Editorial: Wrong time to increase jobless benefits

Looking to the future, Michigan's small business owners are worried about a lot of things, including inflation, tighter regulations and a dearth of talent. But near the top of the list is concern the Democratic controlled Legislature will deliver on a promise to increase unemployment benefits.

The Small Business Association of Michigan surveyed its members and found considerable anxiety over Democrats regaining their pro-labor policymaking fervor now that they have restored their House majority and are in back in full control of the Legislature.

Among the items of unfinished business is extending unemployment benefits to 26 weeks from 20 weeks and increasing the maximum weekly cash benefit to $602 from $362. They also want an annual automatic inflation adjuster.

Three-quarters of SBAM members think that's a terrible idea, and they're right.

Jobless benefits were extended during the COVID-19 pandemic largely with federal dollars. A study from the National Bureau of Economic Research determined the fatter unemployment checks slowed the return to work as the crisis ended. States that opted out early from the increased benefits recovered their workforces more quickly.

The lag in workers returning to their jobs helped create the labor shortages that fueled record inflation.

Michigan policymakers should be informed by that experience. This state continues to have more job openings than people willing to fill them, according to the Bureau of Labor Statistics. Workforce participation here is at 61.9%. While Michigan is leading the nation in the expansion of workforce participation, it still ranks in the lower third of all states.

Lawmakers must avoid enacting policies that discourage people from taking a job when one is available. Nor should they pass measures that add to the cost of doing business in the state. It is employers who bear the cost of unemployment benefits.

The SBAM survey found 90% of business owners say they are experiencing higher costs this year.

“SBAM’s membership has enjoyed a relatively stable economy in the past several years and been able to staff up and plan ahead for a rainy day,” said Brian Calley, president and CEO of the Small Business Association of Michigan, in a statement. “The results of our latest survey show that rainy day could be coming sooner rather than later, as inflationary pressures and a lack of available labor continue to impair small business owners.”

Calley adds there is no justification for adding to jobless pay-outs.

“It’s certainly an odd time to consider increasing Michigan’s unemployment benefits, when our state’s unemployment rate remains at record lows,” he says.

Two-thirds of small business owners report having difficulty finding enough talent to keep their enterprises fully staffed. When businesses are unable to expand or even operate at full capacity, it is a drag on economic growth. It also adds to inflation pressures, since employers have to pay higher wages to attract workers. Sixty percent of the businesses said they've had to offer wage hikes to keep and attract employees.

Gov. Gretchen Whitmer has said her priority for 2024 is to grow economic opportunity in Michigan by attracting more jobs and talent.

Adding to the cost of doing business in the state works against that goal.