Michigan weathers highest unemployment with lowest benefits

BY NICK MCWHERTER
Capital News Service
LANSING- Michigan has the weakest jobless benefits system in the Midwest, even though its unemployment rate has been the highest in the region over the past five years, according to a recent report.
The Michigan League for Human Services reports that in the Midwest Michigan:
• Pays the lowest maximum benefits
• Is least likely to insure an unemployed worker
• Offers the lowest unemployment insurance benefits
• Provides the fewest weeks of basic unemployment insurance
One factor contributing to the poor rating is that the maximum weekly benefit has only been raised twice since 1994, said Karen Holcomb-Merrill, policy director for the league.
“In 1994 the maximum was $293 a week and now it is at $362 a week, ” she said.
Other states have kept pace with inflation.
The problems started before the recession.
In the mid-1990’s the state cut benefits and froze the maximum benefit to increase the balance in the fund that pays unemployment benefits, said Michael Evangelist, policy analyst at the National Employment Law Project.
“We were one of the few states in the area to have that freeze, and that is one reason why our maximum is much lower than other states and our average is less as well,“ said Evangelist.
Another significant impact on benefits is that in January the number of weeks allotted to remain on basic unemployment will diminish from 26 to 20, according to Holcomb-Merrill.
The National Employment Law Project estimated that unemployed Michiganders will lose $200 to $250 million by having six weeks of benefit time cut. But it depends on how many people claim benefits.
Forty-percent of unemployed workers use up their entire 26 weeks, and cutting that down will affect a lot of people who rely on those funds, said Evangelist.
Michigan recently missed out on $140 million in federal funds to modernize the benefit system. State Rep. Jim Ananich, D-Flint, introduced legislation required to update the benefit system and make it more accessible for Michigan residents to receive benefits. That would make the federal funds available, but the bill failed to gain approval.
Ananich is the lead sponsor in the House to restore the unemployment benefits back to 26 weeks from 20 weeks.
The governor said at the time that he did not necessarily want to cut the benefit weeks but the legislation was tied to another issue that required it to pass to continue to receive federal funding, said Tom Lenard, media liaison for Ananich.
“We are giving him the opportunity to vote separate on the bill to restore it.”
Modernization of the system is something that other states have done better than Michigan, Holcomb-Merrill said. People seeking part-time work are not covered by unemployment and those seeking skills training to get a job aren’t covered either.
“They obviously don’t understand the importance of having this safety net in place when unemployment continues to be very high in our state,” Holcomb-Merrill said.
Currently Michigan has a 10.6 percent unemployment rate.
People generally don’t save their unemployment benefit money, Holcomb-Merrill said. They often use it for bills and purchasing goods in local communities.
“It really is a win-win in terms of helping the families and the workers but also the local economy,” she said Holcomb-Merrill.
Supporters of improved benefits says future decisions can help turn around a system that has not been able to better serve unemployed Michigan workers.
When times are bad, there should be sufficient funds to weather them, Evangelist said.
“The system isn’t functioning, as it should.” said Evangelist.
© 2011, Capital News Service, Michigan State University School of Journalism. Nonmembers cannot reproduce CNS articles without written permission.