In what has been called a “big defeat” for Michigan’s employers, expanded unemployment benefits appear to be on the horizon for the state’s unemployed workers.

Several business groups and Republican lawmakers opposed the unemployment reforms, which add six weeks of eligibility and gradually increase the maximum weekly benefit amount from $362 to $614.

Michigan’s laid off workers would be eligible for up to 26 weeks per benefit year. Claimants currently exhaust benefits after 20 weeks.

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The business community and lobbyists said it would be too costly and deter people from getting back to work, especially when workers are already hard to find. They argued boosting unemployment benefits would be a burden on employers who pay into the state’s Unemployment Insurance Trust Fund.

“I have a personal interest in this bill not passing, yes, but for all businesses in the state, this is going to be a major cost increase that they have to incur,” said Rep. William Bruck, R-Erie, an owner of Visiting Angels home health care offices. “…Unemployment is not meant to be a living wage. It is not meant to be an amount that someone can function on and not have to worry about getting another job,” Bruck had written in a report.

House Democrats ignored their objections and approved extending the maximum annual weeks from 20 to 26, along with a phased in bump in the maximum weekly unemployment benefit. The main bill in the package, Senate Bill 40, passed the House 58-51 and is headed to Gov. Gretchen Whitmer for her signature. Only two Republicans voted in favor of the bill: Reps. Gregory Markkanen and David Prestin.

The maximum weekly benefit, based on a claimant’s wages, will increase over three years — up to $446 a week next year, $530 in 2026 and $614 in 2027 — and then will be tied to inflation. The bill also expands the benefit cap for dependents from $6 to $26, according to this Detroit Free Press article.

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According to the Senate Fiscal Analysis, based on current trends, the increase in the weekly benefit maximum could add $531.1 million in additional pay outs annually in 2027.

Bruck has been vocal on the legislation since the summer, when the House introduced a similar bill to extend benefit weeks. He voted no and gave a speech opposing House Bill 5827.

“Unemployment is not taxpayer funded, it’s business funded,” Bruck said in this release. “This is a tax increase for small businesses that are already struggling.”

The National Federation of Independent Business lobbied against the legislation, along with several other groups. NFIB Michigan State Director Amanda Fisher testified last week before the Michigan Senate Labor Committee to oppose the Senate Bill 40 and House Bill 5827.

The new law will raise employers’ unemployment taxes even though Michigan is a state where both the benefit and the max weeks are low compared to many states.

“We are disappointed that the Senate chose to ram through such significant policy affecting small businesses so quickly,” Fisher said in a statement on NFIB.com. “It is always important to remember that the Unemployment Insurance (UI) program is 100% employer funded. And because of actions taken in 2011, including limiting duration of benefits, the UI Trust Fund was able to weather the pandemic, but was decimated in the process.”

According to an NFIB member ballot, when asked if the time period to collect benefits should be increased, 86% of NFIB members responded “NO.” When asked should Michigan increase the current weekly maximum unemployment insurance benefit of $362 per week, 78% of NFIB members said “NO.”

Fisher previously called the legislation a “slap in the face” to small business owners navigating worker shortages and a difficult economic climate. Increasing benefits adds extra pressure to a system that has not yet recovered and would make weathering another economic downturn difficult.

“When many small businesses are struggling to find workers, any policy that could lead to tax increases falls flat,” Fisher said.

The Michigan Manufacturers Association has strongly opposed the bills, noting the unemployment system is entirely funded with employer tax contributions. These bills increase in employer UI tax liability.

A survey by the Small Business Association of Michigan also found small business owners – by a margin of 3 to 1 – opposed any changes to unemployment insurance, especially at a time when Michigan’s unemployment rate is low. Instead, the focus should be on UIA reforms related to fraud, technology, and restoring the Trust Fund.

“Integrating a new system and trying to make these drastic changes legislatively is on a collision course to crash and burn,” wrote Kelli Saunders, Vice President Policy & Engagement. “Our message to the legislature: let the UIA director and the agency do their work, prioritizing the Insurance Trust Fund to get it back to pre-pandemic health and make Michigan a top state in best practices.”

Other leading business groups wrote lawmakers in the summer urging them to reject House Bill 5827, including the Michigan Chamber of Commerce, Grand Rapids Chamber of Commerce and the Detroit Regional Chamber.

In addition, those in opposition argue the state’s Unemployment Insurance Agency needs more oversight. The embattled agency has had three directors since 2020. Last week, current UIA Director Julia Dale, announced her resignation for a private sector role in January.

Republicans want more scrutiny of Michigan’s UIA following missteps during the pandemic. A third-party audit estimated that from March 2020 through September 2021 cumulative UIA errors cost the state an estimated $8.5 billion, according to the Bridge Michigan article.

If Whitmer signs the legislation, it would permanently reverse a 2011 law signed by then-Republican Gov. Rick Snyder that cut unemployment insurance eligibility to 20 weeks. Michigan would join the majority of states that offer at least 26 weeks of unemployment benefits. Only 13, including Michigan, currently offer fewer weeks.

