MAX UNEMPLOYMENT BENEFITS; INCREASE S.B. 40 (S-3):
SUMMARY AS PASSED BY THE SENATE
Senate Bill 40 (Substitute S-3 as passed by the Senate)
Sponsor: Senator Paul Wojno
Committee: Labor
Date Completed: 12-27-24
CONTENT
The bill would amend the Michigan Employment Security Act to do the following:
-- Increase, from 20 weeks to 26 weeks, the maximum number of weeks an
individual could qualify for unemployment benefits per benefit year.
-- Increase, from $362 to $614, incrementally over the next three years the
maximum weekly benefit rate an individual could receive for unemployment
benefits.
-- Increase, from $6 to $26, incrementally over the next three years the
unemployment benefit rate for each dependent.
-- Require the State Treasurer to increase the maximum weekly benefit rate and
the unemployment benefit rate for each dependent by the Consumer Price Index
(CPI) annually, beginning December 31, 2027.
Generally, the Act requires the Unemployment Insurance Agency (UIA) to pay an eligible
unemployed individual specified benefit amounts after the individual makes a claim for
benefits and while the individual seeks work. An individual qualified for unemployment
benefits is eligible for between 14 and 20 weeks of unemployment benefits payable to an
individual in a benefit year. Instead, under the bill, an individual qualified for unemployment
benefits would be eligible for between 14 to 26 weeks per benefit year.
In addition, currently, an individual’s weekly unemployment benefit rate is 4.1% of the
individual’s wages paid in the quarter of the year in which the individual was paid the highest
total wages, plus $6 per dependent; however, an individual’s maximum weekly benefit rate
must not exceed $362. Instead, under the bill, an individual's weekly benefit rate would have
to be calculated using the following monetary amounts for each dependent, if any, and could
not exceed the following maximum weekly benefit rates:
-- For a claim filed on or after January 1, 2025, $12.66 for each dependent, and the
maximum weekly benefit rate could not exceed $446.
-- For a claim filed on or after January 1, 2026, $19.33 for each dependent, and the
maximum weekly benefit rate could not exceed $530.
-- For a claim filed on or after January 1, 2027, $26 for each dependent, and the maximum
weekly benefit rate could not exceed $614.
-- For a claim filed on or after January 1, 2028, the adjusted monetary amount established
in accordance with the CPI for each dependent, and the maximum weekly benefit rate
could not exceed the adjusted maximum weekly benefit rate established in accordance
with the CPI.
The bill would require the State Treasurer to adjust the monetary amount for each dependent
and the maximum weekly benefit rate above by an amount determined by the State Treasurer
to reflect the cumulative annual percentage change in the CPI at the end of each calendar
year after December 31, 2026. "Consumer Price Index" would mean the most comprehensive
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index of consumer prices available for Michigan from the Bureau of Labor Statistics of the
United States Department of Labor.
MCL 421.27
BRIEF RATIONALE
Public Act 14 of 2011 decreased the maximum number of benefit weeks from 26 to 20 weeks
for all individuals who filed their initial claims on or after January 15, 2012. According to
testimony, Michigan currently provides the fewest unemployment benefit weeks among states
in the Great Lakes region; forty-five states across the country offer 26 weeks of
unemployment benefits or more while Michigan offers 20 weeks. Increasing Michigan’s
allowed unemployment benefit weeks would help Michigan residents and align Michigan’s
unemployment policy with the policies of a majority of other states.
PREVIOUS LEGISLATION
(This section does not provide a comprehensive account of previous legislative efforts on this subject matter.)
The bill is a reintroduction of Senate Bill 2 of the 2021-2022 Legislative Session.
Legislative Analyst: Alex Krabill
FISCAL IMPACT
The bill would have a significant negative fiscal impact on the Unemployment Insurance Trust
Fund, a minimal fiscal impact on the UIA, and no fiscal impact on local units of government.
Based on current trends and total pay outs in Unemployment Insurance (UI) benefits ($763.1
million), the increase in the weekly benefit maximum could add an additional $531.1 million
in additional pay outs annually in 2027. Expanding the number of allowable weeks from 20 to
26 could add between $76.3 to $104.5 million in additional pay outs annually. In total, this
could increase total pay outs to between $1.3 to $1.4 billion based on current pay out levels.
Total pay outs would be even higher during an economic recession. The total would be less
than the total amount of UI revenue generated, which currently is $1.2 billion and would
decrease the Unemployment Insurance Trust Fund balance, which is currently at $2.8 billion.
Weekly Benefit Maximum
The bill would increase the weekly maximum benefit from $362 to $446 in calendar year
2025, $530 in 2026, and $614 in 2027. After 2027, the maximum would be adjusted annually
according to the CPI. This represents a 23.2% increase in 2025, 46.4% in 2026, and 69.6%
in 2027. The $614 weekly maximum amount would still be less than the median income
benefit received in Michigan, which is $69,183 and would correspond to a weekly payment of
$692 if there were no cap. The percentage increase in weekly payments for each year would
likely be slightly less than the exact percentage change as the maximum weekly cap
approached the median income level.
For the past year, $763.1 million was paid out in UI benefits. Had the maximum weekly
benefits been in place, the total amount paid out could have been $940.1 million for the 2025
maximum, $1.1 billion for the 2026 maximum, and $1.3 billion for the 2027 maximum. For
the 2027 maximum, this would have been greater than the total amount of revenue that had
been received, which was $1.2 billion and would have reduced the Unemployment Insurance
Trust Balance.
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26 Allowable Weeks
The bill would likely increase the average number of weeks that claimants would continue
receiving UI benefits. Currently, 34% of claimants reach the 20-week limit for UI benefits.
For the additional six weeks, if the average week-to-week decrease in claimants receiving UI
benefits were extended (3.47%), the average cost per claimant would increase 9.8% and if
the same number of claimants continued for the additional six weeks, the average cost per
claimants would increase 13.7%.
For the past year, $763.1 million was paid out in UI benefits. Had the total number of allowable
weeks been 26 weeks, the total amount of payouts could have been between $839.4 million
and $867.6 million, an additional $76.3 million to $104.5 million. This amount would have
remained under the $1.2 billion in UI tax collections and the Unemployment Insurance Trust
Fund balance would have increased.
These assumptions are based on the current trends for the number of claimants, the number
of payouts, and the week-to-week rate that claimants continue to receive UI benefits. If the
week-to-week rate that claimants continue to receive UI benefits increased, such as during
an economic downturn with fewer job openings, the average cost per claimant would increase
beyond current assumption. For example, if the average week-to-week drop in claimants
receiving UI benefits were 1% less (or 2.47%) than the current rate, the average cost per
claimant would increase between 17.4% to 19.8% by allowing the additional six weeks.
Administration
The bill also would add Information Technology to the UIA to update the number of allowable
weeks and the maximum weekly benefit rates. This likely would be supported with current
appropriations, which is only supported with Federal dollars and State Restricted Penalties
and Interest Revenue.
Fiscal Analyst: Cory Savino, PhD
SAS\S2324\s40sb
This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official
statement of legislative intent.
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Statutes affected:
Substitute (S-3): 421.27
Senate Introduced Bill: 421.27
As Passed by the Senate: 421.27
As Passed by the House: 421.27
Public Act: 421.27
Senate Enrolled Bill: 421.27