Michigan Legislature must do much more to fix unemployment system, support workers

For Immediate Release
January 9, 2018

Alex Rossman

Despite bills passed to address false fraud issue, Michigan is still worst state for unemployed workers in Midwest

LANSING—While the Michigan Legislature recently passed bills to address the devastating false fraud accusations leveled at nearly 50,000 unemployed workers, a new report calls on lawmakers to do much more to modernize and improve Michigan’s Unemployment Insurance. Falling Short 2017: Michigan’s Unemployment Insurance Continues to Neglect Many Workers Who Need It, released today by the Michigan League for Public Policy, compares Michigan’s unemployment system to neighboring states in the region (Illinois, Indiana, Iowa, Minnesota, Ohio, Pennsylvania and Wisconsin) and shows we are last in nearly every category.

According to the report, Michigan still pays the lowest maximum benefit and its average weekly benefit as a percent of wages remains lowest in the Midwest. Michigan’s Unemployment Insurance program provides the fewest weeks of benefits in the region, which were cut from 26 weeks to 20 in 2011, and also covers the lowest percentage of workers. Michigan also spends far less on Unemployment Insurance per unemployed worker than several other Midwest states.

“You can’t be a great state to work in and an awful place to be unemployed,” said Gilda Z. Jacobs, president and CEO of the Michigan League for Public Policy. “We need to be supporting our workers at every turn, including when they’re struggling to find a job. Unemployment happens, and while our rate has improved, how we support our residents looking for work has a ripple effect throughout our communities and local economies.”

When compared with the other Midwestern states, Michigan’s maximum unemployment benefit ranks last, both as a nominal amount and as a percent of the state average weekly wage. Michigan’s maximum was significantly below the other states at only 37 percent. The state’s average weekly benefit is 31 percent of its average weekly wage, last among the eight states.

In 2011, despite having one of the highest unemployment rates in the nation and having been hit especially hard by the economic downturn, Michigan’s Legislature voted to make Michigan the first state to reduce the maximum number of weeks of basic Unemployment Insurance from 26 weeks to 20 weeks. This change took effect in January 2012. No other Midwest state has reduced its benefit weeks this drastically; the one other Midwest state to reduce its weeks, Illinois, shaved off only one week but restored the maximum to 26 a couple years later.

“Losing a job or struggling to find one is hard enough psychologically and financially, and Michigan’s poor unemployment system only compounds those problems,” Jacobs said. “The false fraud issue raised a lot of questions about how the system operates, and many of those are being remedied. But with lower average and maximum benefits and fewer weeks of unemployment than any other state in the Midwest, there’s much more that needs to be done.”

The League supported the legislation to address the Unemployment Insurance fraud issue and the state’s move in 2012 to adopt an Unemployment Insurance work-sharing program. As the Legislature considers further Unemployment Insurance legislation, it should take into account whether such legislation will strengthen Michigan’s system and bring it in line with other states or cause it to fall further behind in responding to the needs of workers.

The report includes some other recommendations for policymakers, including:

  • Restore the 26-week maximum for unemployment benefits;
  • Peg the maximum benefit to the average weekly wage;
  • Lower the minimum base period and high quarter earnings requirements for unemployed workers to collect unemployment benefits;
  • Expand eligibility for UI to unemployed workers seeking part-time work, workers who left their jobs out of necessity for compelling family reasons, and/or workers who became unemployed and are using their time to acquire new skills through training rather than looking for immediate employment; and
  • Raise the dependents’ allowance from $6 to $15.


The Michigan League for Public Policy, www.mlpp.org, is a nonprofit policy institute focused on economic opportunity for all. It is the only state-level organization that addresses poverty in a comprehensive way.

Update on UI false fraud accusations—Please contact your state senators soon!

As most of our readers know, many unemployed workers who filed Unemployment Insurance (UI) claims between 2013 and 2015 using Michigan’s online Michigan Integrated Data Automated System (MiDAS) were later informed, wrongly, that the UI benefits they received were fraudulent and that they owed thousands of dollars in benefit repayment plus interest and large penalties. The notices did not provide information as to the reason for the fraud determination, and some workers did not realize they had been accused of fraud until their wages or tax returns were garnished.

An internal investigation by the agency revealed that more than 44,000 determinations of fraud since 2013 were false determinations, meaning there had been in fact no fraud committed in those cases and the claimants were wrongly accused. Of the fraud determinations done entirely by computer, 93% were false—a breathtaking error rate! Yet despite initial PR efforts to blame the problem on “computer glitches,” further investigation showed nearly half of determinations reached with some human involvement were false as well. The fact that the false determination scandal was a structural problem and not just a technical problem was further underscored by revelations of the “guilty until proven innocent” questionnaire through which claimants could respond to fraud determinations, which included questions that could be seen as self-incriminating.

Unemployment Benefits Claim Form 450x300Moreover, as if falsely accusing residents of fraud were not enough, Michigan was shown to have the highest penalties in the nation for UI fraud. Federal law requires that claimants who commit fraud must pay the amount overpaid to them plus a 15% penalty, but many states have enacted higher penalties. Michigan’s penalty is by far the highest at 400% of the amount overpaid; someone accused of having fraudulently received $1,000 in overpaid benefits would owe the state $5,000 in repayment and penalties. The victims of the structural dysfunction at Michigan’s Unemployment Insurance Agency were charged much more than they would have if they were falsely determined to have committed fraud in another state.

For many workers accused of fraud who had done no wrong, the false determinations and the efforts by the state to collect the money resulted in a terrible avalanche of consequences: family stress, ruined credit, bankruptcy, foreclosure, homelessness, and even suicide.

