The latest Michigan unemployment news update includes a report on jobless claims. The state agency continues to face challenges as it fields thousands of calls from people seeking unemployment assistance. The COVID-19 pandemic is also affecting the unemployment assistance process. Meanwhile, House Republicans are drafting a series of bills that would increase accountability and oversight at the agency. Hopefully, these reforms will help address the May 2020 warning as well as the problems that plague the department’s customer service.
More than half a million people in Michigan are preparing to lose their jobless benefits at the end of the month. Federal pandemic-related unemployment programs are set to expire next week, so the number of jobless claims in Michigan is expected to fall to less than 100,000. The number of people collecting unemployment benefits already fell by 71,000 to 1.42 million in the week ended March 5. Combined with a one-week lag, Michigan’s unemployment claims are falling below their pre-crisis levels.
While Michigan’s unemployment rate is still double-digits, the rate is falling. Meanwhile, the federal government is considering extending unemployment assistance and granting direct tax-free payments to the nation’s population to encourage more people to take jobs. The recovery of the economy will depend on how the virus is contained, says Rubeela Farooqi, chief U.S. economist at High Frequency Economics.
In the United States, initial claims for unemployment assistance dropped by 17,000 last week. That’s the lowest level since March 14, 2020. Jobless claims, a proxy for layoffs, are also falling. While unemployment remains low, the number of layoffs has increased in some states, such as Louisiana. This is good news for consumers as they are ramping up spending. However, there are still a few concerns about the rising number of claims. Nevertheless, jobless claims continue to fall.
While initial claims for unemployment benefits declined, continuing claims rose by 111,000. Combined, these two numbers indicate that the job market is still recovering and that the Federal Reserve will continue to raise interest rates to combat inflation. While this is a good sign for the economy, the numbers are still far below where they should be. A rising economy is an indication of a strong labor market. With a few more weeks of growth and more jobs available, the unemployment rate will eventually increase to its pre-recession level.
Michigan’s Unemployment Insurance Agency is working to issue more overpayment waivers to those who were asked to repay benefits because of unclear instructions. By identifying these people, the UIA will be able to identify the individuals who are eligible for a waiver. This should reduce the number of people who receive overpayments and increase the amount of money the state can claim from the federal government.
Since UIA cannot respond to specific situations without identifying the source of the overpayment, they will be limited to evaluating the most widespread overpayments for eligibility. For example, some mailings to people who received benefits through state qualification errors will indicate the overpayment amount and whether a waiver is available. The agency will continue to aggressively pursue restitution of stolen benefits. In addition, the waivers will apply to federal benefits received before September 4, 2021. For people whose unemployment benefits were awarded before September 4, these rules also apply to programs created under the CARES Act, such as pandemic unemployment, mixed-equivalent unemployment compensation, and federal reimbursement for the first week of benefits.
In addition to the work search requirement, Michigan’s Unemployment Insurance Agency has made it mandatory for people receiving unemployment benefits to look for work. When certifying their unemployment benefits for the week ending June 5, claimants must provide proof of work search activities. If a claimant fails to document their search, a mistake can cost them benefits or force them to pay back benefits. While COVID did not require this, the UIA has changed its requirements in an effort to identify more people eligible for waivers.
Federal COVID relief funds could be used to prolong Michigan unemployment assistance, but the Biden administration has not made any formal request to reinstate the program past its early September expiration date. The U.S. Secretary of the Treasury, however, has said that states can use American Rescue Plan Act funds to extend unemployment compensation and assistance. Michigan still has approximately $6.5 billion in federal ARPA funds that it can use to extend unemployment assistance for impacted workers. Budget negotiations in Michigan will begin after the Labor Day holiday.
Until Congress acts, unemployment insurance benefits in Michigan will continue to be paid at a reduced rate. The U.S. Congress has set a date for COVID-19 related unemployment assistance programs to end on September 4, 2021. However, it is important to note that federally funded PUC benefits are being paid to claimants for up to three more weeks. The increase in PUC benefits is expected to boost the benefit supplement to $400 a week.
As a result of the increase in COVID cases, Michigan’s unemployment assistance system is proving increasingly difficult to serve customers. As a result, Gov. Gretchen Whitmer recently issued an Executive Order to extend the state’s unemployment assistance program. Michigan is currently suffering from an unemployment rate of 6.9 percent. It’s important to note that the state’s Unemployment Insurance Agency is funded by a $4.6 billion trust fund. If more state funding for unemployment assistance is made available, it’s likely that Michigan’s Unemployment Trust Fund can handle the burden.
Another bipartisan bill that recently passed the Michigan Legislature and the federal government signed into law may also help jobless workers in the state. The Families First Coronavirus Response Act provides paid family leave and sick leave, enhanced unemployment insurance, and increased access to food and other essentials. Additionally, the bill ensures that people undergoing treatment for COVID won’t have to pay for the tests.
House Republicans drafting bills to increase oversight
The Republican-led House Oversight Committee has been investigating the UIA for months without announcing any significant reforms. This comes amid calls from unemployment advocates to fix a glaring problem with the system. Automatic notices and flags for potential unemployment fraud have made the UIA difficult to use and operate. The proposed changes aim to improve customer service and efficiency. Meanwhile, the state budget does not have the money to implement the changes.
Some House Republicans are also concerned about the UIA’s sweeping fraud scandal, which led to the imposition of large fines and penalties on 600,000 jobless residents. This scandal erupted under former Gov. Rick Snyder. While many lawmakers introduced legislation to improve the unemployment system, the unemployment fraud system was never replaced. Johnson questioned why the state had renewed the vendor for another year.
The bill is unlikely to pass before the end of the year, but would prevent the elimination of unemployment benefits and jobless benefits. Another major component would avoid a threatening 27 percent cut to Medicare payments and federal pensions for people earning over $85,000 a year. While the Senate could block it, the House plan will be more likely to pass. If the Republican-led House passes the legislation, it is likely to become law.
COVID relief funds still subject to negotiation
The funding for COVID-19 is still subject to negotiations in Congress. Initially, the White House requested $22.5 billion to combat COVID-19. The negotiations led to an amount that Congress stripped out of the final bill. This money would have gone to the COVID-19 Uninsured Program, which reimburses health care providers for costs associated with COVID-19 and vaccinations. However, the situation could change.
The funding is intended to cover emergent public health needs relating to COVID-19. The funding is intended to counter the spread of the virus and help communities affected by the epidemic. It also addresses the wide disparity in public health due to the pandemic. The interim final rule provides a nonexclusive list of eligible uses. It does not address the costs associated with a new issuance of debt.