Table 1 reports the weekly UI benefits that would be received by a recently unemployed person as well as the lost income for a 12-week unemployment spell in each case.
In each case, I assume the person entering unemployment had been working continually over the preceding 12 months. This assumption is made because a few of those states condition UI benefits on those criteria. I assume the individual is unmarried and has no dependents in order to do the calculations. and a medium-income case, someone earning $1,000 per week. First, I considered a low-income case, someone who had been earning $600 per week before taxes, This would be the case if the individual earned $15 per hour and worked 40 hours per week. Calculations are based on website formulas accessed on March 18, 2020. I used information from several state governments’ websites to compute benefits in two scenarios. This could give policymakers a sense of whether UI generosity should be adjusted to reflect current economic conditions and, if so, how much to adjust it. In some states, a claimant’s marital status and number of dependents can influence benefit amounts.īy examining the specific dollar amounts, we can gauge the generosity of UI in several states under the current system. For example, Indiana pays a weekly benefit equal to 47% of past earnings, up to a limit of $390 per week. Weekly benefits increase as an individual’s past earnings increase, but they are also capped at some level, which varies by state. Generally speaking, weekly benefits are calculated using an individual’s recent earnings history (from payroll records over the preceding year). They are subject to caps and other restrictions. These rates vary across individuals and U.S. UI benefits are often framed as “replacement rates,” i.e., the weekly benefit amount divided by the weekly (pre-unemployment) take-home pay. See Dupor’s March 17 blog for an overview of how one might approach the economic issues surrounding the current situation. and ways one might adjust the current system in response to the economic effects of the COVID-19 virus and of the public health response to the virus.
Louis, the Eighth Federal Reserve District includes all of Arkansas and parts of Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee. In this article, I discuss the UI system, the current UI benefit schedules of states that are part of the Eighth Federal Reserve District, Headquartered in St. A natural question is: How much income support will the federal and state governments provide to those who are eligible for unemployment benefits? Investment bank Goldman Sachs predicts that on March 26, new claims will come in at 2.25 million people. On March 19, weekly new unemployment insurance (UI) claims spiked by 70,000. For a broader look at the potential economic impact of the coronavirus, see Bullard. The economic impact of efforts to slow the transmission of the coronavirus is now beginning to emerge.
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