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

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

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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.

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