 weeks. Michigan also pays the lowest maximum weekly benefit in the Midwest, both as a numerical figure ($362/week) and as a percentage of the average weekly wage (35%).

“Michigan is operating with Unemployment Insurance policies that do not meet the needs of workers, their families or the state economy. Too many workers are ineligible for unemployment, and for those who are eligible, the benefits are too low. If we’ve learned anything over the past year, it’s that we need to make sure our systems are on solid ground—and even before COVID-19 hit, Michigan’s Unemployment Insurance system was broken. Michiganders deserve better,” said Gilda Z. Jacobs, President & CEO of the Michigan League for Public Policy.

More than 20 bills currently sit before the Michigan Legislature that will address the shortcomings with the state’s UI system outlined in the report. The League urges lawmakers to restore to 26 weeks the maximum number of weeks that UI is offered, peg the maximum benefit to the average weekly wage, increase the allowance for dependents, cover more workers and make other important improvements to the system.

The state’s weak unemployment policies are even less equipped to assist women and workers of color, who because of systemic inequities earn a lower median wage and are more likely to work part time. Black and Hispanic (Latinx) workers often live in highly populated areas that often have fewer jobs than jobseekers, have a lower rate of postsecondary credential attainment, and often face barriers such as reliable transportation and the availability of child care. As such, they generally have a higher unemployment rate than White workers and are paid a significantly lower median wage. Black workers are also more likely to work part-time.

These factors mean that they are especially impacted by the high earnings requirement and the prohibition against part-time workers receiving UI, especially the large number who live in high-poverty urban centers such as Detroit and Flint where there are fewer jobs. Michigan’s UI policies also disproportionately affect women, who are much more likely than men to work part-time and to need UI due to compelling family reasons including domestic violence.

“The system was really designed to support a workforce that doesn’t exist anymore. Today, more people work part time, most families have two parents working outside of the home, and most full-time jobs require training beyond high school. Economic mobility looks much different today than when this system was designed, and it’s time to catch up with—and get ahead of—the times. The Legislature has a prime opportunity to modernize the UI system with these bills, and people in every single district would benefit from the proposed changes,” Jacobs said.

The report also finds that in the Midwest, Michigan has the highest wage eligibility requirements for Unemployment Insurance protection and the lowest Unemployment Insurance coverage, covering just 72% of unemployed workers. Michigan spends far less on Unemployment Insurance per unemployed worker than most other Midwestern states, and has an Unemployment Insurance benefit that is not enough to prevent a family from falling below the poverty line, nor does it pay enough to make rent affordable.

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The Michigan League for Public Policy, www.mlpp.org, is a nonprofit policy institute focused on opportunity for all. Its mission is to advance economic security, racial equity, health and well-being for all people in Michigan through policy change. It is the only state-level organization that addresses poverty in a comprehensive way.