Cuts to jobless benefits reveal just what may be in store with Gov. Rick Snyder's 'reinvention'
Gov. Rick Snyder has signed a bill cutting the number of weeks that laid-off workers are eligible to receive unemployment checks from 26 weeks to 20 weeks — the shortest benefit period in the country.
A conservative friend of mine, commenting on a front-page New York Times story about the measure, which I posted on my Facebook news feed, suggested we go further and end employer financing of the unemployment insurance system.
His solution? Since employees are the ones who receive jobless benefits, make them finance the system through payroll deductions.
Employee contributions to support the state’s unemployment insurance system could cost Michigan workers as much as $900 a year each under the current structure.
Initially, this idea struck me as too far removed from mainstream thought of how economic safety nets should work to ever be considered by policymakers.
But maybe it’s not so unimaginable. Already three states — Alaska, New Jersey and Pennsylvania — require small contributions from employees to their unemployment insurance systems.
And business lobbying groups in Michigan say Snyder’s historic shrinking of benefit weeks doesn’t go far enough to cut the cost of Michigan’s system, which pays a maximum of $362 a week to eligible laid-off workers.
Cutting six weeks of benefit payments is expected to save businesses nearly $1 billion over the next three years, according to the politically powerful Michigan Chamber of Commerce, which pushed for the change.
“It marks one of the biggest UI (unemployment insurance) reforms Michigan has seen in decades,” the chamber said about the measure in a news release.
But chamber officials say more must be done to cut the cost of Michigan’s system, which owes more than $3.9 billion to the federal government.
That’s the amount Michigan had to borrow from the feds to keep paying benefits when the state’s trust fund went broke during the Great Recession.
Businesses will pay as much as $240 million more in unemployment insurance assessments this year to begin repaying the debt, according to the chamber. Those payments are scheduled to progressively increase over the next decade.
The chamber will issue a series of proposed unemployment insurance reforms in the next several weeks, said Wendy Block, the chamber’s director of health policy and human resources.
Among reforms likely to be proposed are speeding up the appeals process for disputed claims, strengthening requirements that require those receiving unemployment benefits to search for work, and implementing a waiting week for benefits.
Forty other states require waiting weeks, which can save employers money, Block said. Michigan eliminated its waiting-week requirement in 1974.
“Unemployment taxes vary from state to state and are an area of business competitiveness,” Block told me. “We have to make sure our tax system is balanced and competitive with other states.”
The chamber won’t be proposing that the burden of financing the state’s unemployment insurance system be shifted to workers.
But don’t be surprised if ideas for reducing costs that may have seemed unthinkable a short time ago appear on the table.
In less than three months, Snyder has enacted several sweeping government reforms, including broad new powers for emergency financial managers, and proposed a budget that represents a massive shift in the tax burden from businesses to individuals.
Very little appears to be sacred in our new governor’s push to “reinvent” Michigan.
Email Rick Haglund at firstname.lastname@example.org.