If you ask Michigan small business owners what keeps them up at night, you are likely to get some variation of the same response—trying to find qualified people to hire. This talent shortage, along with continually dealing with inflation and worrying about costly expansions in the unemployment insurance system, were the top issues identified in the Small Business Association of Michigan’s (SBAM) spring membership survey.
Ninety percent of SBAM members surveyed in April said they are experiencing higher cost increases, as compared with previous years. While SBAM’s membership has enjoyed a relatively stable economy in the past several years and has been able to staff up and plan for a rainy day, the results of this latest survey show that rainy day could be coming sooner rather than later, as inflationary pressures and a lack of available labor continue to impair small business owners’ growth trajectory.
By a margin of three to one, small business owners are against any proposed expansion of the unemployment insurance system. While it’s certainly an odd time to consider increasing Michigan’s unemployment benefits — when our state’s unemployment rate remains at record low — we are beginning to see and feel very serious rumblings from Lansing that legislators are considering it. Respondents to the spring survey clearly opposed legislative efforts to expand Michigan’s unemployment benefits from a maximum of 20 weeks per year to 26 weeks and increase the cash benefit from a maximum of $362 per week to $602, with an automatic annual increase.
The Unemployment Insurance Agency (UIA), under the leadership of Director Julia Dale, has been intentional in bringing stakeholders together to discuss fraud and systems issues after the debacle of the COVID-19 pandemic. During that time, the Unemployment Insurance Trust Fund was used as a social safety net for essentially any and all. While we recognize and can appreciate the complexity of the pandemic, the fund is kept afloat by employers, and treating it with respect and being fiscally sound in its allocation is non-negotiable. Before the pandemic, the fund was at a healthy $4 billion, but has been at risk of going broke. Expanding weeks and benefits before getting the fund back up to that healthy $4+ billion mark is irresponsible and disrespectful to employers. At this time it’s back to just north of $2 billion.
To be clear, we are encouraged by the UIA’s work. They are narrowing in on a new system that will better support claimants AND employers. Along with many other long-overdue improvements, the UIA will narrow the gap for fraud, bring technology up to date and equip its employees to serve constituents holistically. However, legislative action is getting ahead of this work, setting this progress up for potential failure. Integrating a new system and trying to make these drastic changes legislatively is on a collision course to crash and burn. Our message to the legislature: let the UIA director and the agency do their work, prioritizing the Insurance Trust Fund to get it back to pre-pandemic health and make Michigan a top state in best practices.
We hear you and we will do everything in our power to relay this message. If you are out and about this summer and come into contact with your Representative or Senator, please tell them about your concerns in this area. As always, we will keep you apprised to anything we see moving in Lansing and will engage you when appropriate, but it takes all of us to make the small business voice heard and no voice is more credible than your own.
By Kelli Saunders; originally published in SBAM’s July/August 2024 issue of FOCUS magazine
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