Michigan needs unemployment law reform, to stop excluding workers and get federal funding

Rachael Kohl, guest writer
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Rachael Kohl

The COVID-19 pandemic has shown that unemployment insurance is both a vital economic stabilizer as well as a lifeline for jobless workers. During times of economic downturn, these benefits prevent families from falling into poverty, homelessness, food insecurity, and other examples of devastation for workers who have lost their job.

Unemployment benefits generate an extraordinarily high return on investment. For every dollar of unemployment benefits given to workers, studies have shown that it returns nearly two dollars back into the community. This impact has been even greater due to the additional funding from the federal government to aid workers affected by COVID-19. When jobless workers can continue to spend while also providing for their necessities, this return on the benefits' investment not only protects the economy but also individuals and families.

States that choose to cover their jobless workers are better protected against economic downturns. Unfortunately, Michigan's unemployment program is among the weakest in the country because laws have not evolved since its inception in 1935. The impact of Michigan’s Legislature neglecting its unemployment program has created a system that does not protect its workers. Currently, only about 25 percent of jobless workers will be entitled to benefits in Michigan — leaving 75 percent of the jobless workforce without these life-saving funds.

Michigan also loses out on millions of dollars of federal funds due to its lack of coverage compared to other states. When there is federal funding available, typically in times of crisis like COVID-19, that federal money goes to all states with programs that allow their workers to obtain benefits. Because Michigan excludes about 75 percent of workers, much of that federal funding will not come into Michigan — but it will go to other states.

The impact of Michigan’s poor unemployment laws means that a worker in Michigan will be denied unemployment benefits, but that same worker would be able to access benefits in most other states. Compared to other Midwestern states, Michigan lags behind significantly in every category of coverage.

Michigan has one of the lowest weekly benefit amounts (how much people receive each week). The Legislature hasn’t changed the amount in almost 20 years.

It’s one of the only states in the entire country that fails to offer at least 26 weeks of coverage. Despite having a robust workshare program, the system is the second-worst jurisdiction in terms of covering low-earning workers.

Michigan is also one of the only states that fails to cover part-time workers.

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Now that so many workers have been trying to access the program due to the pandemic, many are finding it impossible to get benefits.

Thousands of Michigan workers are calling their legislators frustrated about being excluded from this crucial economic stabilizer during a pandemic. But it’s important to understand that one of the main reasons workers are being excluded is because Michigan’s laws have not been updated and have left them out. Rather than misdirecting our frustration at the UIA, we must instead urge the Michigan Legislature to make real change.

Michigan has a history of only responding to its unemployment system in times of crisis. Looking at the state legislature’s response during COVID-19, it merely added temporary fixes and then allowed them to expire.

Rather than only being reactive to a crisis, Michigan's Legislature should be proactive to enact meaningful reform to protect and strengthen Michigan's unemployment coverage.

Strong unemployment insurance coverage leads to better communal financial health and economic stability. Michigan’s workers deserve better.

Rachael Kohl is an assistant professor of law and directs the University of Michigan’s Law School’s Workers' Rights Clinic (formerly the Unemployment Insurance Clinic).

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