Democrat Testifies: Boosted Unemployment Benefits Still Can Pay More Than Work

State Rep. David LaGrand described what he sees as a disincentive to work under Michigan's current unemployment benefits system.

LaGrand, a Democrat from Grand Rapids, explained at a hearing that the system’s benefits include $362 a week through the state and $300 a week through the federal government. (All unemployed worker benefits are paid for by assessments on employers, according to the National Federation of Independent Business.)

LaGrand estimated that current weekly unemployment benefits (which are higher than normal due to boosted federal payments) equate to about $15-an-hour. He said at an April 27 state House committee meeting that if he sees a help wanted sign at a business offering $11 an hour, “What I’m really being asked to do is work for a $4-an-hour pay cut.”

And according to testimony from Wendy Block of the Michigan Chamber of Commerce, “That’s a very real problem.”

Block said that if the temporary unemployment benefits were collected for a full year, they would be equivalent to a $34,000 salary. She described the current situation as one where private sector employers are having to compete against government benefits for workers.

Others who testified noted that employers are currently offering pay far better than Michigan’s minimum wage (currently $9.87 per hour) because they are desperate for help.

“Everywhere I go, I see a help wanted sign,” Block said.

The Federal Pandemic Unemployment Compensation program provides $300 per week for unemployment through Sept. 6, 2021, according to Investopedia.

The hearing was called to investigate why the state of Michigan was still suspending the unemployment system’s usual requirement that individuals collecting benefits must demonstrate they are actively searching for work.

Peter Ruddell, an attorney and the chair of the Michigan Law Revision Commission, explained that the law requiring this also grants discretion to the director of the Unemployment Insurance Agency. So no law is being broken by not enforcing a work-search requirement during the epidemic.

Stephanie Glidden of the Unemployment Insurance Agency said that it plans to reinstitute the requirement by the end of May.

Glidden said there were currently about 700,000 people collecting unemployment in Michigan, of which 170,000 interact with the agency solely through the telephone under emergency rules. Glidden said it is not possible to enter information about work searches by telephone.

“The majority of those folks have never been on UI (unemployment insurance); they don’t know what work search is,” Glidden said. “Work-search mistakes have proven to be costly for unemployment claimants.”

“If they make mistakes, their benefits are in jeopardy. We don’t want to just throw that mandate on them without educating them.”