With the coronavirus pandemic pummeling the U.S. economy, unemployment claims have spiked to historic levels. As a result, the U.S. government included a key measure in the $2.2 trillion economic relief package designed to help unemployed workers weather the storm: a supplement of $600 per week added to state unemployment payouts.
The $600 supplement has been controversial, with some seeing it as a much-needed lifeline and others arguing it’s a disincentive to return to work. A new study from MagnifyMoney sheds light on the impact the supplemented unemployment payments actually have as a replacement for the average worker’s lost wages — and found that it varies significantly from state to state. Our study also explores how standard unemployment payments in each state will stack up against lost wages once the supplemental provision expires at the end of July.
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Key findings
- We estimate that 52.6 million Americans, or 39% of those who are eligible for unemployment benefits, would see their weekly incomes drop if they were laid off. This is the case even with the $600 weekly supplement.
- In fact, the average worker in 21 states and the District of Columbia would not break even with the $600 supplement. This includes some of the most populous states, such as New York, California, Illinois and Florida.
- If the $600 supplement expires, the average worker in 36 states and the District of Columbia would bring home half of their previous earnings or less.
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Methodology
Using unemployment formulas reported by the Department of Labor and included in CARES Act material, we calculated the weekly wage at which a worker would take home the same amount from unemployment, plus the $600 weekly supplement, in each state.
We then estimated the number of people in each state who would qualify for unemployment but earned more than the break-even amount using microdata from the 2018 American Community Survey (ACS) from the U.S. Census and hosted by IPUMs. We excluded anyone who was unemployed at the time of the survey, worked fewer than 13 weeks in that year or earned less than $1,885 during that year ($1,885 is equivalent to 20 hours a week for 13 weeks at the federal minimum wage).
Cut off income was scaled down by 6% to account for the average increase in hourly wages between 2018 and 2020 reported by the Bureau of Labor Statistics. Weekly earnings of ACS respondents were calculated by dividing reported annual wages by the hours they reported working in the same year; because the weeks worked is reported in ranges, we used the midpoint of the range, except for 51 to 52 weeks, for which we used 52.
Secondarily, we calculated the weekly unemployment benefit, both with and without the $600 supplement, for the average wage in each state, as reported by the Bureau of Labor Statistics, as of Q3 2019 (last available).
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States with the largest percentages of workers for whom supplemented unemployment benefits do not replace lost wages
Overall, our study reveals that even with the beefed up unemployment benefit of an additional $600 per week, approximately 39% (or 52.6 million Americans) who are eligible for unemployment benefits would see their weekly incomes drop. However, the percentage of workers who would experience lower incomes — even with the supplemented unemployment benefit — ranges wildly from state to state.
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22. Connecticut
Average weekly wage: $1,236
Weekly benefit + $600 for average wage: $1,218
Dollar amount of weekly shortfall: $18
Percentage of weekly shortfall: 1.5%
Maximum weekly benefits do not include supplements for dependents, which vary according to different formulae within and between the states where it is available.
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20. Tie: North Carolina
Average weekly wage: $972
Weekly benefit + $600 for average wage: $950
Dollar amount of weekly shortfall: $22
Percentage of weekly shortfall: 2.3%
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20. Tie: Missouri
Average weekly wage: $942
Weekly benefit + $600 for average wage: $920
Dollar amount of weekly shortfall: $22
Percentage of weekly shortfall: 2.3%
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19. Washington
Average weekly wage: $1,335
Weekly benefit + $600 for average wage: $1,294
Dollar amount of weekly shortfall: $41
Percentage of weekly shortfall: 3.1%
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18. Illinois
Average weekly wage: $1,125
Weekly benefit + $600 for average wage: $1,084
Dollar amount of weekly shortfall: $41
Percentage of weekly shortfall: 3.6%
Maximum weekly benefits do not include supplements for dependents, which vary according to different formulae within and between the states where it is available.