How They Voted

Yays

Rep. Aiyash, Abraham [D]; Rep. Andrews, Joey [D]; Rep. Arbit, Noah [D]; Rep. Brabec, Felicia [D]; Rep. Breen, Kelly A. [D]; Rep. Brixie, Julie [D]; Rep. Byrnes, Erin [D]; Rep. Carter, Brenda [D]; Rep. Carter, Tyrone [D]; Rep. Churches, Jaime [D]; Rep. Coffia, Betsy [D]; Rep. Conlin, Jennifer [D]; Rep. Dievendorf, Emily [D]; Rep. Edwards, Kimberly L. [D]; Rep. Farhat, Alabas [D]; Rep. Fitzgerald, John [D]; Rep. Glanville, Carol [D]; Rep. Grant, Kristian [D]; Rep. Haadsma, Jim [D]; Rep. Herzberg, Peter [D]; Rep. Hill, Jenn [D]; Rep. Hood, Rachel [D]; Rep. Hope, Kara [D]; Rep. Hoskins, Jason [D]; Rep. Koleszar, Matt [D]; Rep. Liberati Jr., Tullio [D]; Rep. MacDonell, Sharon [D]; Rep. Markkanen, Gregory [R]; Rep. Martus, Jasper Ryan [D]; Rep. McFall, Mike [D]; Rep. McKinney, Donavan [D]; Rep. Mentzer, Denise [D]; Rep. Miller, Reggie [D]; Rep. Morgan, Jason [D]; Rep. Morse, Christine [D]; Rep. Neeley, Cynthia [D]; Rep. O’Neal, Amos [D]; Rep. Paiz, Veronica [D]; Rep. Pohutsky, Laurie [D]; Rep. Prestin, David “Dave” [R]; Rep. Price, Natalie [D]; Rep. Puri, Ranjeev [D]; Rep. Rheingans, Carrie [D]; Rep. Rogers, Julie M. [D]; Rep. Scott, Helena [D]; Rep. Shannon, Nate [D]; Rep. Skaggs, Phil [D]; Rep. Snyder, Will [D]; Rep. Steckloff, Samantha [D]; Rep. Tate, Joseph “Joe” [D]; Rep. Tsernoglou, Penelope [D]; Rep. Wegela, Dylan [D]; Rep. Weiss, Regina [D]; Rep. Whitsett, Karen [D]; Rep. Wilson Jr., Jimmie [D]; Rep. Witwer, Angela [D]; Rep. Xiong, Mai [D]; Rep. Young, Stephanie A. [D]

Nays

Rep. Alexander, Gregory L. [R]; Rep. Aragona, Joseph [R]; Rep. Beeler, Andrew [R]; Rep. BeGole, Brian [R]; Rep. Beson, Timothy [R]; Rep. Bezotte, Robert J. [R]; Rep. Bierlein, Matthew D. [R]; Rep. Bollin, Ann [R]; Rep. Borton, Ken [R]; Rep. Bruck, William [R]; Rep. Carra, Steve [R]; Rep. Cavitt, Cameron “Cam” [R]; Rep. DeBoer, Nancy [R]; Rep. DeBoyer, Jay [R]; Rep. DeSana, James [R]; Rep. Filler, Graham [R]; Rep. Fink, Andrew [R]; Rep. Fox, Joseph D. [R]; Rep. Friske, Neil W. [R]; Rep. Green, Phil [R]; Rep. Greene, Jaime [R]; Rep. Hall, Matthew “Matt” C. [R]; Rep. Harris, Mike R. [R]; Rep. Hoadley, Mike [R]; Rep. Johnsen, Gina [R]; Rep. Kuhn, Thomas “Tom” E. [R]; Rep. Kunse, Tom [R]; Rep. Lightner, Sarah [R]; Rep. Maddock, Matthew “Matt” [R]; Rep. Martin, David W. [R]; Rep. Meerman, Luke [R]; Rep. Mueller, Mike [R]; Rep. Neyer, Jerry [R]; Rep. Outman, Patrick “Pat” [R]; Rep. Paquette, Brad [R]; Rep. Posthumus, Bryan [R]; Rep. Rigas, Angela [R]; Rep. Roth, John R. [R]; Rep. Schmaltz, Kathy [R]; Rep. Schriver, Josh [R]; Rep. Schuette, Bill G. [R]; Rep. Slagh, Bradley [R]; Rep. Smit, Rachelle M. [R]; Rep. St. Germaine, Alicia [R]; Rep. Steele, Donni [R]; Rep. Thompson, Jamie [R]; Rep. Tisdel, Mark [R]; Rep. VanWoerkom, Greg [R]; Rep. Wendzel, Pauline [R]; Rep. Wozniak, Douglas C. [R]; Rep. Zorn, Dale W. [R]