In Blog: Factually Speaking

Governor Rick Snyder, just before Christmas, signed into law a bill package with fixes to Michigan’s Unemployment Insurance (UI) system that will prevent the false fraud accusation travesty (which we blogged about here, here and here) from happening again. That is the good news.
The new laws will not, however, make reparations to the tens of thousands of workers and their families who were hurt by being falsely accused of fraud and having their wages and tax refunds garnished—and in some cases went into bankruptcy or foreclosure.
The new laws also do not make fundamental changes that would bring Michigan’s UI system in line with its neighbor states by making it easier for lower-paid unemployed workers to access benefits as they look for work, and by increasing the amount of the benefits. The Michigan League for Public Policy has proposed several such changes in its new report, Falling Short 2017: Michigan’s Unemployment Insurance Continues to Neglect Many Workers Who Need It.
The last time we did a Falling Short report was in 2011, and unfortunately little has improved since then. Michigan’s UI system continues to lag behind other states in the Upper Midwest:

  • Michigan still pays the lowest maximum benefit, and its average weekly benefit as a percent of wages remains lowest.
  • Michigan still has the lowest UI coverage.
  • Michigan still provides the fewest weeks of benefits.
  • Michigan spends far less on UI per unemployed worker than several other Midwest states.

Michigan enacted several bad unemployment policies over the past 25 years. One was decoupling the maximum UI benefit from state average weekly wages in 1994. Prior to that year, the maximum UI benefit was equal to 58% of state average weekly wages, so as wages go up (or very occasionally in recession years, down), the benefits go up (or down) as well. Beginning in 1994, the maximum benefit was set as a flat rate that only the Michigan Legislature can change. That rate has been $362 since 2002, which, when adjusted for inflation, is worth only $266 today.
Another anti-worker change Michigan made was in 2011, when it became the first state in the nation to reduce the maximum number of weeks that unemployed workers can receive benefits as they look for work. Prior to that, all states had a 26-week maximum, although many workers don’t receive that many weeks of benefits because they find work before the maximum is reached. Michigan’s move to reduce the maximum was quite extreme, especially since our state had one of the highest unemployment rates in the country at the time. Sadly, a tiny handful of other states saw Michigan do it and followed suit.
Finally, Michigan has failed to update its eligibility rules that would enable unemployed lower-paid workers who are firmly attached to the labor market to collect UI benefits as they seek new jobs. A much lower percentage of employed workers in Michigan is eligible for UI due to this legislative negligence.
Now that the UI fraud determination laws have been strengthened, UI will probably fall off the media radar and out of public attention, but we must continue to improve the system. There is much more work that needs to be done to bring Michigan’s UI into the 21st century. This is not just about providing a safety net for unemployed workers and their families, but also about helping local economies that suffer when spending goes down.
Some may ask why we should worry about UI now, when the economy is improving. My response is, why wait until the next recession hits and layoffs again plague our state to fix the program that can alleviate family and community hardship? Let’s do what needs to be done to support workers and businesses today and in any economic climate ahead.

— Peter Ruark

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