Cutting Unemployment Benefits

Mar 30, 2011

Two days ago a friend of mine called me in a semi-panic. Her unemployment benefits were about to run out, and she had eighty-seven dollars to her name. She wasn’t going to be able to make the modest payment on her small house, and didn’t know what to do. Nor did she understand what was going on in the legislature. Someone had told her that the governor was signing a bill to extend unemployment benefits. Somebody else told her he was going to shorten them. Which, she wanted to know, was it?

Well, both, I said. The governor signed a bill Monday that extends eligibility for federal extended unemployment benefits for up to ninety-nine weeks.

That’s only, however, for people like my friend Karen, who already is collecting unemployment.

Next year, however, things will change drastically. Any Michigander who loses his or her job after January 15, 2012 will only be eligible for state unemployment benefits for a maximum of twenty weeks. That’s less than five months.

For years, jobless workers in Michigan have been able to collect benefits for a maximum of twenty-six weeks, or six months. They can collect them for longer periods of time now because the federal government decided to temporarily provide benefits, because of the lingering effects of the recession. Those effects are still hanging on in Michigan, where unemployment is still more than ten percent. Economists expect that to come down a little by next year, but we’re likely to continue to be a long way from full employment. What that means is that for many people, twenty weeks is not going to be enough time to find a job.

So why is our government making it tough for jobless workers? Interestingly, nobody is really coming forward to defend this. Governor Snyder said he signed this bill because it was necessary to extend benefits for those who are jobless now. He said he would have been happy to leave eligibility at twenty-six weeks, and blamed the legislature for shortening the time period. Why did they do this? Well, nobody is rushing forward to claim credit.

My guess is that this was pushed primarily by businesses, who have been paying the cost of these extra benefits. Michigan’s unemployment insurance fund ran dry long ago, and the state has been borrowing from the federal government. So far, we’ve borrowed almost $4 billion dollars, and businesses have to come up with the repayment money. 

Not surprisingly, to protect themselves, they sought the cut in benefits. That seems simple enough. But politically, it could be very risky. The Republican party could end up looking like the guys in the sadistic orphanage who denied Oliver Twist more gruel.

Next year is a national election year, and it isn’t going to help the national or the state Republican parties if Michigan ends up with tens of thousands of jobless and desperate men and women.

Sixteen years ago, Democratic bungling gave Republicans control of both houses of Congress. Speaker of the House Newt Gingrich then turned so many people off with his arrogance that President Clinton was reelected easily. Michigan Republicans might do well to remember that most famous axiom: Those who don’t remember the past are, more often than not, condemned to repeat it.