Rep. Joseph Graves convened a task force made up of claimant advocates, organized labor, business groups and legislative staff to develop a package of bills to make sure the false fraud determination travesty never happens again. After many, many hours of work and deliberation, the task force produced a package that passed the House unanimously last month and was passed unanimously on November 30 by the Senate Oversight Committee. From there it will go to the full Senate as soon as next week, where we hope it will pass without amendments and go to Governor Snyder’s desk to be signed into law.

Please learn about what these bills will do here and here, and then call your state senator’s office and tell the staff person that you would like your senator to support the package of bills without amendments. We ask that the bills be passed without amendments because the task force was made up of many points of view and difficult compromises had to be made to reach agreement on a bill expected to be favorable to all parties. Amendments tacked onto the bills could tip the balance and poison the well, jeopardizing passage of the entire set of bills.

If you do not know who your Michigan senator is, you can find out here.

You can find your Michigan senator’s contact information here. (Calls to your senator’s office are more effective than emails.)

Readers who have been wrongly accused of fraud and need legal assistance can find help here.

— Peter Ruark

Census numbers tell of stagnancy and slow recovery

Today is the big day that comes each year: the release of American Community Survey figures on income and poverty.

Ready for some numbers?

Michigan’s household median income in 2013 ($48,273) was a bit higher than in 2012, but is nearly $1,000 lower than in 2009. The income bracket that grew the largest from 2009 to 2013 was the share of Michigan households who make under $10,000 a year. The only other income bracket with a significant share increase was households making more than $200,000 a year. These numbers taken together suggest that the slow economic recovery in Michigan is primarily benefiting those at higher incomes. (more…)

Shooting ourselves in the foot

Michigan and the seven other states that cut unemployment benefits in the wake of the Great Recession caused financial hardship for unemployed workers and failed to boost the overall economic outlooks of the states, a new report from the Economic Policy Institute concludes.

Problems with the unemployment system actually stemmed from underfunding the state trust funds in good times, rather than paying out benefits too generously, the report concludes. And cutting benefits not only shortchanged jobless workers and their families, it undermined the countercyclical role of the unemployment system that is designed to kick in when times are tough. (more…)

Vets lose benefits as we celebrate Fourth of July

Just as we head into one of our most patriotic celebrations of the year next week (the Fourth of July), a new estimate out shows that 285,000 unemployed veterans will lose jobless benefits by the end of June, including thousands of out-of-work vets in Michigan.

Extended benefits known as Emergency Unemployment Compensation expired Dec. 28. Congress’ failure to extend the benefits means that 1.3 million workers were cut off from unemployment benefits nationwide at the end of last year, with an additional 1.6 million exhausting their regular state benefits in the first six months of this year. Included in those numbers are nearly 300,000 jobless vets, Chad Stone, chief economist at the Center on Budget and Policy Priorities, estimates. (more…)

Ramp up pressure on Unemployment Insurance

“I agree with you, I want to do it, now make me do it.”  ~ President Franklin D. Roosevelt to Sidney Hillman and other labor leaders after his election in 1932.

“I don’t think there is a great sense of pressure on our members.”  ~ Deputy Whip Rep. Tom Cole, R-Okla., responding to a question about renewing long-term Unemployment Insurance benefits, 2014.

The U.S. Senate passed a bill to extend Emergency Unemployment Compensation Monday evening with bipartisan support and with benefits retroactive to Dec. 28 when the program expired. Yet U.S. House leaders show little interest in bringing it up for a vote. (more…)

War on Poverty: Part 2

From the League’s First Tuesday newsletter
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Today marks the 50th anniversary of President Lyndon Baines Johnson’s now-famous State of the Union address that launched the War on Poverty:

“Unfortunately, many Americans live on the outskirts of hope — some because of their poverty, and some because of their color, and all too many because of both. Our task is to help replace their despair with opportunity.

While some pundits will undoubtedly seize the anniversary as an opportunity to wrongly declare the War on Poverty a failure, we should instead recommit to LBJ’s vision, as there is plenty of evidence that it worked. And what an incredible return on investment! (more…)

Unemployment drama redux

It is December again. Along with the annual holiday season comes what is beginning to feel like an annual drama: Congress approaching year’s end without reauthorizing long-term Unemployment Insurance benefits.

If Congress does not reauthorize Emergency Unemployment Compensation, up to 189,700 Michigan workers could lose benefits as they continue to look for jobs: 43,800 immediately, an additional 86,500 if their unemployment goes beyond 20 weeks before June 2014, and 59,400 more if they go beyond 20 weeks between July and December 2014. (more…)

Weakening worker protections

Charles Dickens created his novel Oliver Twist to portray the brutal exploitation he saw in the workhouses in his city of London. (We now know that the laborers were treated even more ruthlessly in real life.William Blake wrote about extremely young boys being sold as chimney sweepers, whose lives were cut short from all the coal dust they breathed on the job. Upton Sinclair painted a grisly picture of the conditions and dangers in Chicago’s meatpacking plants. And John Steinbeck wrote about what happens when exploited workers attempt to organize a union.

These works of literature sparked moral outrage in the 19th and 20th centuries and eventually led to many of the labor protections we have come to expect in the developed world today. A new paper from the Economic Policy Institute, however, shows a coordinated effort across the country to roll back or weaken state labor laws on child labor, the minimum wage, overtime, workplace safety and other labor protections. (more…)

Making Michigan truly a ‘comeback state’

As the annual Mackinac Policy Conference continues, we’re sure to hear a lot about Michigan as the “comeback state.” (Just check out #MPC13 on Twitter and Gov. Rick Snyder, who tweets under @onetoughnerd.)

Sponsored by the Detroit Chamber of Commerce, the conference brings together business people and politicians on Mackinac Island for an annual confab on policy. (more…)

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