Worst in the Midwest

Added November 21st, 2011 by Peter Ruark | Email This Entry Email This Entry
Peter Ruark

For nearly two years, we’ve been blogging about the various policies governing Michigan’s Unemployment Insurance system and their effects on the unemployed workers who need the benefits as they look for work.

Some of the blog entries have focused on federal legislation, such as the game of chicken that Congress played more than once by renewing benefit extensions at the last minute before expiration. Others, however, have been about ill-advised decisions by the Michigan Legislature during the past year: 1) cutting the maximum number of state-funded UI weeks from 26 to 20, and 2) letting $139 million in federal dollars for the state UI trust fund float by rather than make modernizations that would expand UI eligibility to cover more workers.

To our list of questionable state policies, we can add keeping the maximum benefit at a flat $362 per week instead of pegging it to the average wage, and maintaining high earnings requirements for eligibility that prevent low-wage workers from accessing benefits.

Such state policies have resulted in Michigan being last in the Midwest on four indicators of worker-friendly UI systems, according to a new paper by the League. Of eight Midwestern states, Michigan pays the lowest maximum benefit (leading to a comparatively low average weekly benefit), has the lowest level of UI coverage (making Michigan workers the least likely in the Midwest to qualify for UI), spends the least amount per unemployed worker, and allows the fewest weeks of state-funded benefits. All this while its unemployment rate is highest among the Midwestern states.

The paper recommends that the Michigan Legislature reverse its new law cutting state benefits to 20 weeks and refrain from passing further UI legislation that is anti-worker. It also recommends making the maximum benefit a percentage of the state average weekly wage rather than keeping it at a flat rate, and adjusting the earnings requirements so that more low-wage workers can be eligible.

Finally, the paper encourages Michigan to implement the modernizations that would expand eligibility, even though the federal money is no longer available. It also encourages Michigan to explore the idea of adopting a work-sharing program, in which qualifying businesses could arrange with the state to cut hours of many employees rather than laying off a few, and have UI make up a portion of the lost wages.

Michigan is not going to be out of this economic hole anytime soon, and in the meantime it would do well to strengthen its worker safety net to at least be on par with its Midwestern neighbors.

— Peter Ruark

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