If you have lost your job, don’t lose hope yet. You may be eligible for unemployment benefits, so ensure that you file a UI claim right away. The US government has expanded Unemployment Insurance eligibility criteria to deal with the coronavirus-induced joblessness. But what if you live in one of the states with the worst unemployment insurance benefits?
We will look into the states having the worst unemployment insurance system, at some length. We examine whether these states will be able to support their citizens with the present condition of UI benefits and what changes they will need to make ASAP. We consider data from the last quarter preceding the coronavirus-recession and the claims filed from March 15-21 to understand what needs to be done.
Overview of The States With The Worst Unemployment Insurance Benefits
The first criterion we are using to shortlist the worst states is the maximum benefit amount cap. We look at states that pay less than $300.
- Florida
- Tennessee
- Louisiana
- Mississippi
- Arizona
- Alabama
Note that you may receive much less than the maximum Weekly Benefit Amount, based on your base period earnings. Without the additional weekly amount of $600 made available by the CARES Act, life in these states would have been harder in these trying times.
The claim numbers mentioned below are likely underestimates considering how many people were unable to get through to the system. Recipiency rates measure what proportion of jobless applicants actually received UI benefits.
Florida
The state saw 67,558 new claims filed last week. At 11% recipiency rate in the last quarter, the state ranks quite low in the number of people actually getting UI benefits, at 47. The Florida Labor Department has signed an agreement with the Federal government to implement the CARES Act. Hence it will need to fast track the processing of new claims and effectively implement the relaxed rules to reach all the unemployed who need benefits.
The largest number of claimants last quarter belonged to the Administration and Support/Waste Management and Remedial Services sector, which is badly affected now as well by the economic shutdown. Now that casual workers and the self-employed are eligible for UI benefits, it remains to be seen whether this sector will be the worst affected.
Florida residents can get a maximum of $875 in UI benefits, not counting the one-time direct payment mandated by the Coronavirus Economic Security Act.
Tennessee
Tennessee ranks slightly better at 44, with a recipiency rate of 15%. With 36,394 new claims filed last week, the state has a slightly lower burden than Florida.
In Tennessee, the largest share of UI claims came from former employees of the manufacturing sector, last quarter. Tennessee houses some automotive manufacturing plants which have slashed production. Guidelines have not yet come which would enable the self-employed to file for benefits. Tennessee residents can hope to get a maximum of $875 in UI benefits.
Louisiana
With an increase of 70,365 in claims filed in the last week, Louisiana is clearly in need of a massive scaling up of UI claims processing infrastructure and staff. The low recipiency rate of 10.9% indicates that the state will have to work quite hard to meet the needs of new claimants.
The sector with the most volatility in this state is construction, with the largest share of UI claimants last quarter. As the sector has a large proportion of contractual employees, it will be a significant contributor to unemployment, now. Those who qualify for maximum WBA in Louisiana can hope to get $847 at most.
Mississippi
This state has been fortunate so far to have only seen a rise in unemployment claims by 5,576. These numbers are likely to spike by next week. The state has also included people caring for a family member afflicted with COVID-19 or those whose care facilities are closed due to the pandemic.
Mississippi has among the lowest UI benefits and a worker can hope to get at maximum $835, adding in the $600 stipend. It also has the worst UI recipiency rate at only 9.2%, necessitating a huge effort from the government.
The most unstable industry in Mississippi appears to be the manufacturing sector with the largest number of UI claimants last quarter. This is likely to continue as the state’s backbone is this sector, which will now face a drop in demand besides shutdown.
Arizona
Arizona saw the filing of unemployment insurance claims jump by 25,424 last week. Its recipiency rate at 11.2% has room for improvement without which many unemployed people will hit poverty. The state is at 46, very close to the bottom in this respect. The sector giving the highest number of UI claimants has consistently been Administration and Support/Waste Management and Remedial Services, this past quarter. At $840 being the maximum UI benefit one can hope to get, the state will need to overhaul the system to meet the UI needs of the newly eligible claimants.
Alabama
While Alabama may offer a maximum unemployment benefit of only $255 which with the stipend will amount to $855, it got the best recipiency rate among these 6 states at 25.6%. It ranks in the middle of a list of all the American states.
However, the Alabama legislature had passed a law to cut down the number of UI payments weeks to 14 from 26. They may need to abrogate this law if the economic slowdown takes a long time to recover.
The manufacturing sector in Alabama has thrown up the largest number of UI claimants last quarter. This one as well as the other major sector, tourism will most likely be hit badly.
Lessons for UI from GFC-2008
Compared to the Unemployment Insurance changes made to cope up with the 2008-10 financial crisis, the measures this time are broader. The amount of money paid out by the program will be known only once it’s all over, but the outlay is higher at the outset.
Back then the benefits were extended for 99 weeks, whereas this time it’s 39 weeks. But this is only the beginning. The benefits increase this time around is much higher, on the other hand. Compared to only $25 last decade, the weekly $600 dollars this time for four months, is a huge improvement.
UI claimants were also given a big health insurance subsidy. This time around the government is sponsoring health insurance costs, but mostly for COVID-19 related health issues. However, most employers furloughing people are still giving regular health insurance coverage for 2 months.
The US government will need to implement the Families First Act and the Coronavirus Aid, Relief, and Economic Security Act at war footing to save the US economy from collapse and thus the lives of Americans. Not just these six worst unemployment insurance states, but all the states will have to ensure that the unemployed don’t fall through the cracks of the complicated UI systems.