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Jobless Michigan workers scrambling with federal unemployment as benefits set to expire

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Without the federal unemployment benefit expansion of $600 per week, the 12% of Michiganders who are out of work will receive a maximum of $362 dollars a week to pay for rent, food, healthcare and insurance. (WWMT)

More than 500,000 unemployed Michiganders are going to see their benefits slashed by more than 60% as the federal unemployment expansion expires.

Under the CARES Act the federal government provided an additional $600 per week benefit to people receiving unemployment insurance through July 31, 2020.

Without the expansion, the 12% of Michiganders who are out of work will receive a maximum of $362 a week to pay for rent, food, healthcare and insurance.

Chris O’Leary, a senior economist at the W.E. Upjohn Institute for Employment Research, said the expanded benefit helped prop up the economy after tens of millions of people nationwide lost their jobs due to the pandemic.

“It was a tremendous macro-economic stimulus,” he said. “When money is given to people on unemployment benefits, they’re working people and they’ve lost their incomes and every dollar that they receive they’re going to spend.”

Research shows that the expiration of could lead to a mass eviction crisis as people lose money to pay rent. A study by the COVID-19 Eviction Defense Project estimates more than 600,000 people in Michigan are at risk for eviction by the end of 2020.

A common argument against extending the benefits is that it discourages people to work. A study released this week by Yale economists shows the $600 benefit had no impact on employment.

O’Leary said there haven’t been enough places hiring to see an impact.

“When income replacement is much above 50% there is a work disincentive,” he said. “But again is there labor demand? Are there jobs there?”

Republicans and Democrats have both put forward separate plans, but there are a number of significant differences that experts aren’t confident they would resolve before the benefits expire.

With many businesses still shuttered and Michigan’s unemployment rate sitting at around 12% O’Leary said it’s important for legislators to find a compromise to extend expanded benefits and ensure those hurt by the pandemic can pay their bills and keep the economy afloat.

“If that can be continued through the end of the year, past the election so it’s not a political issue the economy can be maintained and households can keep paying their bills,” he said.