A Not So Happy Labor Day for 365,000 Unemployed Michigan Workers

A version of this column originally appeared in The Alpena News.

On September 6, the three federal Unemployment Insurance (UI) programs put in place at the start of the pandemic will end. That date happens to be Labor Day.

The national Century Foundation, in a new report, estimates that more than 7.5 million workers nationwide will face a benefits cliff with the loss of benefits from two of these programs.

Here in Michigan, an estimated 216,633 Michigan unemployed workers will lose Pandemic Unemployment Assistance (PUA), which provides federal funding to states to temporarily fill state UI coverage gaps. And approximately 148,272 Michigan workers will lose Pandemic Emergency Unemployment Compensation (PEUC), which provides additional weeks of UI benefits for unemployed workers who have exhausted their 26 state-funded benefit weeks. The workers receiving federal benefits from these two programs will lose all of their Unemployment Insurance assistance, since they by definition are not eligible for state-funded UI. 

In addition, all of the workers above, along with all workers receiving state UI, receive an additional $300 per week in supplemental benefits from a third federal program, Federal Pandemic Unemployment Compensation (FPUC). This program will also end on September 6, meaning that workers still receiving state benefits will not lose all of their UI, but will receive $300 less per week in benefits. In Michigan, because the maximum weekly benefit is $362, those workers will see their benefits cut from $662 per week to $362 per week beginning on Labor Day. There are currently approximately 95,600 workers receiving regular UI that will see a $300 per week cut. 

It is important to keep in mind when reading these UI figures that UI and its federal pandemic supplements not only helped workers and their families, but kept Michigan’s economy alive. With so many employers having had to shut down temporarily to protect public health, the extremely large number of workers who would have suddenly been without money to spend would have cut way down on spending at supermarkets, department stores and essential small shops, hurting those retail businesses. They would have foregone necessary car repairs, hurting auto mechanics. They would have declined to get take-out food at restaurants, putting those employees at risk of underemployment or unemployment. While many establishments sadly did go out of business during the past 16 months, without the additional $300 supplement going to unemployed households, Michigan would likely have lost many more businesses.

The federal Unemployment Insurance programs ending on Labor Day is something that Michigan’s Legislature and governor have no control over. However, moving forward, the Legislature should act to strengthen Michigan’s UI policies to cover more workers, pay adequate benefits, and provide more worker protections. Some of the Michigan League for Public Policy’s recommendations that are currently in bills before the Legislature include:

• Restoring the maximum number of weeks for basic UI from 20 to 26 weeks.
• Pegging the maximum benefit to the average weekly wage, as the current amount replaces only 33% of the average weekly wage.
• Lowering the earnings requirements for unemployed workers to collect UI benefits. 
• Raising the dependent allowance from $6 to $20. 
• Establishing an “ABC test” to prevent employees from being wrongly classified as contract workers and hence be left out of Unemployment Insurance coverage. 

Despite the fact that Michigan falls far short of its Midwestern peers in how its UI system responds to unemployment, most of these bills have not seen any action since they were introduced. For the sake of Michigan’s workers, their families, and our state’s future, legislative leaders and the relevant committee chairs need to bring these bills up for hearings and votes, rather than let them die through inaction. 

Some of these reforms, such as establishing an ABC test and expanding national standards for employee eligibility, would ideally be made by Congress on the federal level and applied across states. But since any federal reform will take a long time, Michigan’s Legislature needs to act now to improve our outdated Unemployment Insurance policies and better support Michigan workers and their families.