High court won't block ruling nixing key parts of Michigan's auto insurance reform

Finley: Fat jobless checks a disincentive to work

Nolan Finley
The Detroit News

Some Michigan employers say the enriched jobless benefits included in Congress' $2 trillion COVID-19 relief package may actually slow the state's recovery from the massive job losses caused by the pandemic. 

Employers who are still hiring say they can't compete with the state and federal checks that in Michigan will total up to $963 a week. They also report some workers are asking to be laid off because the unemployment benefits greatly exceed their regular pay.

Diane Lynch, vice president of Minnie Marie Bakers, Inc, stands in front of Awrey Bakery in Livonia on April 7. With unemployment benefits and the threat of the virus keeping most people at home, the bakery is struggling to stay staffed, says owner Ronald Beebe.

"It’s a disincentive for those making under $24 an hour to go to work," says Ronald Beebe, owner of Awrey Bakery in Livonia. 

He's trying to hire 35 workers to staff new product lines at the bakery, and despite the wave of layoffs locally has been able to attract only five qualified applicants for positions that pay $12 to $15 an hour and health insurance.

"People are very scared of catching COVID-19," says Beebe, who also can’t find workers for a new plant making face masks in Midland. "They prefer to stay home and make $24 hour and feel safer."

Arny Rodriguez, who runs a medical and technical staffing firm in the west Michigan city of Wayland, needs a hi-lo driver for a client, and offered $16 an hour to a prospect. He was surprised when he was turned down.

But when he started being rebuffed for jobs in the $20 to $22 an hour range, he realized filling positions would be tough for awhile.

"I'm hearing, 'For two dollars difference, why go to work and risk myself?'" he says

The federal CARES Act adds $600 a week for four months to state jobless benefits, which top out at $363 a week in Michigan. 

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Sen. Lindsay Graham of South Carolina and a few other Republicans cautioned against making the supplement too rich, warning if laid-off workers can do better on unemployment than working they will lose the incentive to take jobs.

Graham was hooted down as being heartless. But history supports his claim. 

In 2009, in response to the Great Recession, President Barack Obama extended jobless benefits for more than four years. Job growth languished until 2014, when the extensions ended.

Expect a similar result this time, warns Rich Studley, executive director of the Michigan Chamber of Commerce.

"Congress clearly created a disincentive for low- and moderate-income workers to return to work," he says. "I don’t think it was entirely accidental."

Diane Lynch, Vice President at Minnie Marie Bakers, Inc dba Awrey Bakery in Livonia, Michigan on April 7, 2020.

Studley believes the end game for the Democrats who demanded the higher benefit is to create pressure for a mandated National Living Wage.

"Democrats knew exactly what they were doing," he says. "When the federal supplement eventually rolls off, imagine the enormous pressure in Lansing and every other state capitol in the nation to keep it going."

Mike Shirkey, leader of the Michigan Senate, worries about both workers and employers gaming the system by asking to be laid off or dumping employees they might otherwise have continued to pay during this shutdown.

He's also concerned that not all workers understand they can't just quit jobs to go on unemployment.

"The federal action is now creating incentives for people to tell their employers to pound sand (so) they can make more money at home," Shirkey says.

He's asking Gov. Gretchen Whitmer to put out a statement clarifying the eligibility rules for unemployment benefits in Michigan."

A packaging business owner in Grand Rapids hopes her employees get that message. The woman, who asked that her name not be used, says she is committed to keep her small staff on the job until the economy recovers, but she's getting pressure to lay them off instead.

"I'm trying to keep the people I have, but this is making it difficult," she says. "They can do the math."


Twitter: @NolanFinleyDN

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