Monday, July 27, 2009

Maximum Weekly Unemployment Benefits

On my post about adjusting to a financial crisis such as losing one's job, a commenter noted

It doesn't sound like you figure unemployment into your emergency plan which makes the scenario that much more stressful!

It's true-- when I visualize losing my job and how I'd adjust, I think first of all about what it would take to live on my savings. I'm sure I would qualify for unemployment, but I certainly couldn't count on it to survive. The state of New York is notorious for having very low unemployment benefits, especially in relation to the cost of living in New York City. See this article for a state by state list of maximum unemployment benefits as of 2008. You know there's something out of whack when someone in New York maxes out at $405, or $3 a week less than someone in West Virginia! $21 less than someone in Iowa! $2 less than someone in Kansas! Not to mention that New Yorkers get less than half of what someone in Massachusetts can get. Massachusetts is a great state to be in if you're going to lose your job-- $900 a week maximum!

$405 a week, if that is what I qualified for, would cover maybe half the cost of my current lifestyle-- which, admittedly, is not all that spartan. If I was being careful and making a lot of cutbacks, I might almost balance my budget with an unemployment check-- but there's a limit to how long you can claim benefits. (Normally, you can only claim full benefits for 26 weeks, although right now, due to the economic situation and the stimulus package, benefits are available for an extended period-- up to 53 additional weeks in New York. See the Department of Labor website for details.)

I guess what this comes down to is one of my psychological techniques: I like to pretend money isn't there! When I think about retiring, I try to plan for my own savings to pay the bills, and figure whatever I get from Social Security would just be extra. When I think about losing my job, I figure unemployment benefits would be extra. I always prefer to overestimate my expenses and underestimate my income-- it leads to far better consequences than doing the opposite!

12 comments:

frugal zeitgeist said...

I do exactly the same thing. I never figure unemployment benefits into a losing-my-job scenario.

Amy K. said...

The $900 max in Massachusetts must include child benefits. The max without kids is $628, plus another $25 thanks to the stimulus. If you do have children, you get $25 for each child.

dawn said...

There is at least one inaccuracy in the SF story. If you go the CT DOL website, they tell you the max is $525 a week, not $576, and i have several out of work friends who tell me the same.

Bob said...

To get that high in Iowa, you would have to have multiple dependents.
I could look it up, but I think it's lower $300's for singles.

Gord said...

Overestimate expenses and underestimate income?

That's exactly what successful governments do; good personal philosophy as well.

Our unemployment insurance in Canada was so successful it built up a huge surplus. The govt took the money out of the fund to pay down debt, which sounded nice then. But now, times aren't so good and it's hard to get benefits when it is needed most.

mOOm said...

Here in Australia if you have any decent savings you can't claim unemployment benefits. It's only about half minimum wage if you can...

K said...

I didn't count unemployment benefits or severance in calculating how long my savings would last if I got laid off. Well I did get laid off and having the unemployment benefits changes the calculations significantly. My savings (beefed up with severance) will stretch so much longer than my worst case scenario that I'm quite serene about not having a job right now.

kk said...

"You know there's something out of whack when someone in New York maxes out at $405"

"$405 a week, if that is what I qualified for, would cover maybe half the cost of my current lifestyle-- which, admittedly, is not all that spartan."

+++

Sorry. I have a bone to pick with you here.

Unemployment benefits are not meant to support you, they are meant nudge you quickly right back out into that workforce. It's like a trampoline -- your contact with the trampoline (the unemployment benefit) should only be for a moment until you get shot back up into the workforce.

Mass. folks get a higher benefit becasue they pay lots more taxes.

A friend of mine once said -- and I wholeheartedly agree -- the best measure of unemployment benefits (not just monetary but the whole system) is how fast it gets folks off the benefits and back the workforce.

Madame X said...

Thanks for the fact-checking everyone.

@kk, I didn't mean to give the impression that I would expect unemployment benefits to support a luxurious lifestyle and I've talked elsewhere about how I'd be making some serious adjustments in my lifestyle if I lost my job. Just pointing out that for someone in NYC the benefits are out of line in relation to the cost of living, and we certainly pay high taxes too. The benefits shouldn't be so high they discourage you from working, but for NY, there is hardly any threat of that!

Christine said...

I DO factor in unemployment benefits into my emergency plans. However, my emergency fund is 2 years worth of expenses instead of the 6 months worth that most advisers recommend.

Anonymous said...

Either way, MyOpenWallet is right. UE in NY state is outrageously low. Take a look at their neighboring nearby states: NJ, PA, CT, MA, VT. All of these states have higher UE benefits. NY state tax=~6.85%; NYC tax=3.9%. Taxes in the other states are less. Plus, sales tax in NY: 4% + NYC sales/use tax 4.875 (most other counties are 4%). True, NJ @7%; MA @ y/county tax ~4%). I think MyOpenWallet should write a letter to all of your state congressman and senators to complain that they have an outdated UE benefits that does not relate with cost of living while being unemployed; especially where CT and MA and NJ and PA all have higher UE and less state/local income taxes. Just imagine, on just 405 per month, minus your federal, state, local income taxes, and I dont think anyone in the 5 boroughs of NYC can afford to live as one person in a studio or 1BR apartment. Even if you had your old rental studio, you would almost get by. Of course, you also have to subtract at least ~400-500 per month or more for COBRA health insurance; so you're underwater. I suggest you ad a voice to the NY State Government, and let's get NYS on track with today's times.

Anonymous said...

Your unemployment benefit is state-wide; what it costs to live in NYC has nothing to do with the amount. There are plenty of less expensive areas in NY state to live, have you tried the Buffalo area in Jan? Florida, where I live is max $275 and I assure you it's not cheap to live here either. There's a price for temps in the 70s in Jan. Thankfully, I have a job but I'm very sorry and understanding of those who do not. These extensions cannot (will not) go on indefinitely.