Michigan First To Act As States Weigh Reductions In
By Peter Whoriskey and Michael A. Fletcher
March 24, 2011
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 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
"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.
Most state unemployment funds have been depleted, and
they are now borrowing from the federal government to
make their portion of the payments.
The shortfalls can be traced to a failure during the
economic boom to properly prepare for a downturn,
Unemployment benefits are funded by a payroll tax on
employers, collected at a rate that is supposed to keep
the funds solvent. Firms that fire lots of people are
supposed to pay higher rates. Over the boom years, the
drive to minimize state taxes on employers reduced
revenues, and when the ranks of the unemployed grew
during the crisis, the funds could not meet the need.
Collectively, the states owe the federal government $46
billion for the shortfalls in their unemployment funds.
Those deficits put pressure on the states to reduce
benefits or raise the payroll taxes.
This month, the Florida House approved a measure
reducing the maximum benefit period from 26 to as little
as 12 weeks while curbing increases in unemployment
taxes paid by employers. The jobless rate in Florida is
"We are sending a message to the business community that
Florida is quickly becoming the most business-friendly
state in the country," said state Rep. Doug Holder (R-
Sarasota), the sponsor of the Florida bill.
It would go into effect Aug. 1.
In Arkansas, lawmakers are moving toward freezing
unemployment benefits levels while trimming the maximum
benefit period for state benefits from 26 to 25 weeks.
"The more that states look at the severity of the
solvency problems, the more measures like this will be
seriously considered," said Douglas Holmes, president of
UWC, an organization that provides advice on
unemployment policy to businesses and some states.
The federal extensions - the latest one pushed forward
by President Obama in December - have led to criticism
that the unemployment program has morphed from a
temporary bridge for laid-off workers into an expensive
entitlement, a critique that angers advocates for the
"We have had such high unemployment for so long, people
maybe don't have as much sympathy for the jobless as
they did in 2008 or 2009," said Rick McHugh, a staff
attorney with the National Employment Law Project.
Pointing out that the maximum unemployment benefit in
Michigan is $362 a week and $275 a week in Florida,
McHugh added that it is unlikely that many people are
financially comfortable just collecting unemployment
The Michigan measure was part of a bill that was
necessary to ensure jobless people could receive a 20-
week federal extension of unemployment benefits, the
governor's office said. Without it, about 35,000 people
would have lost their benefits as of April 1.
A spokesman for Snyder said that he will sign the bill
because it ensures that presently unemployed workers
will continue to get benefits but that he would have
preferred not to reduce the maximum benefit period.
"This makes sure we have that lifeline still in place,"
Snyder spokeswoman Sara Wurfel said. "It was a necessary
compromise. The votes to do anything else weren't there
Kitzhaber Signs Unemployment Bills
by Andy Giegerich
Portland Business Journal
March 24, 2011
Gov. John Kitzhaber signed bills Thursday that will
extend unemployment benefits for about 67,500
Oregon's governor has signed bills that will, among
other measures, extend unemployment benefits for ongoing
out-of-work residents by another 26 weeks.
Gov. John Kitzhaber signed senate bills 637 and 638
Thursday morning. Senate Bill 637, which passed both the
Oregon House and Senate unanimously, will supply $225
million in federal funds that extend benefits by 20
weeks. Senate Bill 638, which passed the Senate by a 26-
to-4 count and the House by 49 to 9, would add another
six weeks to the extension. Money for the second measure
would come from the State Unemployment Trust Fund.
The measures would all told provide benefits for 67,500
"Although we are on the path to economic recovery, there
are thousands of Oregonians who are still struggling,"
Kitzhaber said in a statement. "Extending unemployment
benefits is a life line to people in need right now."
The federally funded package will allow around 50,000
Oregonians to receive more benefits by the end of the
year. The state-funded measure will help workers whose
benefits would otherwise expire in April.
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