The Senate approved 21-15 gradually raising maximum unemployment benefits from $362 to $614 weekly, as well as extending the maximum timeline for receiving benefits from 20 to 26 weeks.
Sen. Ed McBroom (R-Waucedah Twp.) joined Democrats in passing the bills.
The expansions under SB 40 will take place over time, reaching $446 maximum per week in 2025, $530 in 2026 and $614 in 2027. However, the 26 weeks – a restoration of the maximum number of weeks before the Snyder-era cap was installed in 2011 – will happen right away.
Senate Labor Chair John Cherry (D-Flint) said many folks are forced into unemployment, like construction workers.
“We are losing people because they go to work in other states where they have higher benefit levels that help tide them over in those periods in which they can’t work,” Cherry said on Thursday. “This helps make sure we have a stable population. That money goes straight back into the economy, and it’s really a buffer for folks who need it.”
The Senate Fiscal Agency (SFA) projected that the 26 weeks maximum of benefits alone would have a “significant fiscal impact” on Michigan’s Unemployment Insurance Trust Fund. Based on $763.1 million being spent on benefits in the past year, the SFA calculates that total payouts could have been between $839.4 million and $867.6 million under a 26-week cap.
The trust fund, bankrolled by taxes paid by employers on workers’ wages, had a $2.28 billion balance as of January. But at the start of 2019, before the COVID-19 pandemic, the balance was at $4.2 billion.
“We’re actually gaining very large increases to the trust fund balance every year,” Cherry said, noting that the balance was at $963 million in January 2022.
He believes the changes are sustainable “absent an economic collapse, but quite frankly, the trust fund balance would be in jeopardy regardless of what our maximum benefit level would be if we had an economic collapse.”
SB 40 also instructs the state treasurer to adjust maximum weekly benefit rates to reflect yearly changes in the consumer price index, requiring the program to account for inflation.
According to the Michigan League for Public Policy – a vocal advocate for expanding unemployment benefits – Michigan falls behind Indiana, Iowa, Ohio and Wisconsin in terms of its highest weekly benefits, although its average weekly wages are greater than those states.
Among the four states, the average weekly wage ranges from $932 (Indiana being the lowest) to $995 (Ohio being the highest), with their maximum weekly benefits being worth 38 percent (Wisconsin) to 52 percent (Indiana) of that average. Meanwhile, for Michigan in 2021, the average weekly wage was $1,051, but the unemployment benefit was worth 34 percent of that because of the statute’s current amount of $362.
According to the U.S. Department of Labor, 9,596 initial unemployment claims were filed in Michigan for the week ending on Nov. 30. Right before Thanksgiving, in the week ending on Nov. 23, Michigan had 2,528 more weekly unemployment claims than it did a year ago.
Many business voices came forward with their opposition to the reform, with the Michigan Manufacturers Association (MMA) claiming that, because the unemployment insurance system is funded by employer tax dollars, “the cost of this staggering benefits increase will be borne entirely by Michigan job providers.”
“Increasing the weekly maximum benefit with an undefined cost to Michigan job providers is irresponsible and will threaten the state’s competitiveness compared to neighboring states,” said Dave Worthams, the MMA’s employment policy director. “This large increase will threaten the solvency of Michigan’s Unemployment Insurance Trust Fund, which will trigger even higher tax increases placed upon the backs of employers.”
Before voting on SB 40, the Senate approved other reforms to Michigan’s Unemployment Insurance Agency (UIA) and its functions – tie-barred to the modifications in SB 40.
For example, SB 962, SB 975, SB 976 and SB 981 all passed 21-15. McBroom joined Democrats in supporting the four bills. They oversaw reforms like ensuring domestic violence victims can still qualify for benefits after voluntarily leaving work because of abuse, as well as allowing residents to have up to $100,000 in cash assets on-hand to be waived from repaying benefits improperly paid to them.
Senate Minority Leader Aric Nesbitt (R-Lawton) said Thursday’s reforms are “once again” Democrats not wanting to come to a consensus with Republicans. He said he believes there are a lot of reforms they could have worked together on, especially after billions were paid out to potentially fraudulent claims during the pandemic.
“I have restaurant owners who still haven’t gotten a check from four years ago, so there are huge problems with the unemployment insurance agency,” Nesbitt said. “What they passed today doesn’t do anything, doesn’t fix the problems that’s there and continues to hide away from the horrendous operation that (Gov. Gretchen Whitmer) and her . . . (UIA) did under the COVID lockdowns.”
Article courtesy MIRS News for SBAM’s Lansing Watchdog newsletter
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