Skip to main content
Bridge Michigan
Michigan’s nonpartisan, nonprofit news source

Michigan benefited from COVID stimulus and jobless aid. Now what?

Michigan emerged from the early days of the pandemic in better economic shape than many thought possible: Personal income increased, state tax revenue followed and state officials even were able to pass a budget with funding increases.

Economists credit federal stimulus money and enhanced unemployment benefits among the reasons. But now both hang in the balance in Michigan, raising questions about the financial impact on the state’s residents and businesses.


“It’s clear that uncertainty reigns in Michigan,” said Eric Lupher, an economist at the Citizens Research Council, a nonprofit public affairs research organization.

The Michigan Supreme Court ruled on Oct. 2 that Gov. Gretchen Whitmer’s executive orders after April 30 were invalid. Unclear now is whether jobless benefits will remain seamless for many of the 1.18 million residents with active claims. Extensions of unemployment benefits that had been done under executive order now need to be codified by the Legislature, Whitmer said, but no date for that was set by Friday morning.

Related stories:

Then, on Tuesday, negotiations for another federal stimulus bill ended, with President Trump saying a deal would have to wait until after the Nov. 3 election. By Wednesday, Trump was calling for a series of individual bills that would target areas like airlines and personal stimulus checks instead of a wide-scale relief package like the $2.2 trillion CARES Act that passed quickly on March 27 with bipartisan support. 

Timing on any federal action also appears unclear, though it was reported Friday that a new White House plan is coming.  Most GOP senators have opposed another large stimulus package, according to an Associated Press report. The Democrat-controlled House of Representatives passed a $2.2 trillion plan on Oct. 1 by a 214-207 vote after 18 Democrats voted against it.

The CARES Act passed in March established the Paycheck Protection Program small business loans to prevent layoffs, broadened eligibility for unemployment benefits and extended their duration, and set a $600 per week extra payment for the jobless through July. Gov. Whitmer, through executive orders, made sure Michigan fully participated. 

Many economists praised the moves, noting that the pandemic’s unique and dramatic effect on the economy. 

“You can give both the [federal government] and the state credit,” said economist Lou Glazer of Michigan Future Inc. “They acted boldly. That extra money is what allowed the economy to stay reasonably afloat during the pandemic.”

Inaction or delays on further steps will be felt by individuals, which is one cause for concern, said Glazer. Unemployed workers had been promised a financial safety net as unemployment soared and longer-term job losses affected hundreds of thousands of Michigan workers, many who had held low-wage positions. About 31 percent of Michigan households now are having difficulty paying for usual household expenses, according to new U.S. Census Bureau data. 

“There’s a whole boatload of people who’ve lost jobs through no fault of their own who will take a big hit,” he said. 

But the risk reaches across the economy, Glazer warned. Without more federal action, “The whole economy is going to get weaker and it’s going to stay weaker longer.”

Still struggling

Fifty-five semi-trucks per month roll onto the roads of northeast Michigan, from Flint to the Mackinac Bridge, delivering to temporary drive-thru food pantries.

Supplemental food programs tell the story of the pandemic for the residents of 22 counties serviced by the Food Bank of Eastern Michigan, said its president, Kara Ross. In a normal year, the food bank helps 14 percent of its service-area population. As of today, it’s topping 39 percent.

“Unfortunately, as the jobs have declined … we’ve just had so many more people connecting with the food pantry for the first time,” Ross said. Many are people who have worked two or three part-time jobs, often in restaurants or retail settings. If they’re back to work, Ross said, they have fewer hours.

Others are not back to work. Michigan’s unemployment rate was 8.7 percent in August, according to the U.S. Bureau of Labor Statistics, down from 24 percent in April. However, August’s rate was unchanged from July, showing an overall slowdown in the rate of jobs regained.

According to the Bureau of Labor Statistics on Thursday, another 840,000 Americans filed initial unemployment claims by the end of last week. The number has fluctuated close to that level for the past month. In Michigan, initial clams from 15,915 people represented a drop of 3,845 from a week earlier. More than 2.3 million state workers have filed for jobless benefits since March.

Job recovery during the pandemic has been stronger in high-wage jobs. Nationally, the decline for jobs paying more than $60,000 per year is 1.6 percent, according to Opportunity Insights. However, low-wage positions remain down 16 percent.

“Despite the recent gains in confidence, a substantial share of the population still suffer from persistent job losses and income decline,” said economist Richard Curtin in his report for the September Surveys of Consumers, based at the University of Michigan.  “Without a renewed federal stimulus and enhanced unemployment payments, the income gap will only widen.”

Michigan’s unemployed can file unemployment claims through two tracks: Traditional unemployment is paid through the Michigan Unemployment Trust Fund from money collected by employers. During the pandemic, a range of other workers – including part-time workers and the self-employed – were allowed to file through the federal Pandemic Unemployment Assistance (PUA). 

Until the end of July, the CARES Act added $600 per week to many jobless claims. After that expired, many in Michigan qualified for six weeks of $300 additional payments from the Lost Wages Assistance plan, starting in August.

