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Does It Pay More To Be Unemployed Than to Have a Job? How Coronavirus Changed The Calculation

Dayana Yochim  |  April 28, 2020

Many out of work Americans are eligible for a 150% bump in weekly unemployment benefits. It’s not as good of a deal as you think.

Talk about a silver lining. Thanks to new rules around unemployment benefits, some Americans who lost their jobs are getting a raise. 

Pre-pandemic, the average unemployment benefit was $372 per week for 15 weeks, according to the U.S. Labor Department. That comes out to roughly $1,500 a month for a little less than four months. But under the new CARES Act legislation, if you lose your job due to fallout from the COVID-19 crisis, you’re eligible for an additional $600 a week on top of your state’s standard unemployment coverage. That boosts the average unemployment payout to $978 a week, or $3,912 a month. 

Not bad, right? In fact, the new provisions for out-of-work Americans are so good that people are buzzing about how they’d make more money on unemployment than they currently make staying on the job.

Our advice: Don’t ask your boss to lay you off just yet. 

Weighing your wages as an employee against how much you’re eligible to receive in unemployment payments is a flawed comparison. You have to factor in the value of current benefits (especially healthcare, which can be incredibly expensive) and future opportunities (like career advancement within the company), neither of which unemployment offers. There’s also the bigger economic picture: With roughly one in six Americans unemployed, a job is a precious and increasingly rare commodity, and it’s hard to say how difficult it will be to get a new job once the economy starts to recover.

But the most compelling reason to want to hold onto your job if you have one is this: Uncle Sam’s largesse is only temporary. The unemployment gravy train will be leaving the station before you know it.

The New Rules of Unemployment 

Here’s a snapshot of how the CARES Act bolsters unemployment benefits. It provides: 

  • Extended benefits coverage: You’ll get an additional 13 weeks of unemployment insurance coverage after your state benefit period expires. That translates to a maximum of 39 weeks of benefits in some states, up from an average of 15 weeks.
  • Supplemental payouts: An extra $600 per week is being tacked on to unemployment payments through July 31. (Most states apply the bump retroactively to the beginning of the year.) 
  • Broader eligibility: Under the Pandemic Unemployment Assistance (PUA) program, some self-employed people and independent contractors are now eligible to receive unemployment benefits for the first time.
  • No waiting period: You’re no longer required to wait a week after losing your job to file an unemployment claim. You can file immediately. 

The most important detail is the one with the deadline. That $600 weekly bump in unemployment payments is only temporary. After July 31, payments revert to each state’s standard benefit amount. If you’re still not working by August, brace for a sizable unemployment paycheck pay cut. 

How Much Will You Get in Unemployment Benefits

In general, unemployment insurance is designed to replace roughly half of your previous wages. The actual amount you receive depends on where you live (each state has their own minimums and maximums, and calculates benefits differently), your recent income or wages, if you’re eligible for full or partial unemployment in your state, and whether or not you have dependents. 

For a rough idea, take a look at the maximum standard and enhanced unemployment payouts in a handful of states. 

Source: State unemployment sites, savingtoinvest.com

Related: How to get every unemployment benefit you’re entitled to right now

How long will your unemployment benefits last? State coverage periods range from 12 to 26 weeks. The CARES Act extends coverage eligibility an extra three-plus months after your state’s standard benefit period ends. In the most generous states, that means more than 10 months of unemployment coverage. But, again, those pumped up unemployment checks are set to expire this summer.

Use the Department of Labor’s database to find out how to apply for unemployment benefits in your state, and also see how much you qualify to receive.  

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