Michigan moved Thursday to significantly cut its unemployment program, becoming the first of what could be a flurry of debt-laden states to reduce aid even as high jobless rates persist.
The Michigan measure reduces the maximum period a person can receive state unemployment benefits from 26 to 20 weeks, the lowest in the nation, officials said. Gov. Rick Snyder (R) indicated Thursday that he would sign the bill.
Many states with high jobless rates are struggling with debts incurred by their unemployment programs.
A look at how the states compare in their budget problems and their proposed cuts.
The state’s economic troubles, aggravated by the recession and its shrinking manufacturing base, have turned Michigan into a bellwether of bust. Its unemployment rate stands at 10.7 percent — one of the worst in the country.
The move comes as other Republican-dominated legislatures, including Florida’s, are weighing similar efforts to restrict payments to the jobless, and states such as Wisconsin, Ohio and Indiana are implementing far-reaching, controversial plans to close budget gaps.
Although critics have decried the benefit reductions during a time of high joblessness as part of a political “war on the unemployed,” advocates of the cutbacks say they are necessary to ease the burden on employers, who pay for the programs through a payroll tax.
The cost of providing unemployment payments rose rapidly as the jobless ranks grew with the recession. Some states, including Michigan and Florida, face multibillion-dollar debts as a result, according to Labor Department estimates.
When state unemployment funds are depleted, they borrow from the federal government. Michigan owes the federal government $3.9 billion for the program. By comparison, the state’s proposed budget for next year is $45.9 billion.
“If we don’t solve the deficit problem, there won’t be any benefits for anyone,” said Wendy Block of the Michigan Chamber of Commerce, which lobbied for the bill. “This insures that employers won’t be taxed through the roof for unemployment benefits.”
Opponents, however, argue that it makes little sense to reduce benefits now when many Americans are finding it difficult to get work. The nation’s jobless rate stood at 8.9 percent in February, and nearly 44 percent of the country’s jobless have been out of work for more than six months, according to the Labor Department.
Moreover, opponents fear that Michigan’s approach on unemployment benefits could be copied by other states with energized Republican majorities, just as the collective-bargaining restrictions approved in Wisconsin have been entertained by other states.
“This is frightfully shortsighted for the individual families,” said U.S. Rep. Sander M. Levin (D-Mich.). “It turns back the clock on 50 years of these benefits. What concerns me is that it could go viral.”
Since the 1950s, nearly every state has offered at least 26 weeks of unemployment insurance.
Federal measures enacted in response to the recent economic downturn extend those benefits to as long as 99 weeks in states with the highest jobless rates – the longest period since the program’s inception. The extended federal benefits expire in January.
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