HAVLICEK: Michigan’s unemployment system is facing unprecedented filings

The Michigan Unemployment Insurance Agency has faced unprecedented filings due to the coronavirus pandemic. Since March 15, roughly 2.3 million eligible claimants have applied for unemployment and $14.3 billion in benefits has been paid out to more than 2 million workers.

In April alone, Michigan lost a staggering 1,048,000 jobs and unemployment skyrocketed to 24 percent. Not only did we experience the highest rate of job loss in the country, we were one of only three states above 20 percent. May’s figures showed unemployment falling to 21.2 percent, but that’s still much higher than the U.S. average of 13.3 percent.

In response to this crisis, Congress passed the $2.2 trillion CARES Act which included a provision to pay Americans eligible for unemployment insurance an extra $600 through the Federal Pandemic Unemployment Compensation program. This money is in addition to what they normally claim under their state’s benefits. While this expanded unemployment benefit helped many who found themselves out of work, it has also — albeit unintentionally — impeded our economic recovery.

Those extra payments, coupled with the lack of a requirement to look for work, have created a disincentive for any worker making less than $18 per hour prior to the pandemic to return to work. As a result, many workers are opting to remain unemployed even if their job is offered back to them.

Judee Hopwood of Williamson Employment Services is hearing from clients every day who say their workforce has declined to come back to work and they are desperate for new employees. At the same time, their flow of applicants has become a trickle.

“People just are not applying for work right now. When we offer positions to candidates, the response we most hear often is that they are making more on unemployment than the job pays.”

Ryan Smith from Express Employment Professionals echoed these sentiments.

“In some cases, people are bringing home nearly double what they were making prior to the executive orders and company layoffs. Some companies are having to pay bonuses and increase wages just to attract enough talent to stay open. Other companies who are less fortunate may not be able to meet customer demands.”

Workers must realize it is short-sighted to put the temporary increase of income provided by unemployment benefits over long-term career growth. Not only does this hurt their career trajectory, it slows the growth of our economy as we try to recover from this crisis.

Furthermore, businesses should not have to compete with the Unemployment Agency for talent. With the extra $600 ending July 25, the government must focus future stimulus legislation on incentivizing a return to work. So far, a few proposals have been floated, but nothing concrete. Frustratingly, a timeline still has not been announced.

With Michigan’s recovery already expected to lag behind the rest of the country, there’s no time to lose.

Arthur Havlicek is the President and CEO of the Southwest Michigan Regional Chamber. He can be reached at (269) 932-4042 or by email at ahavlicek@smrchamber.com.

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