Welfare reform is always going to be a good idea. But there are serious flaws with the effort described here.
If the recipients are capable of performing some productive work for the betterment of society, what would stop them from getting a job in the private sector, thus eliminating the need for being on the government dole?
Are these people likely to be of any great service to the organizations who are the beneficiaries of their volunteer service? If these people are hard working, diligent, creative thinkers, who show up on time and perform quality work... are likely candidates of welfare benefits? Since they are not gainfully employed in private industry...
The most important issue, though, is this blurs the line between an equitable exchange of value for services rendered and slavery. In the private marketplace a company pays an employee a wage for their work. The wage earner uses that money to provide for their own personal needs... Food and clothing, housing, entertainment, etc... The employee is welcome to spend this money as they see fit.
What the state of Michigan is proposing here is something different: work for the state and you will receive funding specifically allocated for your food, housing, healthcare. Sounds a bit like... living in a plantation in the South in 1850.
The concept of slavery has to come into the conversation because a) the recipient is not an employee and not receiving a wage; and b) the state has. the ability to coerce their citizens to comply with the regulation thru the use of the police powers inherent to its existence.
Play out a scenario where one of these welfare recipients doesn't want to volunteer their services. Removal of welfare funds? Or put someone in chains and bring them to the worksite?
Perhaps it would be more useful to restrain the eligibility and funds available such that the potential recipients of state funds (and putative "volunteers" should this bill become law) might feel the need to get a real job and provide for themselves.