Yesterday, the Republican-controlled Michigan Legislature passed a bill that sets a dangerous precedent for jobless workers and continues Midwest governments’ assault on the vulnerable middle class. While the bill would continue extended unemployment insurance for those already unemployed, it cuts the time new claimants can receive benefits -- from 26 weeks to 20. This would make it the first state to go below the national standard of 26 weeks.
Legislators supporting the bill must have a rosy economic outlook if they think future claimants won’t need benefits for as long as they do at present. They ignore the fact that Michigan faces deep, structural economic challenges that aren’t going away anytime soon. Four of its counties have unemployment rates above 20 percent, signaling problems that go far beyond the setbacks of a recession. Its state unemployment rate remains at 10.7 percent, far above the national rate of 8.9. Those jobs aren’t coming back any time soon, and forcing people off the rolls earlier will do nothing to force them back to work.
What’s really troubling is that the state isn’t doing this to balance its budget; the Extended Benefit program is federal. Michigan employers who pay into the fund will save some money, but the returns on the amount saved probably won’t be able to compete with the significant returns generated by UI. For every dollar the government spends on UI, it injects a stimulus estimated to be between $1.60 and $2 into the economy. That’s stimulus that a struggling state like Michigan really needs.