How Long Is Too Long For Unemployment Benefits?

A little more than 74,000 people in Michigan exhausted their state unemployment benefits through the first 11 months of 2011. That still left about 232,000 receiving unemployment benefits through the end of November, the most recent data the state has released.

How long unemployed workers should receive benefits has been a hot topic. Michigan’s unemployed have had the opportunity to receive benefits up to 99 weeks via 26 weeks of state benefits and a combination of federal extensions.

Michigan recently reduced the number of weeks someone can claim state unemployment benefits from 26 weeks to 20 weeks before the federal extensions would kick in. For those newly unemployed as of Jan. 15, 2012, they will be eligible for up to 20 weeks of benefits, according to the state.

Michigan’s unemployment insurance is paid in full by employer-financed payroll taxes.

Charles Owens, state director of the National Federation of Independent Business, said that the original intent of the law was to provide people some assistance until they could find another job. Owens argues that unemployment benefits are now becoming an entitlement program.

“The longer you extend benefits, the more you deviate from the intent of the law,” Owens said. “The idea was folks would be out looking for a job and this would tide them over.”

Owens said in a tough economy, there would be some people who need extended time to find a job.

“But there are a lot of people who adjusted their lifestyle to survive on this benefit,” Owens said.

Owens said that members of the NFIB have reported that some job applicants said they could start work, but not until their unemployment benefits ran out.

Matthew Mitchell, a senior research fellow at the Mercatus Center at George Mason University, said that unemployment insurance decreases the incentive to look for another job.

“Absent the generous unemployment benefits, people will be willing to be underemployed,” Mitchell said.

Or, in sum, people respond to incentives.

Once state benefits are exhausted, unemployed workers are still eligible for benefits allowed by the federal government.

The federal Emergency Unemployment Compensation (EUC) program provides up to 53 weeks of unemployment benefits to workers who depleted their state unemployment benefits. The EUC program is scheduled to stop accepting applications on March 10, the same date the Extended Benefits program is scheduled to end, according to the state of Michigan.