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Urge State Senate to Continue to Hold Strong on Costly Unemployment Expansion
Members of the Michigan Chamber are encouraged to contact their State Senator to strongly encourage him/her to hold strong in opposition to efforts to accept one-time dollars from the federal government in exchange for a massive, permanent expansion of the State’s 100% employer-financed unemployment system – and increased payroll taxes on job providers to pay for it.
At issue is an offer contained in the American Reinvestment and Recovery Act (i.e., the “stimulus legislation”) that would allocate a one-time, $138.9 million payment to the State if it enacts permanent changes to our unemployment laws by the close of federal fiscal year 2011. This federal mandate calls upon states to approve two of the following four provisions in order to receive the payment:
Permit former part-time workers to seek part-time work and be eligible for unemployment benefits (HB 4786);
Provide benefits to claimants who voluntarily leave for “compelling family reasons,” including domestic violence; the illness or disability of a member of the individual’s immediate family; or to accompany a spouse to a place from where it is impractical to commute and due to a change in the location of the spouse’s employment;
Provide an additional dependent allowance of $15/dependent, subject to a minimum cap of $50; or
Provide extended benefits to unemployment recipients who have exhausted benefits and are making “satisfactory progress” in a state-approved job training program or in a job training program authorized under the Workforce Investment Act of 1998 (HB 4785).
Although legislative adoption of any of the above two proposals would bring a one-time increase in revenue to the State, the Michigan Chamber is strongly opposed to all four proposals – including House Bills 4785-4786 – because they are not cost effective. There is approximately a three-year “tipping point” at which the costs of enacting any two of the above proposals would outweigh the benefits because employers would be forced to pick up the additional costs in the form of higher SUTA and FUTA payroll taxes, as the unemployment system is 100 percent employer-funded, meaning employers, not employees, are taxed to pay for unemployment benefits.
Any increases to the UI system would come on top of news that employers will be faced with higher FUTA payroll taxes come January 1, 2010 because the federal government will begin to require the state to pay back principal on the over $2.9 billion Michigan has borrowed to meet unemployment obligations and issue checks to claimants. This tax will impact all job providers at a cost of approximately $21 per employee.
Throughout this debate, Senate Republicans have remained steadfast in their opposition to this legislation, realizing the long-term tax increases on Michigan employers that will accompany these proposals will only serve to further damage our state’s business climate. We know that Senate Democrats and the Governor will continue to call for passage of this dangerous proposal, so please ask your Senator to oppose these efforts and House Bills 4785-4786.
Do not hesitate to contact Wendy Block if you have any questions or if we can be of assistance at (517)371-2100.
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