Advocacy News – June 27, 2024
Prior to recessing for summer break, the Michigan House rushed through legislation increasing the cost of Michigan’s 100% employer-financed unemployment insurance (UI) system by expanding UI benefit duration from a maximum of 20 weeks to 26 weeks. The bill passed on a strict party line vote will all Democrats voting yes and Republicans voting no (56-54).
Why it matters: The bill, which never went through the committee process, was rushed through in the final hours of the spring legislative session, arguably to give House Democrats something to highlight as they return to their districts to campaign this summer. While the proposal may appeal to a subset of voters, it will have negative implications for Michigan job providers:
- The UI Trust Fund, the fund that pays benefits to unemployed workers, is financially vulnerable. Despite a once-healthy UI Trust Fund balance of $4.54 billion in March of 2020, the Trust Fund remains in an unhealthy financial state due to the Agency’s mismanagement of the program during the COVID-19 pandemic. To make up for the billions of dollars the state paid out in fraudulent claims during COVID, Michigan employers continue to pay a higher taxable wage base to rebuild the Trust Fund. Legislation to increase benefit duration will lead to increased benefit payouts, further threatening the financial health of the Trust Fund.
- Vehicle bill for mischief on additional benefit increases. The legislation creates a vehicle bill for other, more aggressive changes to the law, including an increase in weekly benefits from the current $362/week to $606/week, which the Michigan Senate is interested in passing. We strongly oppose these efforts because Michigan cannot afford a large benefit increase without pushing the system beyond its capabilities and into insolvency, forcing the state to borrow money from the federal government (which must be repaid by Michigan employers – with penalty).
- The focus should be on matching unemployed workers with open jobs. There are more than 200,000 open jobs in Michigan right now and the unemployment rate is under 4%. Our members are frustrated by the fact that they have job openings but are unable to find workers ready and willing to fill them. Rather than focusing on ways to increase unemployment benefits, Michigan should focus on finding ways to match unemployed workers with available jobs.
- Reforms to the system are needed. Before any serious proposal for an increase in UI takes place, we believe it is important to allow the modernization work currently being implemented by UIA Director Julia Dale to be completed. This work includes many recommendations from the Government Accountability Office (GAO) and the US Department of Labor Office of Inspector General (OIG) and will provide increased accountability of the UI Agency.
- The time is now for improved enforcement of UI qualification requirements, including work search activities. Employers are frustrated with calls to extend or increase UI benefits when they are experiencing such shortages in the workforce and are witness to many abuses in the field. Employers report an increasing trend of “ghosting” (i.e., interview no‐shows, refused job offers, under the table pay requests, and first day no‐shows). It is believed that such behavior is often prompted by the desire of applicants to show “good faith” job search activities for the purpose of collecting UI – even though they aren’t serious about taking a job. Employers desire a system that builds in real accountability throughout the process, from application to ongoing eligibility criteria enforcement.
The big picture: Although we know the Michigan Senate is interested in taking up legislation to increase UI benefit duration – and would like to take it further by increasing the weekly benefit amount from $362/week to $606/week, increase the dependent allowance from $5 to $26, and tie annual increases to CPI – the bill must lay over five days before it can be considered by the Michigan Senate. Given that lawmakers are unlikely to return to Lansing until late July or early August, we would not expect action until then.
Go deeper: Read the coalition letter the Michigan Chamber signed onto with other business and trade groups. Please contact Wendy Block with questions or for more information at wblock@michamber.com.