With no stimulus, benefits revert to a maximum of $362 per week. As of August,  the average weekly benefit amount in Michigan was $298. For PUA, the amount is about  $200.

That amount may not be enough for people receiving benefits to continue to pay their household bills, and it could extend the recovery for many Michigan families, Ross said. The Food Bank is preparing to operate at expanded volume “well into next year,” she added.

Northeast Michigan was hard-hit early on with pandemic job loss. Ross said the region will show the economic ripple effects if unemployment payments are limited or reduced, either through state or federal actions. 

“When people can’t get back to work and make money, they’re not supporting the other types of businesses in our community,” Ross said.

“I worry there’s not going to be as many businesses or jobs available, in our rural communities especially.”

Businesses wait 

Stores and restaurants in downtown Ferndale are doing what they can to stay open, said Lena Stevens, director of the city’s Downtown Development Authority. Restaurants are expanding patios, while retailers turn to online sales. By the holiday season, they’ll collaborate in a shop-local effort to try to attract more customers to the trendy city on Detroit’s northern border.

But many have nothing but questions about policies and directives, Stevens said. That ranges from state requirements on COVID-19 protections to whether federal PPP loans will be forgiven.

“We’re telling folks: Document everything,” Stevens said. “From financial decisions to how you are testing employees to how you are keeping everyone safe. “

Increased spending in Michigan over the summer, including through tourism, helped erase a projected budget deficit. 

But overall, many of the state’s businesses still are struggling to regain lost business during the pandemic. A recent survey by the Small Business Association of Michigan said 10 percent of owners still fear for their business’ survival. Seventeen percent fear sales losses of 50 percent or more for the year. 

Yet at a time when business leaders say they need clarity from the government, they’ve been thrown into confusion. Ongoing concerns about the criteria for stricter coronavirus guidelines haven’t been resolved by the state Legislature yet, and requests for more federal aid are going unanswered.

By late August, SBAM President Brian Calley had hopes for a new round of business stimulus, possibly targeted toward the most hard-hit, including places that still hadn’t been allowed by the state to reopen, like movie theaters and bowling alleys.  Forgiveness of the smallest PPP loans could be a meaningful option, he said. 

PPP “ended up being a highly effective tool, but it was designed for a few months,” Calley told Bridge Michigan in late September. 

His hopes for more business relief had faded before President Trump’s announcement this week. Even with the ongoing pandemic recession, Calley said, “we’re just in a holding pattern until after the election.

“We don’t really have any expectations that anything will pass before the election.”

Yet on Wednesday, one hopeful step emerged: The Small Business Administration and U.S. Treasury Department announced a one-page application for PPP loan forgiveness for businesses with less than $50,000 in revenue. 

Lupher, of the Citizens Research Council, said a targeted approach for new stimulus would make sense, like adding payments to unemployment benefits and allowing more PPP loans to become grants, but “making sure they get into hands of people who need them most.”

Personal savings overall went up during the pandemic, Lupher said, as upper-middle-class recipients of stimulus payments didn’t spend them. As a result, all of the money didn’t circulate in the economy. Meanwhile, credit card debt is increasing, which he said suggests that people are turning to them for necessities. 

“That really suggests a blanket program of sprinkling money across the country  .. wouldn’t have as much impact on the businesses and people who need it the most,” Lupher said. 

Meanwhile, the federal government still has to consider what it’s spending, said Donald Grimes, economist at the University of Michigan. 

“You can’t continue to just give everybody money,” he said. “The government can’t run a $3 trillion budget deficit forever.”

Yet offering $300 to $400 per week to the unemployed through the end of the year could help to steady the economy as efforts continue to develop a vaccine and to get the virus under control, Grimes said. 

On a state level, codifying the Whitmer executive orders that extended unemployment benefits appear to fall to the Republican Legislature and Democratic governor’s office working out a vote. So far, tensions already have flared. 

“When you look at how … the executive and legislative branches have gotten together for the last year and half, it’s hard to believe anything productive will come out of it now,” Lupher said.  “They sure seem to be at odds with each other. That doesn't bode well for the rest of us.”

How impactful was this article for you?

Business Watch

Covering the intersection of business and policy, and informing Michigan employers and workers on the long road back from coronavirus.

Thanks to our Business Watch sponsors.

Support Bridge's nonprofit civic journalism. Donate today.

Only donate if we've informed you about important Michigan issues

See what new members are saying about why they donated to Bridge Michigan:

  • “In order for this information to be accurate and unbiased it must be underwritten by its readers, not by special interests.” - Larry S.
  • “Not many other media sources report on the topics Bridge does.” - Susan B.
  • “Your journalism is outstanding and rare these days.” - Mark S.

If you want to ensure the future of nonpartisan, nonprofit Michigan journalism, please become a member today. You, too, will be asked why you donated and maybe we'll feature your quote next time!

Pay with VISA Pay with MasterCard Pay with American Express Pay with PayPal Donate Now