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17. Minnesota
Average weekly wage: $1,107
Weekly benefit + $600 for average wage: $1,062
Dollar amount of weekly shortfall: $45
Percentage of weekly shortfall: 4.1%
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16. New Hampshire
Average weekly wage: $1,075
Weekly benefit + $600 for average wage: $1,027
Dollar amount of weekly shortfall: $48
Percentage of weekly shortfall: 4.5%
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15. Alabama
Average weekly wage: $919
Weekly benefit + $600 for average wage: $875
Dollar amount of weekly shortfall: $44
Percentage of weekly shortfall: 4.8%
Image Credit: DepositPhotos.com.
13. Tie: Michigan
Average weekly wage: $1,021
Weekly benefit + $600 for average wage: $962
Dollar amount of weekly shortfall: $59
Percentage of weekly shortfall: 5.8%
Maximum weekly benefits do not include supplements for dependents, which vary according to different formulae within and between the states where it is available.
Image Credit: DepositPhotos.com.
13. Tie: Massachusetts
Average weekly wage: $1,359
Weekly benefit + $600 for average wage: $1,280
Dollar amount of weekly shortfall: $80
Percentage of weekly shortfall: 5.8%
Maximum weekly benefits do not include supplements for dependents, which vary according to different formulae within and between the states where it is available.
Image Credit: DepositPhotos.com.
12. Georgia
Average weekly wage: $1,026
Weekly benefit + $600 for average wage: $965
Dollar amount of weekly shortfall: $61
Percentage of weekly shortfall: 5.9%
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11. Delaware
Average weekly wage: $1,078
Weekly benefit + $600 for average wage: $1,000
Dollar amount of weekly shortfall: $78
Percentage of weekly shortfall: 7.2%
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10. Louisiana
Average weekly wage: $923
Weekly benefit + $600 for average wage: $847
Dollar amount of weekly shortfall: $76
Percentage of weekly shortfall: 8.2%
Image Credit: DenisTangneyJr.
9. Florida
Average weekly wage: $955
Weekly benefit + $600 for average wage: $875
Dollar amount of weekly shortfall: $80
Percentage of weekly shortfall: 8.4%
Image Credit: DepositPhotos.com.
8. Tennessee
Average weekly wage: $966
Weekly benefit + $600 for average wage: $875
Dollar amount of weekly shortfall: $91
Percentage of weekly shortfall: 9.4%
Image Credit: iStock.
7. Maryland
Average weekly wage: $1,169
Weekly benefit + $600 for average wage: $1,030
Dollar amount of weekly shortfall: $139
Percentage of weekly shortfall: 11.9%
Maximum weekly benefits do not include supplements for dependents, which vary according to different formulae within and between the states where it is available.
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6. Alaska
Average weekly wage: $1,105
Weekly benefit + $600 for average wage: $970
Dollar amount of weekly shortfall: $135
Percentage of weekly shortfall: 12.2%
Maximum weekly benefits do not include supplements for dependents, which vary according to different formulae within and between the states where it is available.
Image Credit: DepositPhotos.com.
5. Virginia
Average weekly wage: $1,125
Weekly benefit + $600 for average wage: $978
Dollar amount of weekly shortfall: $147
Percentage of weekly shortfall: 13.1%
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4. New York
Average weekly wage: $1,314
Weekly benefit + $600 for average wage: $1,104
Dollar amount of weekly shortfall: $210
Percentage of weekly shortfall: 16%
Image Credit: iStock.
3. Arizona
Average weekly wage: $1,018
Weekly benefit + $600 for average wage: $840
Dollar amount of weekly shortfall: $178
Percentage of weekly shortfall: 17.5%
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2. California
Average weekly wage: $1,309
Weekly benefit + $600 for average wage: $1,050
Dollar amount of weekly shortfall: $259
Percentage of weekly shortfall: 19.8%
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1. District of Columbia
Average weekly wage: $1,851
Weekly benefit + $600 for average wage: $1,044
Dollar amount of weekly shortfall: $807
Percentage of weekly shortfall: 43.6%
This article originally appeared on MagnifyMoney.com and was syndicated by MediaFeed.org.
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