Jobless Benefits, State by State


They vary wildly, in both dollars and eligibility. State unemployment offices have one thing in common, though: They're overwhelmed and understaffed

In good times, consumers search out the best places to eat, raise their kids, take a vacation, or pursue a career. But as the recession deepens and more workers lose their jobs, a more germane search may well be the best places to be unemployed.

Of course, laid-off workers can't pick which state in which to qualify, but considering the vast differences across state lines, many probably wish they could. The 50 U.S. states—plus Puerto Rico and the U.S. Virgin Islands—offer a wide range of unemployment-insurance dollars to recipients, from Puerto Rico's $133 weekly maximum to Massachusetts' $900. They also use different methods to determine who is eligible to collect: In South Dakota, 18% of the jobless receive benefits, compared with 69% in Idaho.

"States have different cultures around providing benefits," says Maurice Emsellem, policy director of the National Employment Law Project, an advocacy group for low-wage workers in Washington. "Some work to help people get [unemployment benefits], while others look for ways to deny them."

A 26-Year High

The unemployment-insurance program is jointly administered by states and the federal government. States pay unemployment benefits through payroll taxes levied on employers. These taxes are deposited into the federal Unemployment Trust Fund, which maintains a separate account for each state or territory. Many states are facing shortfalls as layoffs cause the number of claims to rise while payroll tax revenue falls. The Labor Dept. reported on Dec. 24 that filings for jobless benefits jumped to a 26-year high, 586,000, for the week ending Dec. 20. That was the highest weekly figure since November 1982.

The federal government is making loans to states to stay solvent, but the system is increasingly strained.

The federal average weekly benefit is $293 a week, and about 38% of the jobless receive payments, but state by state the numbers vary wildly. Mississippi joins Puerto Rico on the low end of the spectrum. Its weekly maximum is $210, with weekly payments averaging $180.77 going to about a quarter of that state's jobless. In South Dakota and Texas, just 18% and 20% of the unemployed receive benefits, respectively. That compares with Massachusetts' average weekly benefit of $383.77 to 57% of its jobless workers, or Hawaii's $414.17 average weekly payment and 42% recipient rate.

Each state has different laws governing who is eligible for unemployment insurance and for how much. When calculating weekly benefit amounts, states use formulas offering a certain percentage of the applicant's average weekly wage for a maximum of 26 weeks, or 39 weeks if the worker qualifies for an extension. (Some states also use a formula designed to help low-wage workers collect more benefits than they would with a standard calculation, while others offer additional benefits for applicants with children.) Recipient rates also vary. Some states' formulas allow more part-time and low-wage workers to collect benefits than others, for example.

Too Many Shut Out

In the near term, groups such as the National Employment Law Project want to expand eligibility rather than raise average weekly payments. To that end the group is urging the Senate and President-elect Barack Obama to support the Unemployment Insurance Modernization Act in conjunction with Obama's planned economic stimulus package. "In a recession like this, it is critical that every deserving person working hard…can collect unemployment benefits," Emsellem says.

Some employer advocates argue that the current system already provides the jobless adequate compensation. "I don't see anything to justify large-scale modifications to what are sound basic [eligibility] principles that have stood the test of time," says Douglas J. Holmes, president of UWC-Strategic Services on Unemployment & Workers' Compensation, a consulting firm in Washington. He adds state-by state comparisons of benefit levels aren't useful because workers' wages vary so much in different regions of the country. "This is a wage-replacement program that factors in what an individual has earned, not what others have earned in other states."

One issue both worker and employer advocates agree on is that state unemployment offices aren't equipped to handle the deluge of applicants the recession has created. Some state unemployment offices cut staff when the unemployment rate was low and are now facing in-person and telephone queues that last hours. "With the increased workload, we're short-staffed ourselves," says Joyce Fogg, a spokeswoman for the Virginia Employment Commission. "We are doing the best we can to try to serve customers." On Dec. 15 the commission announced it will hire up to 40 temporary staff.

Besides unemployment-insurance taxes, employers pay a separate tax called FUTA (Federal Unemployment Tax Act) of $56 per worker annually for program administration. But funds from this tax, which has remained the same since 1987, are now also being used to pay for unemployment-insurance benefits extensions. That leaves states with less money to staff unemployment claims offices. Holmes argues that FUTA funds should not be used to extend benefits but to help states administer unemployment programs. "Employers have been overtaxed, and states have been underfunded," he says. "We think that should change."

Herbst is a reporter for BusinessWeek in New York.

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