Labor Voices

Michigan's jobless deserve a raise
Increasing and extending benefit helps unemployed weather economy

By Mark Gaffney
First printed in The Detroit News 01/20/2006

Big business and some Republicans recently criticized the Michigan House Democrats for proposing to raise the unemployment benefit from $362 per week to $408 and extend it for 13 additional weeks.

But raising the payment is the right thing to do. It provides temporary relief to workers who have lost their jobs through no fault of their own so they can focus on a job search while continuing to feed their families. It puts money in the hands of the unemployed, giving them some purchasing power and dignity.

In times of recession and economic downturn, these benefits counter an overall loss in purchasing power by the public that ultimately would endanger even more jobs. It also helps keep a temporarily laid-off skilled worker from moving out of the state, so when a business is ready to hire or rehire, it can choose from a pool of candidates with the best possible skills and training right here in Michigan.

A recent Detroit News editorial stated that Michigan's top unemployment benefit is third highest in the Midwest and that the House Democrats plan would raise the state's benefit to one of the highest in the region. It contended that ultimately this would be a business-breaker, forcing even more workers on the unemployment rolls.

State benefit isn't high

At best, these arguments are misleading.

The $362 benefit figure is Michigan's highest possible benefit that a worker can receive. But only about 60 percent of those men and women receiving benefits are getting the maximum. Others receive a rate based upon their pay rate while employed and all possible increases for dependants.

Now, looking at the $362 maximum benefit figure, let's look at other states' maximum benefit, comparing apples to apples.

According to Michigan's Department of Labor and Economic Growth and the U.S. Department of Labor, 26 other states had higher maximum benefits last year -- and many will likely see raises this year.

Pennsylvania's maximum benefit was $486 and has risen to $497, while North Carolina's is $442. In our region, Minnesota is at $515, Illinois $456, Ohio $446 and Indiana $390.

Pro-business, Chamber of Commerce types will, of course, call any unemployment insurance increase a job-killing tax. After all, unemployment insurance programs, which were established under the Social Security Act of 1935, impose a tax on an employer's payroll of four or more workers.

Employer tax is modest

But it is important to look at exactly how much money we are talking about. The average premium or tax paid by employers for this insurance benefit last year was only $5.88 per week per employee, according to the Department of Labor and Economic Growth. It was not even in the double digits.

The money isn't wasted. Ninety percent of the revenue from the tax is returned directly to the workers; the remainder is used for administrative purposes.

The current proposal is not the first time that Michigan has looked at raising unemployment benefits, nor has it only been brought up by Democrats. Four years ago, the Republican House speaker called for the maximum benefit to be raised to $400. Is proposing a 2 percent higher increase four years later unreasonable?

Extended payout temporary

The second issue of a 13-week extension for unemployment benefits is also critical. With the tough economy we face today, 13 extra weeks is a necessary extra step. Last year 98,000 working men and women would have been eligible for the extension after exhausting their benefits.

When drafting the legislation, the House Democrats were astute enough to include a trigger that will cease providing the additional 13 weeks when the state unemployment rate drops below 5 percent and it becomes easier for a displaced worker to find a job.

This will save businesses money in the future.

Trigger saves firms money

And it will help workers who, just like you and I, are responsible for a household's well-being and whose dependents are children, who need to be fed and clothed regardless of a job situation and regardless if someone's allotted 26 weeks are up.

Let's be clear: A worker is a human being. When workers lose a job through no fault of their own in a difficult economy, they deserve to collect a meaningful unemployment benefit. Raising and extending that benefit, which is pretty average compared with other states' benefits, is the least the Legislature can do.