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New Law Shortens Michigan Unemployment Benefits

Michigan has a new law on unemployment benefits which reduces the number of weeks that benefits may be enjoyed from 26 weeks to 20 weeks. This measure is now being considered by the Florida legislature. The bill was passed and will go into effect starting next year to give unemployed workers 6 weeks less to collect unemployment benefits in Michigan.

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In response to Michigan`s $1·4 billion deficit the reduction in benefits is seen as showing fiscal responsibility. However the labor advocates and the Democrats oppose the measure on the grounds that in Michigan where the unemployment rate is always higher than the national average, this is particularly unfair.

The bill which was signed by Republican Gov. Rick Snyder was really drafted to extend federal unemployment benefits up until the end of the year. The effect of the new measures is that by reducing the number of weeks that benefits are paid from 26 to 20 weeks, Michigan employers will find that they will pay lower unemployment taxes next year. The Michigan Chamber of Commerce acclaimed the passing of the bill as a huge win that could bring an estimated saving of $300 million a year.

By September 30 Michigan is due to make a $117 million payment on the $3·9 billion in loans from the federal government in support of the unemployment benefit program. Other states too are looking to the federal government for help in fact , according to the US department of Labor, by 2013 the fifty states will have borrowed a total of $65 billion for their unemployment programs. The state with the most debt is California which owes $10·5 billion and Michigan comes second on the list.

The fact that since 2008 Michigan has had an unemployment rate of over 10 percent is the main reason why the state`s unemployment trust fund is depleted forcing the state to borrow federal dollars. This is according to an economist at the University of Michigan –Donald Grimes who feels that increasing federal taxes on business is regressive and will work against fostering a healthy economic climate. He added that the tax is being imposed on firms at the same as they are being asked to start hiring again and thinks that it would be a more equitable approach to forgive the debt and allow the states to reduce the burden on business as well as to avoid cutting programs.

According to Labor the long term jobless in the state will be hurt by the bill. Another comment by Rep. Sander Levin (D) of Michigan is that the effects of the bill will be felt for years and that it has given Michigan the dubious distinction of becoming the only state in the union with 20 weeks of state unemployment insurance. He added that hundreds and hundreds of thousands of unemployed workers will be affected in future.

It may well be that Michigan will soon be joined by other states, such as Florida, that are considering similar bills.

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