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Freeze on jobless benefits still hurts workers

Date Posted: October 26 2001

Have you been laid off and applied for Unemployment Insurance? If so, you know first-hand the reality of the state's jobless benefits system, which limits the amount any jobless worker can receive to $300 per week.

Of course, workers in the up-and-down construction industry are particularly vulnerable to the whims of the economy - more than ever, now that the nation seems to have entered into a downward cycle. That's why building trades unions are fighting to overturn Michigan Public Act 25, which set the $300 benefit maximum in 1995 without any provisions for increasing it due to inflation.

Republican lawmakers who adopted that legislation controlled the entire state government in 1995, and continue to control all of its branches today. That's why it will be difficult to overturn the law.

Even so, earlier this month, IBEW Local 58 Business Rep. Bruce Burton testified in front of the House Democratic Task Force on Labor in support of Democratic-sponsored House Bill 4188, which would restore the benefits that were cut in 1995. Unfortunately, only Democratic lawmakers were in attendance - Burton said "Republicans simply will not hear any bills that have anything to do with being pro-labor." Here are excerpts of his testimony:

"I am here to testify in favor of House Bill 4188, a well-thought-out piece of legislation that would do much to stimulate Michigan's economy while simultaneously easing the suffering of our citizens who find themselves out of work through no fault of their own.

House Bill 4188 would reverse the damage currently being done to Michigan's economy and unemployed workers by Public Act 25. This short-sighted legislation was signed into law in 1995, a time of relative prosperity. It is only now, during this economic downturn, exacerbated by the current national emergency, that the full weight of Public Act 25 has been placed on the shoulders of Michigan's citizens.

Public Act 25 does several things to the unemployment compensation system, all of which hurt those people who have lost their jobs through no fault of their own. It makes unemployment benefits more difficult to qualify for. For those who do qualify, however, it cuts the weekly benefit amount for those who do not receive the maximum benefit of $300 weekly.

Public Act 25 eliminated indexing and froze the maximum weekly benefit at $300 forever. By the way, if indexing were still in effect, the current maximum would be $414. One part of Public Act 25 seems particularly onerous in that it provides not one, but two separate disincentives to work.

Clearly, Public Act 25 hurts Michigan's unemployed workers. Its effects are particularly insidious to construction workers, as their unemployment rates typically run 2½ times the total unemployment rate. Michigan's current unemployment rate is 5.1 percent.

When Public Act 25 was passed into law in 1995, putting the hurt on construction workers - or any other workers for that matter - was not a concern of the legislature or the governor.

Unfortunately, this attitude still holds true today. However, given the deteriorating economic situation, combined with the national emergency, Public Act 25, which initially helped Michigan's employers, may very well begin to hurt them as well.

Unemployment insurance helps protect those businesses that depend on workers to purchase their goods and services. A 1999 economic simulation commissioned by the U.S. Department of Labor concluded that over the last five U.S. recessions, unemployment insurance has "mitigated the loss in real gross domestic product by about 15 percent over all quarters in each recession."

The National Employment Law Project further writes, "Unemployment Insurance has always served as the nation's first line of defense in an economic recession. By pumping UI trust fund dollars into a declining economy, UI automatically boosts consumer spending in communities impacted by unemployment, while meeting essential needs of households hit by layoffs."

In speaking to this committee, I realize I am preaching to the choir. My remarks need to be heard by those (Republican) members of the State House Employment Relations, Safety and Training Committee who are not in attendance, especially the chairman. However, we all need to work to get HR 4188 passed, and relegate the effects of PA 25 to the scrap heap of history. Let's get Michigan back to business and back to work."