Unemployment Insurance Task Force Initial Findings & Recommendations, Small Business Association of Michigan

Summary

Unemployment Insurance Task Force Initial Findings & Recommendations, from the Small Business Association of Michigan. The document says the association assembled a task force of small business owners and their human resources staff to serve as the source of employer perspective for the UIA Modernization Workgroup. It states that Michigan has more than 170,000 small businesses with employees and that small businesses provide over $85 billion in payroll each year. It lists four goals: Increased Accountability, Simplicity and Efficiency, Encourages Work, and Minimizing the Consequences of Long-Term Unemployment, each with a description, followed by additional considerations.

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UNEMPLOYMENT INSURANCE
TASK FORCE
INITIAL FINDINGS & RECOMMENDATIONS




                     Small Business Association of Michigan
                            120 N. Washington Square Suite 1000
                                              Lansing, MI 48933
                                                www.SBAM.org
Task Force Background
Small businesses provide diversity and resiliency to Michigan’s economy. In most
communities, the landscape is dominated by small businesses. According to the US
Small Business Administration’s 2022 state profile, small businesses provide nearly half
of all jobs and over $85 billion in payroll to Michiganders each year.

Michigan is fortunate to have more than 170,000 small businesses with employees; all
of whom pay into the unemployment system. In recent years, business owners have
faced enormous and unprecedented challenges requiring perseverance and
determination to survive. The unemployment system has been a source of frustration
during these times as business owners often felt as though the system created a
deterrent to working, especially during the pandemic.

Small business owners want to be a partner with the Unemployment Insurance
Agency (UIA), ensuring that premiums are used in an effective and efficient manner,
free of fraud and abuse. Unemployment Insurance is an employer-paid benefit
provided to employees and therefore small business owners would like to be treated
like customers of the UIA.

Ongoing struggles regarding claimant accountability, disputed claim resolution,
system complexity, lack of responsiveness, fraud, and increased assessments take time
and energy away from running a small enterprise. Some employers even report that
they give up on challenging bogus claims because it costs so much time, money, and
energy to work through the system and achieve a fair resolution.

The Small Business Association of Michigan has assembled a task force of small
business owners and their human resources staff to discuss experiences, identify
challenges, and propose solutions to problems within the existing system. That task
force will serve as the source of employer perspective that SBAM brings to the UIA
Modernization Workgroup.




                  UI Task Force Chair                             SBAM
                  Mark Ware                                       President & CEO
                  CEO, Mission Point Resort                       Brian Calley
Four Overarching Goals
Increased Accountability: Create an accountable unemployment system that can
efficiently identify ineligibility through partnerships with employers and more
robust work search verifications.

Description: Employers report unusually high levels of interview no-shows, refused job
offers and first day no-shows. Additionally, some prospective workers are more
aggressive on requesting to be paid in cash or “under the table” to avoid
documentation of employment. There are also frequent reports of employees who
intentionally get fired or make themselves unlikely to be hired in an interview. It is
believed that such behavior is often prompted by the desire of applicants to remain
eligible for unemployment until benefits are exhausted.

Employers desire to find a way to report such cases (even when the prospective
employee is not a claimant against their business) to ensure that they are not
continuing to draw unemployment benefits after they have turned down a job offer or
have otherwise made themselves unavailable for work.



Simplicity and Efficiency: Create an efficient unemployment system that is easy for
employers to use, quickly responsive to questions, provides live staff to talk to with
reasonable hold times, and is efficient at reviewing and resolving disputed eligibility
and fraud claims.

Description: Employers report that they feel like the system is stacked against them.
Questionable or disputed claims are paid before eligibility is fully examined and cases
that are clearly ineligible tend to get caught in bureaucratic loops going months
without resolution. The online system is cumbersome and cluttered with hundreds or
even thousands of messages and requires significant staff time to monitor and
respond. Paper notices are often received after the date a response is required, which
results in even more delays in resolution of the underlined issue.

Employers desire to be treated more like customers who are paying for a benefit for
their employees. They want to be able to respond to and resolve ineligible and
fraudulent claims quickly - with a person when necessary - and have access to a
fair/impartial appeals process.
Encourages Work: Create an unemployment system that encourages and facilitates
work.

Description: The unemployment insurance system is an important safety net for an
employee who loses their job through no fault of their own. However, benefits and
eligibility should be designed in a way that encourages employees to minimize time
on the system as a true stopgap between other employment opportunities.

There is a substantial disconnect between the severe workforce shortages employers
in Michigan are facing and those who experience chronic unemployment. Identifying
and understanding the root causes of chronic and long-term unemployment and
targeting remedies and services to address them would help citizens far more than
extending the size or duration of unemployment benefits.

Minimizing the Consequences of Long-Term Unemployment: Create an
unemployment system that helps people minimize the adverse impacts of being
unemployed by minimizing the time a person spends on the system.

Description: Long-term unemployment has significant adverse effects on an
individual’s finances, mental and physical health, and the chances of finding
reemployment. A wide body of evidence shows that the longer an individual’s period
of unemployment extends, the further their skills erode. That erosion, also referred to
as the “depreciation of human capital,” increases as time passes, meaning that the
potential wages the unemployed can earn upon finding a new job, and even the
chances of finding a new job, decrease the longer they remain unemployed.

Being out of work also reduces a worker’s “social capital”— the network of business
contacts that makes finding new, well-paying jobs easier. Combined, this means that
the longer a worker is unemployed, the less likely he or she is to find employment and
more likely they are to separate from the workforce entirely. Even if they do beat the
odds and find employment, the long-term unemployed tend to earn less than similar
jobseekers who quickly reentered the workforce.

In addition, the stress of being out of work for an extended duration can influence an
 individual’s physical and mental health, family dynamics, and the well-being of his or
her children, which has consequences for communities. Involuntary job loss is a
stressful situation that generates a variety of immediate problems, which are further
compounded by extended periods of unemployment. Each week out of work means
more lost income for the household and increased feelings of anxiety, depression,
demoralization, physical pain, and even chronic illness for the individual. As household
income drops, so does the quantity of quality of the goods and services the worker’s
family can purchase. If this occurs to many families within a community, the demand
for public services will increase in conjunction with a decrease in the tax base
necessary to fund those services.
Additional Considerations

 Certain industries, especially those with planned seasonal layoffs, need a system
 more specialized to the nuances of those industries.

 Training program capacity (those required to maintain eligibility for unemployment)
 should be able to accommodate demands and seasonal fluctuations.

 Third party payroll vendors are not able to fully utilize the online system on behalf of
 their customers and must instead resort to paper communications though the mail
 system in some instances.

 Layoffs caused by COVID executive orders were not supposed to be included in
 experience ratings, but often are.

 Provide clarity regarding UI eligibility at the predetermined end of a paid internship.


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