Great Lakes Wire

The Michigan Senate has approved legislation to increase unemployment benefits and extend the period over which they can be claimed. The bills, passed with a 21-15 vote, propose raising the maximum weekly unemployment benefit from $362 to $614 over several years and extending the benefit duration from 20 to 26 weeks.

Senator Ed McBroom, a Republican from Waucedah Township, joined Democrats in supporting the legislation. The changes under Senate Bill 40 will gradually raise the maximum weekly benefit amount, reaching $446 in 2025, $530 in 2026, and ultimately $614 by 2027. However, the extension to a 26-week benefit period will be implemented immediately.

John Cherry, Chair of the Senate Labor Committee and a Democrat from Flint, highlighted that many workers are forced into unemployment through no fault of their own. "We are losing people because they go to work in other states where they have higher benefit levels that help tide them over," Cherry stated. He emphasized that this adjustment aims to stabilize Michigan's workforce and bolster its economy.

The Senate Fiscal Agency anticipates a "significant fiscal impact" on Michigan’s Unemployment Insurance Trust Fund due to the extended benefits. With $763.1 million spent on benefits last year, projections suggest payouts could rise to between $839.4 million and $867.6 million under the new cap.

Despite these concerns, Cherry noted positive growth in the trust fund balance annually, asserting sustainability unless faced with an economic downturn. He remarked on its substantial increase since January 2022 when it stood at $963 million.

Additionally, SB 40 mandates annual adjustments of maximum weekly benefits based on changes in the consumer price index to address inflation concerns.

Michigan currently lags behind neighboring states like Indiana and Ohio regarding unemployment benefits relative to average wages. For instance, while Michigan's average weekly wage was $1,051 in 2021, its unemployment benefits were only about 34% of this figure.

Business organizations such as the Michigan Manufacturers Association (MMA) voiced opposition due to concerns about increased costs for employers who fund these benefits through taxes. Dave Worthams of MMA warned against potential threats to Michigan's competitiveness and solvency risks for its Unemployment Insurance Trust Fund due to these reforms.

In addition to SB 40, other related bills were passed by similar margins. These include provisions allowing domestic violence victims eligibility for unemployment after leaving jobs voluntarily due to abuse and waiving repayment requirements for improperly paid benefits up to certain asset thresholds.

Senate Minority Leader Aric Nesbitt criticized these reforms as partisan moves lacking consensus with Republicans amid ongoing issues within Michigan's Unemployment Insurance Agency following COVID-19 pandemic challenges.