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NELP decries more cuts to Mich. unemployment benefits

The National Employment Law Project, which advocates for jobless workers, is criticizing Gov. Snyder and the Republican-led state Legislature for making more cuts to unemployment benefits in Michigan.

In a new briefing paper, the NELP says:

Michigan workers continue to face one of the nation’s toughest labor markets. Earlier hopes of a recovery proved to be premature as the number of unemployed and the unemployment rate in Michigan increased substantially in recent months, while the number of labor force participants and number of workers holding a job fell.

Adding injury to insult, state lawmakers enacted legislation in March of this year to reduce the duration of unemployment insurance (UI) benefits by six weeks (from 26 to 20 weeks). Nearly all states, including Michigan, began offering 26 weeks of UI during the 1950s.

Currently, the Michigan legislature is considering new bills designed to further reduce UI payments for low- and moderate-wage claimants while leaving more unemployed individuals without UI coverage. The fact that Michigan is now borrowing $3.1 billion from the federal government to finance state UI payments is being used to justify the benefit cuts. Proponents of the new legislation have long-supported UI benefit cuts, even before the current solvency crisis, which they now use as a convenient rationale for further undermining UI.

The paper describes what the proposed legislation would do:

Recent and past UI program history aside, some Michigan lawmakers believe that unemployed workers are due to make more sacrifices. Newly proposed legislation (HB 4781 and HB 4782) would further erode UI benefits by altering the formula used to determine weekly benefit amounts and by preventing other unemployed workers from receiving benefits.

The most damaging legislative proposal is the replacement of the current formula used to determine weekly benefit amounts with a new formula known as 52-week averaging (HB 4781). Claims that the new formula is only meant to address “seasonal” workers are misleading. No worker will qualify for a larger benefit under the new bill and most will face reductions

  • All individuals with base-period earnings under $40,052 would face a benefit reduction.
  • Under the proposed formula, weekly UI benefits would be lower by 12 to 67 percent for workers earning up to $35,500. Individuals who did not earn the same amount each week throughout the base period would experience the most significant losses.
  • Currently UI payments replace up to 53.3 percent of lost wages from a worker’s highest quarter of earnings. The proposed formula would lower the maximum replacement rate to 47 percent.4. Michigan’s jobless workers are threatened with loss of federal Emergency Unemployment Compensation benefits in 2012 if HB 4781 is passed as written.

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