Michigan Unemployment Payments May Fuel More Unemployment
Michigan has led the nation in unemployment for 19 months. Experts fear this will put even more strain on Michigan businesses, slowing hiring even more.
As of February 2010, Michigan owed the federal government $3.5 billion it has borrowed to help pay unemployment benefits, according to the state.
Michigan paid $7.1 billion in benefits to the 680,000 unemployed Michigan residents in 2009 and had to borrow $2.4 billion to cover that year's expense. That state's unemployment rate was 14.6 percent in December 2009, the highest in the nation. Nevada was second at 13.0 percent.
In Michigan, businesses carry the entire burden of paying unemployment benefits for the first 26 weeks and then share the cost with the state for the first 13-week extension. The federal government pays for its extensions as part of the stimulus package.
Businesses will be taxed more to pay back the billions they owe the federal government.
"Unemployment insurance taxes are payroll taxes. As such, they are disincentives to hire workers and they diminish the take-home wages of existing employees when they are increased," said Charlie Owens, state director of the National Federation of Independent Businesses. "It is a certainty that these taxes will increase to cover Michigan's debt to the federal government and this will exacerbate our high unemployment, creating a vicious cycle of decline."
The state has paid out more in benefits than it has collected in taxes to pay those benefits since 2001, said Norm Isotalo, spokesman for the Michigan Department of Energy, Labor and Economic Growth. The state expects it will have to borrow another $1 billion through 2010.
Fred Radtke, president of F.A.R. management, an unemployment consulting business in Clinton Township, said the federal bill will linger for years.
"I would be shocked, absolutely shocked if we could pay this off in five years," Radtke said. "I've been doing this 32 years. This is as bad as I've ever seen it."
Radtke said in some instances, businesses could see their unemployment payments per employee rise from $56 to $140 in three years.
"It's a big problem," Radtke said.
It is correct EUC
It states that in the article, the the Feds pay for their extension per the stimulus pkg.
Michigan Unemployment Payments May Fuel More Unemployment
As a former business owner during the Carter years, I clearly remember the pain in the 1980’s as unemployment payments were a burden to our business. This is something that has not been discussed by the media during this repeat of another liberal agenda 30 years later.
The next time you hear of another unemployment extension just know that they don’t grow on trees. Senator Jim Bunning may be right and reminds me of Joe Wilson hollering, “You lie”. We must first have a revenue plan before we spend more money or the financial hole will become so deep that no lifeline will save us without severe consequences. This seems to be an issue that the Tea Parties are in position to constantly remind the public even if our “PayGo” President has forgotten what he so recently signed into law. It’s also something the Republican Party should be supporting but they seem to have left one of their own with little support. Is this a signal that many of the currently elected GOP members are no more interested in getting spending under control than the Democrats?
If one thing is for sure, the Tea Parties and the Republican Party are not one in the same. At least the teapartiers understand fiscal responsibility.
EUC
The article is factually incorrect. All Federal extensions are funded 100% by the Federal government.
Mr.
The unemployment situation is a bad as it has ever been since the "great depression". We all know this. Your article points out the problem that unemployment payments are costing businesses and government more and more. But what do you suggest? The 13 week extention that the U.S. Senate just OK'd last night will cover only that short time. There are people who have been out of work for one and two years. They will probably still be out of work after the 13 weeks! What can government and business do????
Anti-Business
This is completely consistent with the Granholm administration's anti-business (especially, small businesses) stance from the time the Governor assumed office in 2003. Moreover, by accepting "stimulus" dollars, she has roped the State and its citizens into infinite, unfunded expansions of various entitlement programs.
Ideological differences or not, how can anyone with an IQ above room temperature make such decisions and expect to achieve a positive result for Michigan's businesses and workers? Is this mere ignorance, willful misconduct, or just a case of passing the problem off on subsequent generations?
If I could sell my home, I would leave this State in a heartbeat. If things get much worse I may have to board it up, take it on the chin, and simply move.
Honor of..
For the honor of doing business in Michigan I had to pay, like every other business, an additional 0.3% on payroll even though I'm a positive reserve balance employer. If Michigan's governor and legislature did a better job of growing the economy I could put that extra tax payment towards higher wages or more employees. Instead employers are punished for being in this state. I could move my business to Texas and immediately get a 4.35% wage increase simply because they have no state income tax.