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The labor market is strong and unemployment is low.
But economists fear a recession is looming – and 50% of employers expect to cut their workforce in the next six to 12 months, according to a recent PwC survey. Workers who turn to unemployment benefits for financial help will find a significantly altered system from the one they relied on earlier in the Covid-19 pandemic.
This is largely due to the expiration of temporary federal policies enacted in March 2020 that extended through Labor Day last year. These policies increased the amount of weekly benefits, extended the duration of assistance, and greatly expanded the categories of eligible workers.
“The big difference [now] these are the programs that were available during the pandemic [are no longer] available,” according to Steve Wandner, senior researcher at the National Academy of Social Insurance.
Jobless claims and unemployment are low
Workers have benefited from a buoyant labor market since the start of 2021. During this period, the layoff rate fell to historic lows, while job vacancies and voluntary departures reached record highs and wage growth surged. The jobless rate was 3.5% in July – tying early 2020 to the lowest rate since 1969.
However, unemployment benefit claims, although approaching pre-pandemic levels, have increased slightly since the spring. Many companies have announced layoffs in recent weeks. The Federal Reserve is also raising borrowing costs to cool the economy and rein in stubbornly high inflation. Seventy-three percent of economists polled recently by the National Association for Business Economics are not convinced that the Fed can achieve this goal without triggering a recession.
“Claims haven’t increased much yet, but we’re entering a period of uncertainty,” according to Andrew Stettner, senior researcher and unemployment expert at the Century Foundation, a progressive think tank.
Here are some of the main differences workers will see if they apply for unemployment benefits.
Lower benefit amounts
Unemployment insurance is a joint program between the state and the federal government. Certain aspects, such as the amount of weekly benefits, vary widely from state to state.
States pay benefits up to a weekly maximum. This cap is less than $300 per week in Alabama, Arizona, Florida, Louisiana, Mississippi and Tennessee, while assistance can reach over $600 per week in New Jersey, North Dakota, Ohio, Oregon, Rhode Island, Utah and Washington State.
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The federal government paid an extra $600 a week to all unemployed workers for about four months in 2020; this supplement dropped to $300 per week for the 2020 and 2021 periods before ending nationwide in September.
This federal allowance is no longer available. Without it, the average American received $355 a week from the unemployment system in the first quarter of 2022, according to Labor Department data. These benefits replaced an average of about 38% of pre-layoff wages.
Shorter duration of benefits
States also set a maximum duration of benefits. Generally, recipients can collect unemployment insurance for up to 26 weeks. But there are exceptions.
Massachusetts and Montana offer more — up to 30 weeks and 28 weeks, respectively, according to the Center on Budget and Policy Priorities.
Ten states — Alabama, Arkansas, Georgia, Florida, Idaho, Kansas, Michigan, Missouri, North Carolina and South Carolina — offer less, according to the Center. The maximum duration is 12 weeks in North Carolina and Florida, the lowest cap compared to other states.
Not all workers will qualify for the respective state maximum. States determine terms based on a worker’s earnings history and other employment data.
By comparison, recipients were entitled to up to 75 weeks of benefits when federal programs were in place, about three times longer than the traditional cap of 26 weeks.
Reduced benefit eligibility
Before the pandemic, workers in paid positions were typically the only ones on unemployment insurance, according to Wandner.
But Congress temporarily extended the benefits to millions more: the self-employed, gig workers, independent contractors, part-time workers, students and low-wage workers, for example, Stettner said. .
“More people were eligible for benefits than ever before,” he said.
However, these groups are generally not eligible for benefits under current law.
3 other unemployment-related changes related to the pandemic
- Telecommuters should determine where to file a complaint: Applicants must file a claim with the state in which they worked. This may be a more complicated calculation for remote workers; they should generally file in their company’s statement of affairs, Stettner said. Candidates can always contact the employment agency in their state of residence for advice, he added.
- States may require additional steps for eligibility: States have suspended elements of application and administrative processes during the Covid-19 pandemic. For example, they waived certain job search requirements or attendance at career counseling workshops in order to qualify for benefits, Stettner said. But these requirements have largely been reinstated; that means there may be additional steps that claimants and recipients need to be aware of to receive benefits or ensure there are no delays, he said.
- States have implemented more stringent identity verification measures: Applicants should be prepared for potential hurdles — for example, someone who got married and changed their name at work but not on their license or passport may experience administrative delays, Stettner said. The goal is to reduce fraud.
Workers who received benefits in the recent past may not yet qualify for another round of support. States use recent earnings history to determine factors such as eligibility, amount, and duration of benefits. Those who have worked about 15 to 20 weeks in a full-time job since their last spell of unemployment will generally have earned enough money to qualify for some benefits, Stettner said.
“You should definitely always file ‘claims for benefits,'” he said. “You have nothing to lose.”
There’s also a silver lining: Since workers aren’t relying on the unemployment system as much as they did at the start of the pandemic, applicants should be able to reach unemployment offices across the country. state with relative ease if they need help, Stettner added.