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Michigan House votes to end $300 federal unemployment benefit

6/17/21

The Detroit News 

By Beth LeBlanc

Lansing — House lawmakers on Thursday voted 60-49 to end a $300 weekly federal unemployment payment that is scheduled to continue through Sept. 6 without state intervention.

In a late afternoon amendment, the GOP-led chamber changed a Democratic-sponsored bill that would have required to Unemployment Insurance Agency to use plain language to communicate with residents to add a provision preventing the agency from working with the federal government — effectively ending the state’s participation in the enhanced unemployment assistance program that started during the pandemic.

“This is exactly why people are frustrated with government today,” said Rep. Lori Stone, the Warren Democrat who sponsored the initial bill. She had her name later removed as sponsor.

“We have a real solution to a real problem today, which is being twisted to suit a partisan agenda.”

But Rep. Pauline Wendzel defended her amendment to the legislation, noting it was appropriate given the Gov. Gretchen Whitmer’s announcement earlier Thursday that the state’s remaining restrictions on gatherings and masks would be lifted Tuesday.

“Normalcy is finally within our grasp,” said Wendzel, R-Coloma. “…We’re taking steps to remove reentry barriers to the workplace.”

Roughly 25 other states have plans to end their federal unemployment benefits prior to the Sept. 6 cutoff date.

Whitmer’s office has not said whether she is in favor of removing the federal aid, but the Democratic governor proposed Wednesday using the money instead to provide a $300 per week bonus to employees returning to their jobs.

The vote came hours after a Republican House committee chairwoman called on the governor to end the $300 benefit and heard from more than a dozen employers asking for the same at a Thursday morning committee hearing.

Worker shortage

During the more than hour-long hearing, employers from across the state aired their frustrations with the depleted and unpredictable worker supply, with many urging a change to federal unemployment payments.

Some have offered incentives to workers, others cut shifts and still others are looking at opportunities for automation to replace some of the workers they need.

Rep. Beth Griffin, the Mattawan Republican who chairs the Workforce, Trades and Talents Committee, called on Whitmer at Thursday’s hearing to decline the $300 federal unemployment benefits for Michigan as soon as she removes the remaining restrictions on gatherings and masks.

“The message here is that the governor has the ability and the authority and the power to discontinue the federal $300 a week extended benefits anytime,” Griffin said.

Whitmer suggested Wednesday at a press conference that the $300 per week go to employees returning to jobs through Sept. 4 — a benefit currently available only to employees in a workshare program.

“By deploying this critical federal aid, we can set up our state for success and ensure that Michigan’s families, small businesses, and communities emerge stronger than ever from this pandemic,” Whitmer said in a statement.

Employers on Thursday supported changes to the unemployment pay, but argued that might not be enough to combat what they see as short- and long-term impediments to the state’s workforce.

While supply chain issues, COVID fears and unemployment disincentives are temporary challenges post-pandemic, a lack of significant wage growth, few accessible child care options, inadequate skills training and a low labor supply are long-term issues exacerbated by the pandemic, said Todd Cook of the Michigan Department of Labor and Economic Opportunity.

“As soon as 2030, we will have more deaths than births in the state of Michigan,” Cook said. “Without an increase in migration into the state of workers, that supply is going to continue to shrink and be tough to fill.”

Rep. Terry Sabo, the Muskegon Democrat who serves as vice chairman for the workforce committee, said the idea that the worker shortage is due to unemployment alone doesn’t align with the fact that many workers aren’t taking their full share of weeks of unemployment.

“I know that there are issues in each of your sectors of unemployment, but I don’t think the total blame is on the Michigan worker,” Sabo said, arguing that demographics also played a role. “… We just don’t have enough people to work.”

Michigan’s unemployment rate has decreased steadily since a record high of 22.7% in April 2020 to about 5% in May 2021. But some economists have said the lowered unemployment rate could be a reflection of people leaving the labor force, or the number of people actively looking for a job.

“There are temporary factors that are keeping the labor force down right now,” said Gabriel Ehrlich, an economic forecaster at the University of Michigan.

Those temporary factors include virus fears, increased unemployment payments, barriers to child care and a surge of job openings all at once. But he thinks those factors will begin to work themselves out in late summer and early fall.

“We do expect a lot of those to ease up; my guess would be, come October, we won’t hear as many of those stories,” he said.

But the issues experienced now may be a taste of the chronic issues expected to reach a peak in the next few years: A population failing to keep up with Michigan’s retirement and death rates, and a lower rate of immigration into the state.

“We really do count on international immigration to boost the labor force,” Ehrlich said.

Employers weigh in

In Petoskey, manufacturer Manthei Veneer is operating with 85% of its 290-person staff because of an inability to find workers. The company bought a motel and will house workers from Puerto Rico there to help as summer tourism work stresses the labor market in Northern Michigan, said Jeremy Manthei, president of the company.

“It’s creating an artificial imbalance in the labor market,” Manthei said of the unemployment payment.

“Come September, we’ve got our motel, we’ve our Puerto Rican labor, we’ve got our automation. I can see a situation in Northern Michigan where all of a sudden the summer season ends, all of the service industry jobs go away, and then all of a sudden you’ve got this wave of people looking for work that weren’t looking for work in the summer.”

When Michigan’s Unemployment Insurance Agency reinstated its work search requirement for applicants two weeks ago, applications increased, but the individuals didn’t return calls form the company, Manthei said.

“They’re not legitimate applicants,” he said.

Luke Barber of Barber Packaging expressed similar concerns and worried about the long-term changes the shortage would force.

“We ultimately figure out ways to work around that issue, automate, replace that work,” he said. “And then when the unemployment benefits end and these people want to re-enter the workforce, the jobs aren’t there.”

Employers at assisted living centers, gas stations and restaurants in Metro Detroit, the Upper Peninsula and mid-Michigan related similar experiences.

Glenn Stevens, executive director for MICHAuto, acknowledged that unemployment was heightening worker concerns, but argued there were “pinch points” in the labor situation even before the pandemic, due to the declining birth rate and child care issues. Supply chain issues caused by the pandemic also were causing some slowdowns and production fluctuations.

“This is not a short-term issue,” Stevens said. “We have a responsibility to fix the structural issues that the state has as we look long-term.”

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