Claiming unemployment benefits is a complicated process. Your entitlements are dictated by a complex calculation that looks at your work history over the past months and years. However, even when you have worked that much out, exactly what you can claim and how long you can claim it for varies enormously from state to state.
Here we take a look at the mathematics behind unemployment benefits, and find out which are the best and worst states for the unemployed. We will also see what other help might be available to those without work.
Unemployment in the USA
The most recent statistics place unemployment at 4.7%. This is actually the lowest it has been since 2007, and after peaking at an astonishing 9.6% in 2010, the rate has declined steadily every year. While this sounds like great news and suggests full-on recovery from the global recession is well underway, it should be noted that many have gained employment in the part-time and low-wage employment sectors.
Meanwhile, states across the USA from Michigan to Illinois announced wholesale cuts in federal unemployment benefits in 2013. In many states, unemployment insurance is more difficult to access than ever, and since 2011, nine states have reduced the number of weeks that individuals can receive benefits.
Who is entitled?
Benefit entitlement is based on a number of factors, the main ones being the reason you lost your job and the amount of time you were in work. The exact requirements can be found at your local state unemployment insurance office.
Each state has a minimum period you need to have been in employment. This is called the “base period” and is often a source of confusion. In most cases, the base period equates to four out of the five calendar quarters that precede you filing your claim. Just to add to the complexity, you are also required to have earned a minimum amount during the base period in order to qualify for unemployment benefit.
One other point to bear in mind is that the “applicable state” is usually the one in which you were employed during the base period. So unfortunately, it is not possible to go “benefit shopping” by moving from state to state.
Evaluating the Best and the Worst
It quickly becomes apparent that identifying the best and worst states in which to be unemployed is not a straightforward task of seeing which pays the most money. There are a number of parameters to consider, including the benefit duration, annual unemployment rate, the proportion of unemployed receiving benefits (known as the recipiency rate), the benefit amount as a proportion of the state’s weekly wages, the growth rate and various other factors.
The unemployment in a given state is also an excellent indicator of the labour market’s overall health. In the ten best states for unemployment benefits, the unemployment rate was below the national average, and in the ten worst states, it was higher.
In addition, it intuitively makes sense that the states with higher tax rates pay out more generously in benefits, and this is indeed found to be the case in practice.
The best states for the unemployed
California was rated the best state in which to be unemployed, holding true to our theory about higher taxes. Although the actual dollar pay-out is not the highest ($450 per week), it attains top spot due to its claimant-friendly approach and flexibility when it comes to late claims, paying for dependents and numerous other factors. California also has online resources that are held up as a gold standard for other states to follow due to their clarity and ease of use.
If we were looking purely at dollar figures, Massachusetts would be the hands-down winner. It offers a weekly benefit of $742, plus a $25 dependent allowance, meaning that some families can claim more than $1,000 per week. It also has one of the highest benefit durations at 30 weeks. In fact, the only thing letting Massachusetts down is that the service levels fall far below those in California, with claims taking up to ten weeks to be processed.
The worst states for the unemployed
North Carolina is generally recognized as the worst state for those seeking employment benefits. Although the rates are not the absolute lowest (in fact at $350 per week, it is not so far behind California), the duration is only 13 weeks (and sometimes as little as five) while customer service levels are notoriously poor.
Arizona pays one of the lowest dollar rates in the USA, at $240 per week, and also has a reputation for being difficult and uncooperative with claimants. It does benefit from a longer duration than may states (currently 26 weeks) but many argue that this is of little help when it is so difficult to make a successful claim in the first place.
Other help available
Unemployment is never an easy thing to deal with, and is not a situation that anybody would choose voluntarily. The good news is that despite the difficulties and limitations of unemployment benefits, other avenues of assistance are also available, particularly if you have health or disability problems, and it is well worth checking these out too.