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Thursday, April 16, 2020

Officials predict Michigan's unemployment funds could run out by July

Posted By on Thu, Apr 16, 2020 at 2:50 PM

click to enlarge BELISH / SHUTTERSTOCK.COM
  • Belish /

Since the coronavirus arrived in Michigan last month, the state has become one of the nation's deadliest hotspots for the virus, and in Detroit, the coronavirus has claimed more lives than in two years of homicides.

Last week, Gov. Gretchen Whitmer extended her stay-at-home order through April, which closes all but "essential" businesses to slow the spread of the virus.

Already, 1 in 4 of Michigan's 4.6 million workers have filed for unemployment since March, and nationwide, more than 22 million people have applied for unemployment in a four-week span. And there may be more grim news on the horizon as officials and economists project that Michigan's unemployment funds could run dry by July, according to a report from Bridge magazine.

According to Christopher O'Leary, a senior economist at Kalamazoo's Upjohn Institute, the Michigan Unemployment Trust Fund could be close to nearly $15 billion in the red come July, despite the fact that the state had $4.6 billion in its unemployment reserve as of last year, making it the third-highest in the nation.

While those Michiganders who are out of work will continue to receive their full unemployment benefits, it is suspected that business taxes will be increased to pay back what Michigan will be forced to borrow from the CARES Act, making it difficult for businesses to rehire its workforce, which will likely delay the rate at which the state's wounded economy can heal.

One state official, Jason Moon, communications director for the Michigan Department of Labor and Economic Opportunity, says depleting the fund by July is a “worst-case scenario.” But the department's director, Jeff Donofrio, warns that Michigan hasn't “seen the peak of this” yet. According to Bridge, analysts for the Michigan Senate estimate that the state's fund could pay out “$176.7 billion per week for 26 weeks” but the growing number of claims could force that number to increase by a massive $100 million per week beyond that.

Michigan's small businesses could suffer worst of all. As of Wednesday, the Small Business Administration claims it has burned through all of its allocated $349 billion funding for its Paycheck Protection Program, The New York Times reports. The program, which was introduced earlier this month, was intended to keep small businesses of 500 or fewer employees afloat, to be used to keep people on payroll and maintain general operational costs. The SBA reports that it has approved 1.4 million loans, tying up $315 billion.

Gov. Whitmer addressed the state's glaring employment concerns in a statement for Bridge, in which she said she and her administration are “looking at it.”

“We’re mindful of the need,” she said. “The federal government is working to make sure that we’ve got the resources to meet those needs as well.”

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