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The Performance of Michigan’s Unemployment Insurance System

The project: Unemployment Insurance (UI) has historically provided stability to families through periods of economic hardship, keeping 3.2 million individuals out of poverty nationally in 2010. Since then, a variety of reforms reduced the duration of benefit eligibility by six weeks and restricted eligibility for UI, spiking the rate of claims denials to 41% by 2016. These changes have denied benefits to thousands of unemployment insurance claimants. The number of unemployed workers who are applying for UI was decreasing before the COVID-19 pandemic. 

This project assesses Michigan’s UI system compared to the rest of the nation. It concludes that Michigan’s UI responded to the COVID-19 crisis well compared to many other places, but that this response was hampered by long-term structural weaknesses in the state’s system. Many of the changes that helped Michigan weather the worst of the crisis were temporary and highlight a missed opportunity to provide lasting improvements to a flawed system.

The process: This project scores jurisdictions across four broad categories of unemployment insurance performance: 1) Essential Factors; 2) Workforce Coverage; 3) Claimant Benefits and Protections; 4) COVID-19 Response and Administration. These factors are chosen to measure various mechanisms through which UI systems can succeed or fail in providing qualified applicants benefits in a timely and fair manner. Higher scores across these measures indicate that a state’s UI system is relatively more claimant-centered, meaning that the system provides meaningful support to the largest possible range of workers who are out of work through no fault of their own.

Results: Michigan’s UI system consistently ranks as one of the weakest UI programs in the country. In reviewing the first three categories above about the state’s programmatic variables, Michigan was in the bottom five jurisdictions. However, Michigan did very well in response to COVID-19. Because Michigan was a leader to respond and to give out benefits at the beginning of the pandemic, Michigan’s “overall” score was near that of the average state’s score. However, this masks the fact that Michigan was in the top three states in the more temporary policy measure (COVID-19 response) but was second to last in the nation in the longer-term policy measure of essential factors and the bottom one-third in terms of workforce coverage and claimant benefits & protections.

  • Michigan has serious long-term structural issues in terms of its essential factors. These factors include the weekly benefit amount available to claimants, the number of regular weeks of compensation available, the taxable wage base, and rework requirements after a separation.
    Michigan was the second-worst jurisdiction across these dimensions.
  • Michigan was in the bottom one-third in the structural issue of how much of the workforce is covered. While Michigan performed well in terms of having a robust workshare program, the UI system is the second-worst jurisdiction in terms of covering low-earning workers. Michigan also performed poorly in terms of covering part-time workers and having a well-functioning employer chargeability system.
  • Michigan performed poorly in terms of other claimant benefits and protections. This factor includes medical leave availability, dependent allowances, how the state handles potential fraud, and how modernized the UI system is.
  • Michigan’s UI system responded well (in the top three), but with temporary policies, to the COVID-19 crisis. Michigan was among the first states to implement Pandemic Unemployment Assistance and the state’s governor was proactive in broadening worker protections. For instance, the governor temporarily expanded benefit weeks from 20 to 26 weeks, waived the work-search requirement, and broadened the reasons for refusing work in light of COVID-19. While infrastructure issues prevented the state from scoring higher, Michigan made the most out of its structurally-weakened system.

Rachael Kohl, U-M Law School