Record reserve for jobless money…

Jobless building trades workers in Michigan - and there are a significant number of you out there - will no doubt be delighted to hear that the trust fund that holds money to pay state unemployment benefits ended 2000 with a record-high $3.067 billion cash reserve.

The reserve grew by nearly 12 percent from 1999 to 2000. "The reserve is especially impressive when you realize that it accumulated in the face of six straight years of tax cuts authorized by Governor Engler, which have saved Michigan employers over $1 billion in unemployment taxes," said Jack Wheatley, director of the state's Unemployment Agency.

Of course, no where in the press release touting the massive cash reserve is there any word about how the state's unemployed workers have contributed to the surplus. In April 1996, Engler and state Republicans voted to put a halt to any increases in unemployment benefits, capping benefits at $300 per week. That $300 maximum hasn't changed since 1996, and Republicans made sure there were no provisions in the law for that amount to increase, even for inflation.

Furthermore, Engler and the Republican lawmakers in 1996 changed state law so that claimants who file and qualify for unemployment benefits will receive 67 percent of their after-tax earnings in benefits, compared to 70 percent under the old law. The $300 cap in benefits still applies to all workers, no matter their income level when they were laid off.

"The unemployment trust fund is very sound and well prepared, regardless of economic conditions, to continue unemployment benefit payments without borrowing federal funds," Wheatley said.

…But $3.067 billion in cash is not enough

There was more news, both good and bad, concerning the state's Unemployment Agency revealed at the Michigan Building Trades Legislative Conference.

A presentation by two Michigan Unemployment Agency representatives at the conference focused on how well the state's new wage-record system is working. They reported that a spike in the number of jobless claims that came in late last year was handled flawlessly, and jobless workers received their benefit checks in a timely manner thanks to the newly implemented Wage-Record system.

Under its old system, the Unemployment Agency sent requests for wage information to employers every time one of their employees filed an unemployment claim. On Oct. 1, 2000, the agency scrapped that time-consuming system, and replaced it with a program of using quarterly wage information submitted by employers to establish the amount of unemployment benefits jobless workers may receive, if they are otherwise eligible.

Representatives from the state Unemployment Agency, labor and management helped implement the system, which is supposed to be faster and "benefit neutral," meaning some claimants get more, some will get less, but the state pays out about the same in jobless benefits every year.

Which leads us to the bad news - which is essentially an extension of the $300 annual cap on benefits that we allude to in the article above. The Unemployment Agency reps present at the meeting told delegates that if state legislators did not impose the $300 cap on jobless benefits in 1996, the state's jobless workers would be eligible to receive a benefit maximum of just over $400 per week, and Michigan would rank 9th among all states in maximum benefits paid out, instead of 29th.

The Republicans who control our state government could increase that $300 maximum benefit, but the Unemployment Fund is a little cash-starved: the $3.067 billion cash reserve is apparently not enough.