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Tue March 29, 2011
Nation focuses in on Michigan’s cut to unemployment benefits
On Monday, Governor Snyder signed into law a bill that would extend unemployment benefits by 20 weeks to some 35,000 Michiganders. However, the bill also cuts six-weeks of state unemployment benefits for new filers beginning next year. The measure reduces jobless benefits in the state from 26 weeks to 20 weeks as of 2012. That reduction means, beginning next year, Michigan will provide the shortest number of weeks of unemployment out of any state in the nation.
Snyder’s signing of the bill has gained the state quite a bit of national attention.
From The New York Times:
Democrats and advocates for the unemployed expressed outrage that such a hard-hit state will become the most miserly when it comes to how long it pays benefits to those who have lost their jobs. All states currently pay 26 weeks of unemployment benefits, before extended benefits paid by the federal government kick in. Michigan’s new law means that starting next year, when the federal benefits are now set to end, the state will stop paying benefits to the jobless after just 20 weeks. The shape of future extensions is unclear.
The measure, passed by a Republican-led Legislature, took advocates for the unemployed by surprise: the language cutting benefits next year was slipped quietly into a bill that was originally sold as way to preserve unemployment benefits this year.
From NPR’s political blog:
Few states were hit harder by the Great Recession and unemployment than Michigan, a state that faced profound economic challenges, including relatively high unemployment, even before the national downtown.
So it could strike some as ironic that Michigan, of all places, just enacted into law a reduction of the number of weeks it will pay unemployment insurance to 20 weeks from 26 weeks starting next year.
The reduction will make Michigan the state that provides jobless benefits for the shortest number of weeks. And that's in a state whose jobless rate was 11.3 percent in February compared with the 9.5 percent national rate….
Gov. Rick Snyder, a Republican who took office this year, and GOP legislators said the reduction was necessary because the state's unemployment insurance fund is $4 billion in the hole as a result of its economic woes. Michigan borrowed from the federal government to keep the program afloat.
Since employers contribute to the state's jobless fund and were facing higher taxes to repay the federal loan, they supported the benefits reduction.
And, in a story picked up by USA Today, Chris Christoff with the Detroit Free Press, takes a hard look at the fact that Michigan owes, "the federal government about $3.96 billion that the state borrowed to pay unemployment benefits during the worst economy since the Great Depression. That's on top of the regular unemployment tax businesses and other employers must pay."
Snyder's signing of the bill also led some to speculate on whether or not other states would follow Michigan's lead in shortening benefits. An article in Examiner.com asks,"Will Ohio follow Michigan lead on reducing unemployment benefits?" And, in an article last week, the Washington Post noted:
This month, the Florida House approved a measure reducing the maximum benefit period from 26 to as little as 12 weeks while curbing increases in unemployment taxes paid by employers. The jobless rate in Florida is 11.9 percent.
“We are sending a message to the business community that Florida is quickly becoming the most business-friendly state in the country,” said state Rep. Doug Holder (R-Sarasota), the sponsor of the Florida bill.
It would go into effect Aug. 1.
In Arkansas, lawmakers are moving toward freezing unemployment benefits levels while trimming the maximum benefit period for state benefits from 26 to 25 weeks.