The safety net and employment

Conventional wisdom seems to be that a generous safety net reduces the number of people that work. The thinking goes if you pay people enough not to work, they won’t seek and find work. Acting on those beliefs, Michigan, particularly in the last three years, has slashed the state’s main safety net programs: cash benefits, food stamps and unemployment insurance.

Those cuts have made life more difficult for low income Michiganders. What it hasn’t done is increased the proportion of Michiganders with a job. As we explored previously from the month before the Great Recession began (November 2007) through November 2013 the employment-to-population ratio in Michigan has fallen from 59.8 percent to 54.8 percent. If Michigan had the same proportion of adults working today as six years ago there would be 392,000 more working Michiganders today. Only seven states have lower employment-to population ratios. So much for slashing the safety net leading to more Michiganders working.

Minnesota, the Great Lakes state with the best economic outcomes, has a much more generous safety net than Michigan. For example they provide up to 26 weeks in unemployment benefits at a maximum of $610 per week compared to 20 weeks and $362 in Michigan. TANF benefits for a single parent family of three in Minnesota is $532 per month with a 60 month lifetime limit compared to $492 and 48 months in Michigan.

Minnesota’s employment-to-populatio ratio has fallen far less than Michigan’s over the past six years. Declining from 68.7 percent to 66.8. If the same proportion of Michiganders were working today as Minnesotans there would be 941,000 more Michiganders working today. Only three state have a higher employment-to population ratio. So much for Minnesota’s more generous safety net keeping people from working.


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