Updated August 11, 2020

Actions taken so far

At the state level, Gov. Gretchen Whitmer has issued a number of executive orders and directives in response to the COVID-19 crisis, including an executive order on Unemployment Insurance (UI) that does the following:

  • suspends work search requirements; 
  • expands what counts as a layoff or “good cause” for leaving a job to include COVID-19-related job separations; 
  • restores the maximum duration of 26 weeks to receive UI (from the current 20-week maximum) on a time-limited basis; 
  • reduces limitations on employers implementing work-sharing arrangements; and 
  • revises the method by which employers are charged for UI.

At the federal level, Congress has passed the Families First Coronavirus Response Act and the CARES Act. Gov. Whitmer has signed executive orders to enable Michigan workers to benefit from the provisions in the new laws, which do the following:

  • Provide emergency administrative grants to states to help their UI systems respond to the COVID-19 crisis. Michigan will receive  $14,554,745 within the next 60 days, and an equal amount when its unemployment rate increases by 10%. 
  • Provide temporary Federal Pandemic Unemployment Compensation (FPUC) of an additional $600 per week for any worker eligible for state or federal unemployment compensation (UC) benefits, through July 31, 2020. This additional compensation is 60% higher than Michigan’s maximum benefit of $362 per week and will go a long way to help low-paid workers.
  • Temporarily provide full funding for state work sharing programs—saving Michigan a lot of money.
  • Provide 13 additional weeks of Pandemic Extended Unemployment Compensation (PEUC) to workers who exhaust regular benefits. 
  • Expand eligibility for UI benefits to temporarily fill state coverage gaps. States would be permitted to expand eligibility to provide unemployment compensation to workers who are not normally eligible for benefits, as long as their unemployment was connected to the COVID-19 pandemic. These include self-employed individuals, independent contractors, “gig economy” employees, and individuals unable to start a new job or contract due to the pandemic. 

Our recommendations:

Permanently restore the 26-week maximum for basic UI. Just as it took legislative action to reduce the maximum number of weeks for UI from 26 to 20, it will take legislative action to reverse this action beyond the governor’s emergency order and help workers who remain unable, despite their efforts, to secure employment after 20 weeks of job search.

Peg the maximum benefit to the average weekly wage. Until 1994, the maximum benefit was set at 58% of the average weekly wage, which enabled it to keep pace with the economy. Experts recommend that the maximum benefit equal two‐thirds of a state’s average weekly wage. Although Michigan’s 58% standard fell short of this, it would have enabled a more generous maximum in recent years than the current (and long-time) flat rate of $362. 

Expand UI eligibility to help more unemployed workers receive benefits while they look for work. Many workers who are firmly attached to the labor force will not qualify for UI if they find themselves jobless, because their earnings are not high enough. Lowering the minimum base period and high quarter earnings requirements would bring Michigan’s coverage more in line with other Midwest states. Extending UI coverage to part-time workers and “gig” workers will also go a long way toward covering Michigan’s workforce.

Strengthen Michigan’s paid sick leave law. When lower-paid workers miss work and wages due to being sick or having to care for a sick dependent, those missed wages can put them below the earnings thresholds required for collecting UI in the event they become jobless. A strong paid sick leave law in turn makes a stronger UI system.

Implement UI and other protections for misclassified or “gig” workers. Workers misclassified as “contract workers,” even though they function effectively as employees, will likely fall through the cracks during the pandemic and the expected recession that will follow. Michigan should develop protections for such workers, including an ABC test similar to that adopted by California and 15 other states in which workers are considered employees unless they a) are free from direction and control of the employer; b) are performing work outside the employer’s usual business (and sometimes, outside the place of business); and c) have their own independent business.

Why Michigan must act now: 

With only 88% of Michigan’s civilian workforce covered by UI, Michigan has the lowest coverage rate in the Midwest. Michigan also has the lowest maximum weekly benefit of all Midwest states; those of Minnesota, Illinois and Ohio are at least $100 per week more than Michigan’s. Finally, despite the temporary suspension of Michigan’s 20-week maximum duration for benefits, Michigan still has the shortest duration in the Midwest as all other Midwest states have the standard 26-week maximum.

Michigan’s UI system is clearly not structurally designed to maximize protecting workers during a time of crisis, whether a pandemic or a recession. When the governor’s executive orders and the federal emergency provisions expire, workers will be left with Michigan’s long-inadequate UI policies.

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