How States Differ in Unemployment Benefits

Every day, companies across the country are forced to eliminate jobs, and many people seeking unemployment compensation are surprised to learn that benefits only cover a portion of their paycheck. The situation can be even more confusing since unemployment insurance is administered by each state separately, and the policies governing eligibility and compensation vary widely.

Methods Used to Determine Benefits

Every state requires a worker to accumulate a certain amount of qualifying wages within a specific period of time in order to receive unemployment insurance benefits. States are allowed to use a variety of different methods to establish a worker’s weekly compensation.

* High Quarter Method: More than half the states calculate the weekly benefit by referencing the quarter where the recipient’s wages were the highest. This amount is divided by the number of weeks in a calendar quarter to arrive at the average wage. The percentage of the paycheck the state chooses to replace is then applied to the average wage to determine the weekly benefit.

* Annual Wage Method: States that use the annual wage formula calculate weekly benefits as a percentage of the annual wages in a base period. States using this method believe that annual wages are a more accurate way to determine a worker’s usual standard of living.

* Multi-Quarter Method: In this scenario, the weekly benefit is a multiple of the average wages paid out in one or more quarters. This method is preferred by states that want the benefit to more accurately reflect the worker’s actual full-time employment patterns.

* Average Weekly Wage Formula: A few states determine the weekly benefit by applying a percentage against the worker’s average weekly wages in a base period.

States With the Lowest and Highest Unemployment Benefits

Southern states, particularly in the Southeast, have the lowest level of unemployment benefits, but it is important to acknowledge the disparity in salaries and cost of living compared to other more expensive areas of the country. Still, the difference in how benefits are calculated can create a serious hardship for those who are unexpectedly unemployed. The lowest paying states for compensation benefits in 2015 include:

1) Mississippi ($235.00)
2) Arizona ($240.00)
3) Louisiana ($247.00)
4) Alabama ($265.00)
5) Florida ($275.00)

Conversely, Northeastern states have the most generous unemployment compensation programs and provide the highest benefit levels. Unfortunately, those living in the lowest paying states cannot move to a state with higher benefits and collect unemployment since eligibility is based on the state where the recipient worked. The highest paying states for unemployment benefits in 2015 include:

1) Massachusetts ($939.00)
2) Rhode Island ($688.00)
3) Connecticut ($630.00)
4) New Jersey ($611.00)
5) Pennsylvania ($581.00)

During the recession of 2008, many states extended their benefit eligibility period. In fact, five states provided compensation for up to 99 weeks. However, as the economy continues to recover, benefit eligibility has been scaled back to more traditional levels.

Currently, all states provide 26 weeks of eligibility except:

* Arkansas-25 weeks
* Florida-19 weeks
* Georgia-18 weeks
* Massachusetts-30 weeks
* Michigan-20 weeks
* Missouri-20 weeks
* Montana-28 weeks
* North Carolina-19 weeks
* South Carolina-20 weeks


Recent Unemployment Insurance Trends

Since the economic recovery has strengthened, states have begun to reevaluate their unemployment insurance policies. Most notably, many states have reduced the benefit duration period from one full year to only 26 weeks. On the federal level, the Emergency Unemployment Compensation (EUC) and Extended Benefits (EB) programs were allowed to expire as of January 2014, and there is currently no expectation for any further extensions.