Thanks to the passage of the CARES Act, unemployment benefits are now much greater in some states than the average wage. This article reviews the states offering higher unemployment benefits than its average wage.
The CARES Act boosts unemployment benefits by $600/week until July 31, 2020. If the lockdowns continue, enhanced unemployment benefits will likely continue as well. In 2021, President Biden has decided to spend money like no tomorrow. He will also raise capital gains tax rate and the highest marginal income tax rate as well.
Let's take a look at the states that offer higher unemployment benefits than the average wage in that state.
States Where Unemployment Benefits Are Higher Than Average Wages
Here's a chart put together by Evercore ISI Research which shows states that offer higher unemployment benefits than the average wage in that state. Thanks to the CARES Act, more states now offer higher unemployment benefits than average wages.
These states include: Maine, New Mexico, Idaho, Iowa, Kentucky, Arkansas, South Dakota, Vermont, Wyoming, Montana, Mississippi, Alabama, Nebraska, Oklahoma, Missouri, Pennsylvania, Kansas, Tennessee, Nevada, North Dakota, Louisiana, Delaware, Arizona, Michigan, Wisconsin, Oregon, Utah, South Carolina, Maryland, Minnesota, Rhode Island, Connecticut, Florida, Texas, and Ohio.
Due to such fantastic unemployment benefits, it is only logical that millions of Americans file for unemployment and stay unemployed until these enhanced benefits run out.
Why work and make less money when you can relax and make more money? As a result, it's easy to see why so many Americans feel relatively sanguine about the coronavirus pandemic and the lockdown. It's also understandable to see the stock market continue to rebound thanks to tremendous government financial support.
Add on the incredibly generous Paycheck Protection Program along with stimulus checks for even millionaires, and America is feeling pretty good.
Highest Unemployment Benefits States
Below is a table I put together with the top 25 states with the highest unemployment benefits. Instead of only showing percentages, like the Evercore Research table above, I show the absolute numbers.
In order to get the maximum unemployment benefits, you have to earn a minimum amount of income to qualify usually based on the prior four quarters of earnings. Each minimum income amount to earn the maximum unemployment benefit is slightly different by state.
Let's be frank. Earning $4,276 to $5,692 a month in Total Maximum unemployment benefits per person is fantastic! That's an annualized income of $51,312 to $68,304 for just one person compared to the median household income of ~$64,000.
Now imagine if two people were unemployed in a household. We're now talking $100,000 – $136,000 in unemployment benefits. In such a situation, life is so good!
In my opinion, the state you want to best become unemployed in is Hawaii. But I'm also biased because Hawaii is my home state.
Not only is Hawaii sunny and warm all the time with lots of free outdoor activities such as the beach, surfing, snorkeling, hiking, and tennis, Hawaii also offers $648/week in maximum unemployment benefits. Due to the CARES Act, the unemployed get $1,248/week maximum or $4,992/month per person. Even receiving the normal $2,592 a month unemployment maximum is pretty good.
Hawaii is wonderful for families and has one of the highest number of kids per capita. If you have family, Hawaii is the best. Although, Mass. offers the highest unemployment benefits if you have dependents.
Lowest Unemployment Benefits States
Now let's look at the states with the lowest unemployment benefits. But as you've seen from the first chart, even though the absolute dollar amount is low, so is likely the cost of living and the average wage. Therefore, there is still relatively good value with some of these states.
In places like Puerto Rico, Mississippi, Arizona, and Louisiana, thee enhanced $600/week in unemployment benefits is 60% – 80% of regular unemployment benefits. These states have the best value of them all.
Negotiate A Severance To Receive Unemployment Benefits
If you dislike your job and want to take a break, find a new job, or retire, I highly encourage you to try and negotiate a severance. I did in 2012, and was able to receive a multiple six-figure severance and unemployment benefits.
Employers are looking to furlough or lay off employees during a global pandemic. However, there's a lot of peer pressure not to. It's also emotionally difficult to let someone go, even with enhanced unemployment benefits.
Therefore, by negotiating a severance, you actually help your manager and the firm by helping them make a decision for you. You also help a colleague who may desperately need his or her job.
I wrote the book, How To Engineer Your Layoff, in 2012 and have since revised and added to it three times. It's now fresh for 2020 to help you get a severance and the unemployment benefits you need. There is no other book like mine out there.
Not a day goes by where I'm not thankful for negotiating a severance in 2012. Thanks to my severance, my wife and I have been able to visit 20 new countries, grow Financial Samurai into one of the largest independently run personal finance sites in the world, and start a family in 2017.
Life is too short to do something you don't enjoy doing. You will look back with regret if you settle. Take calculated risks and learn to find an occupation you truly love.
About the Author: Sam worked in investment banking at Goldman Sachs and Credit Suisse for 13 years. He received his undergraduate degree in Economics from The College of William & Mary and got his MBA from UC Berkeley. In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $250,000 a year in passive income. He spends time playing tennis, taking care of his family, and writing online to help others achieve financial freedom too.