Unemployment Crisis Could Drain Michigan’s $4.6 Billion Fund

The coronavirus pandemic has impacted almost every industry across the country and has generated unprecedented levels of unemployment.

“It took a decade to build up this very healthy fund, and it also took a decade to pay off the debt from the Great Recession.” — Chad Livengood, Crain’s Detroit Business

Experts and government officials are now warning that unemployment rates are expected to stay at recession level percentages through the end of the year. This massive, sustained influx of unemployment cases could mean Michigan’s $4.6 billion unemployment fund may run out of money in a matter of six months.

Listen: What Happens If Michigan’s Unemployment Fund Runs Dry?

Guest

Chad Livengood, senior editor at Crain’s Detroit Business, recently wrote a piece on Michigan’s hemorrhaging unemployment trust fund and what happens if it dries up. He says Michigan had one of the healthiest unemployment trust funds in the country prior to the pandemic, in part because of the state’s low benefit amount.

“It took a decade to build up this very healthy fund, and it also took a decade to pay off the debt from the Great Recession,” says Livengood.

If the fund does indeed dry up come summer, the state will have to borrow money from the federal government. Livengood says this borrowing will most certainly create a hangover period when it comes time to pay off the federal debt. The ongoing crisis has instigated a debate on the current unemployment insurance structure in Michigan, leading a group of state lawmakers to propose an overhaul to the existing system.