Whitmer economic plan includes millions for boosted wages, small biz, childcare

Beth LeBlanc
The Detroit News

Grand Rapids — Gov. Gretchen Whitmer said Thursday she wants to distribute nearly $1 billion in federal funding to small businesses, payroll and childcare under a new economic restart plan. 

The Michigan Economic Jumpstart Plan takes advantage of billions in federal COVID-19 relief funds as well as a $3.5 billion budget surplus "primed for investment."

"There's reason to feel hope," Whitmer said Thursday as she outlined the policies at the YWCA of West Central Michigan. 

The plan would require the approval of the Republican-led Legislature, which has sparred with the Democratic governor over spending priorities but recently reached an agreement to proceed with budget talks. 

Whitmer's proposal would dedicate about $300 million to grants for businesses to make up the difference between their current hourly wage and a $15 per hour wage that labor advocates have sought. Michigan's minimum wage is $9.65 an hour, which is higher than the nationwide $7.25 minimum rate.

The plan would provide $180 million for the Michigan Reconnect and Future for Frontliners scholarship programs.

Whitmer also wants to target about $125 million for businesses that didn't qualify for earlier federal pandemic aid, $75 million in grants for community startups and $100 million to help restaurants and other "place-based businesses" pay mortgages, rent, taxes or payroll.

Gov. Gretchen Whitmer signed four bills in May aimed at helping the state's craft spirit industry. On Thursday, she revealed a plan to spend nearly $1 billion in federal funding for small businesses, payroll and childcare under an economic restart plan.

Another $370 million would help to expand low- or no-cost childcare for 150,000 families by increasing the income eligibility benchmark for aid from 150% to 200% of the federal poverty line.

The governor also proposed expanding Michigan's work share unemployment program and boosting staff in the unemployment offices to help implement the state's reinstated work search requirements. 

The six-month plan, Whitmer said, is an effort to boost wages and get people back in the workforce. After the program ends, the market will dictate what happens to wages, unemployment and businesses, she said. 

"We can harness these once-in-a-lifetime economic opportunities and channel it to raise wages, invest in small businesses and uplift families," Whitmer said. "I look forward to engaging the Legislature, local communities and Michiganders as we continue thinking through the best ways to use the federal funds and state surplus to turbocharge our economy and make a real difference in people’s lives.” 

It's unclear what sort of reception the plan will receive from the GOP-led Legislature, even after an agreement last month allowed Whitmer space at the table in budget discussions. 

“The economy certainly needs attention after the governor dismantled large parts of it with her COVID policies," Senate Majority Leader Mike Shirkey, R-Clarklake said in a Thursday statement. "How to best help Michigan recover will certainly play a role in budget proceedings.”

Michigan's economic outlook has improved drastically from earlier predictions and unemployment numbers appear to be improving from record highs at the peak of the pandemic. 

Michigan's unemployment rate in April was about 4.9%, down from a record high of 22.7% in April 2020. 

While unemployment numbers are going down, some experts contend those numbers were aided by more people deciding not to look for work, lowering what's referred to as the labor participation rate. 

The state's labor participation rate fell from a pandemic high of about 61.5% in June to 58.8% in April, according to the U.S. Bureau of Labor Statistics.

Michigan has paid out about $34.8 billion in state and federal unemployment benefits since the beginning of the pandemic in March 2020. Those payments were spread out among roughly 3.3 million claimants.

The state budget has been buoyed by federal COVID-19 relief dollars as well as federal stimulus dollars that drove consumer spending and the resulting sales tax revenue. 

The state has about $2 billion more in revenue than initially expected this fiscal year and about $1.5 billion more than expected for fiscal year 2022. 

Last month, Whitmer and the state Legislature came to an agreement that allowed her budget director a seat at the table in budget discussions, a sign that a stalemate between the two branches of government might be dissolving. 

In the past, the GOP-led Legislature has tied federal COVID-19 relief funds to required concessions of the Whitmer administration's emergency powers. House and Senate appropriations leaders have expressed concerns about using federal funds for programs that need long-term revenue, not just a one-time federal investment. 

But Whitmer was optimistic about the GOP-led chambers' support for the plan she laid out Thursday. The governor met with House and Senate leadership that morning but said she had not discussed the plan then.

"This could be one of the issues that transcends partisan politics," she said.