Michigan’s jobless benefits are dated. The claims system is plagued with problems. So what can be done?

Susan J. Demas

Michigan last updated its maximum state unemployment insurance (UI) benefits in 2002, the same year Avril Lavigne released her album “Let Go” and Congress passed a resolution that authorized the Iraq war.

Almost two decades later, an unprecedented pandemic’s disruption of the U.S. economy has left millions of Americans jobless or underemployed. In Michigan, COVID-19 has shed a light on the state’s systems for distributing UI benefits — and some experts say they are broken ones. 

The cap on how much qualifying Michiganders can receive per week while unemployed is $362. When the maximum amount was last updated in 2002, $362 was 58% of the average weekly wage. But in 2020, $362 is only 35% of the average weekly wage. 

Compared to other states, that pre-established $362 entitlement is small and it was in need of an increase long before the pandemic even began, according to experts. 

“Three hundred and sixty-two dollars is extremely low,” said Rachael Kohl, director of the Workers’ Rights Clinic at the University of Michigan. “We’re definitely on the lower end of the country [for state benefits].” 

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Kohl laid out what unemployed workers in other states can get: $730 a week in Minnesota, $647 in neighboring Ohio and $573 in Pennsylvania. 

Michigan’s jobless benefits cover the lowest percentage of average weekly wages of all Midwest states. For example, Iowa’s program would cover 63% of the average weekly wage in Michigan, according to Peter Ruark, a senior policy analyst with the Michigan League for Public Policy think tank.

All eyes are on the federal government as enhanced unemployment benefits are set to expire Friday. 

During the pandemic, Michigan, in particular, has grappled with high rates of unemployment: 14.8% in June, 21.3% in May and a record 22.7% in April, the highest it’s been since at least 1976. The national unemployment rate also jumped those months: 14.7% in April, 13.3% in May and 11.1% in June.

In March, Congress passed the $2.2 trillion CARES Act, which, among other things, allocated $600 a week in supplemental federal funding to workers who lost jobs because of the pandemic. Adding that extra $600 to Michigan’s $362 a week means up to 93% of the average weekly wage is covered.

Prior to the pandemic, qualifying unemployed Michiganders could claim benefits for 20 weeks. Gov. Gretchen Whitmer also issued EO 2020-76, which allows for individuals who filed for unemployment benefits between March 15 and April 18 to claim up to 26 weeks. Through the CARES Act, states were also allowed to extend benefits by up to 13 weeks, putting Michigan up to 39 weeks. 

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But the extra $600 installments are only payable up to July 25. Lawmakers and constituents are pressing Congress to pass additional relief legislation, citing a pandemic that is nowhere near finished taking a toll on the national economy. 

In a July 24 news release, the UIA warned about benefits coming to an end as states do not have the ability to extend the federal program — only Congress can. 

Efforts to hike Michigan’s maximum benefit

What about previous efforts to raise that $362 maximum weekly UI amount? Why has it remained unchanged since 2002? 

Well, it’s complicated. 

“Michigan statute is severely behind the rest of the country as far as what we have to offer and who we cover,” Kohl said. 

State House Democrats in 2019 introduced a package of 10 bills that would have raised the maximum entitlement amount to $542 a week. The lawmakers behind the package said the legislation was intended to bolster Michigan’s standing in unemployment benefits offered, as it’s behind other states. 

But the GOP-led Legislature has not taken action.

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A similar effort happened in 2017, when state Senate Democrats introduced a bill to raise the weekly entitlement to $603 and tie the average weekly wage to the rate of inflation. But the legislation didn’t get far. The GOP-aligned Michigan Chamber of Commerce went so far as to call the proposed amount “flat out irresponsible.”

“This is something that’s been a lingering debate – how we should update the statute on this,” Kohl said. 

The back-and-forth has kept the efficiency of Michigan’s Unemployment Insurance Agency (UIA) behind other states, she added. Michigan also has one of the lowest UI recipiency rates, meaning the total amount of people who actually receive benefits compared to the total amount of people who are unemployed is about 25%, Kohl said. 

“This is what we have. This is our safeguard, and we haven’t invested in it,” Kohl said. “Many states also haven’t invested in it. We only invest in it when it’s a time of crisis and then we’re sad when things are not working perfectly.”

State UIA claims filing systems plagued by problems

Michigan saw record unemployment filings starting back in April, which flooded the agency set to handle them. Whitmer on March 23 issued a stay-home order — part of efforts to halt the spread of COVID-19. That caused businesses and various sectors of the state economy to slow or stop operations and led to a spike in jobless claims.

A bevy of users trying to claim benefits caused the UIA’s website to crash. MARVIN, the automated computer system that lets people connect to UIA by phone, also got an influx of individuals trying to file claims. 

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UIA reported getting up to 150,000 calls a day for a time in April, clogging phone lines as the state unemployment rate reached its highest point. Pre-pandemic, the agency only received between 5,000 and 7,000 calls a day.

The state’s much-criticized online automated filing avenue — MiDAS, a.k.a. the Michigan Integrated Data Automated System — also created confusion. MiDAS is programmed to be “overzealous” in finding reasons to deny people benefits, according to Kohl.

Kohl says she has seen people asked to prove their eligibility at every turn and sometimes, even after doing that, people who are eligible under state statute are denied “on no real basis.” If a person is improperly cut off from benefits, a human has to go in and override MiDAS, Kohl explained.

“That’s the biggest holdup in Michigan. The system has been in place since 2013,” Kohl said. “We are hearing more and more and more about people seeing these weird things showing up on their Michigan Web Account Manager (MiWAM).”

The U.S. Secret Service in May had warned states about an international crime ring’s attempts to commit sweeping unemployment fraud during the COVID-19 pandemic. The state Department of Labor and Economic Opportunity — which includes the UIA — went so far as to appoint a special fraud advisor to act as liaison to a task force of Michigan Attorney General Dana Nessel that specifically investigates instances of unemployment fraud.

Problems started under Snyder

But it was MiDAS that ended up causing a majority of headaches about fraud cases in Michigan.

In June, the much-disputed computer system flagged 540,000 accounts for potential fraudulent activity. Payments to unemployed individuals halted for weeks as the system demanded additional documentation to verify their identities. 

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The same data system caused issues long prior to the pandemic. In October 2013, then-Republican Gov. Rick Snyder implemented MiDAS for an initial $47 million. By design, MiDAS caused the number of unemployed Michiganders who qualify for benefits to decrease, Kohl said. 

Then the UIA discovered they had wrongly accused around 40,000 out-of-work individuals of fraudulently seeking unemployment insurance between 2013 and 2015.

Several Michigan residents were charged with fraud and required to repay benefits at a 400% penalty. A state review of MiDAS later found that in 93% of those cases, it had erroneously accused claimants of fraud. The system is at the center of multiple ongoing lawsuits because it made those false fraud claims, resulting in several residents to lose their houses, cars and savings. 

After that, the UIA started requiring employees to review the fraud determinations before they were acted upon.

“We just now see it with this magnifying glass and how many entitled people are being cut off unnecessarily due to its programming,” Kohl said.