Bid To End $300 Federal UI Kicker Vetoed Amid Stalled Negotiations
July 27, 2021
Gov. Gretchen Whitmer Tuesday vetoed legislation designed to end early the federal government’s $300-a-week unemployment insurance (UI) kicker after late-breaking negotiations with the Legislature stalled out.
Functionally, HB 4434, sponsored by Rep. Jeff Yaroch (R-Richmond), would not have ended the additional benefit prior to the benefit’s scheduled Sept. 5 end date anyway. The bill was not given immediate effect in the Senate, meaning it wouldn’t have gone into effect until 2022, among other technical issues.
Whitmer, without legislation, could end the additional UI payment to help nudge reluctant residents back into the workforce and is prepared to do so.
However, she was looking to cut a bigger deal with legislative leaders that would have increased Michigan’s weekly benefit to $422 while also putting $425 million into the Unemployment Insurance Agency (UIA) trust fund.
MIRS has learned the Detroit Regional Chamber, the Grand Rapids Chamber and the Michigan Chamber of Commerce were on board with a deal that also included expanded benefits to the unemployed with children.
Currently, the unemployed receive $6 more a week per child with the weekly benefit capped at $362. The deal would have been $20 per child with the benefit not capped at $422 a week. A work share piece also was tied to the deal.
But the House was concerned the increased benefit would deter the unemployed to return to work long-term. Also, negotiations did not start in earnest until after HB 4434 had been enrolled, making it difficult to educate members and get something passed.
The House held up HB 4434 in the Clerk’s office for a couple of weeks but sent the bill along to the Governor’s office shortly after the July 4th weekend.
“At the end of the day, we just ran out of time in the Legislature,” said Brad Williams with the Detroit Regional Chamber. “If this process had started when the bills were dropped and we had talked longer about a stronger investment in the UI Trust Fund and a better benefit system, it might have worked. The conversation started too late for that to happen.”
It’s also possible that a deal could be struck whereby the Governor starts the process of ending the benefit tomorrow in exchange for a promise from the Legislature to make the longer-term adjustments to UIA through legislation.
“The problem is that the Governor doesn’t trust us to do it without legislation on its way to her desk,” said Sen. Ken Horn (R-Frankenmuth), who was neck-deep in the negotiations. “She could have pulled the trigger and started the chain of events to get this done. It’s 2 ½ years of lack of trust that came back to bite us all.”
To that, Sen. Curtis Hertel Jr. (D-East Lansing), who also was working on making this deal happen, said, “I don’t know any deal in Lansing that can get done without trust . . . but I certainly trust Ken Horn.”
The business community is suffering from a tight labor market and has called for Michigan to join several other states in rejecting the additional $300-a-week benefit for unemployment workers to spur people back to work.
They also see a draining UI Trust Fund and were excited about the prospects of the state kicking money into it. Otherwise, the fund is replenished by employer contributions.
The Governor sees an unemployment benefit that has not been raised since 2002. It is the lowest in the Great Lakes and well under the $546 that $362 in 2002 would be worth today. She agreed to $422 as a compromise since that would be the average benefit of the rest of the Great Lakes States outside of Pennsylvania.
But now, the summer is half over. It would take 30 days for the extra benefit to go away if the Governor called an end to it. And the $300-a-week kicker is supposed to end Sept. 5, anyway. The House didn’t see the value in pulling back HB 4434 and raising a benefit long-term for something that was going to expire around Labor Day.
Whitmer kept hope alive in her veto letter, adding that if addressing the state’s childcare shortage can be added to the mix, she’d like a deal even more.
The Governor wants to spend more than $1.4 billion toward childcare so working parents have people who can take care of their kids while they’re working to put bread on the proverbial table.
“I am open to discontinuing the enhanced UI benefit early if this Legislature swiftly allocates federal funding for childcare and raises the UI benefit commensurate with that of neighboring states,” she wrote in her veto letter.