Here's a look at the sates with the highest and lowest unemployment benefits. Unemployments vary more than you think by state. Therefore, some unemployed people are faring better than others.
During the pandemic, the federal government significantly boosted unemployment benefits. The CARES Act provided an additional $600/week through the week of July 31, 2020. And the latest $1.9 stimulus package that was passed in 1Q2021 provides for an extra $300/week in enhanced unemployment benefits until September 6, 2021.
Before both acts were passed, the typical maximum unemployment benefit duration was 27 weeks provided by the state.
Having millions of people out of work is terrible. However, the optimist would say millions of people are benefitting from enhanced unemployment benefits during a difficult time.
Let's take a look at the states with the lowest and highest unemployment benefits. I'll then add on the temporary $600/week to see what the total maximum unemployment benefit a person could get. It will take a long time to roll out the vaccines to achieve herd immunity. Therefore, expect to see more enhanced unemployment benefits in the future.
States With The Highest Unemployment Benefits
Below is a table I put together with the top 25 states with the highest unemployment benefits. In order to get the maximum you have to earn a minimum amount of income to qualify. This is usually based on the prior four quarters of one's earnings.
Each minimum income amount to earn the maximum unemployment benefit is slightly different by state. The enhanced unemployment benefits will change over time. However, the normal weekly and monthly unemployment benefit maxes won't. So focus on those two columns in the future.
Look at the Weekly Max and Normal Monthly Max columns to see what the unemployment benefits are by state when there are no more special federal government subsidies.
Earning $4,276 to $5,692 a month in Total Maximum unemployment benefits per person should be enough to live a comfortable lifestyle. That's an annualized income of $51,312 to $68,304 for just one person compared to the median household income of ~$64,000.
There is a correlation between the amount of qualified income, the unemployment benefit amount and the cost of living per state. In other words, higher cost of living states generally have higher unemployment benefits.
However, some states such as Minnesota, Oregon, North Dakota, Kentucky, Oklahoma, Kansas, and Ohio seem to have more generous unemployment benefits than their cost of living would dictate.
For example, the median household income in North Dakota is $61,843 a year or $5,153 a month. With the expanded unemployment, unemployed North Dakotans can now earn $4,932 a month. If you have two in the household who were once working, the potential maximum unemployment amount is $9,864 a month.
The Best State To Become Unemployed
In my opinion, the state you want to best become unemployed in is Hawaii. Hawaii is sunny and warm all the time with lots of free outdoor activities. And what's great is 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.
It is common in Hawaii to have multi-generations living together under one roof. Thus, you could easily have two or three people getting unemployment benefits and live a reasonable lifestyle. Is there any wonder why Hawaii is consistently in the rankings as the happiest state in the country?
Related: How A High-Performing Employee Was Able To Negotiate A Severance And Be Free
States With The Lowest Unemployment Benefits
On the flip side, below are the states with the lowest unemployment benefits. The amounts are much lower than the states with the highest unemployment benefits. However, the benefit amounts correlate with the cost of living per state.
For example, Puerto Rico has a median household income of roughly $20,500 a year or $1,708 a month. If true that an extra $600/week applies to unemployed Puerto Ricans as well, unemployed Puerto Ricans can now earn $3,160 a month or 85% more than the median household income.
* When the enhanced unemployment benefits finally go away, you can just focus on the Normal Monthly Max column to check the states with the lowest unemployment benefits.
The lowest cost of living states that provide the most unemployment benefits are Arkansas, Idaho, Iowa, Nebraska, West Virginia, South Dakota, and of course, Puerto Rico.
The states and district that provide the least amount of unemployment benefits due to their higher cost of living are California, D.C., and Arizona.
I used to think getting $450/week in San Francisco was pretty good. But I changed my mind once I saw how much more cities in other states are getting. And they have a much lower cost of living. Now I think $450/week in normal times isn't very good at all.
It's funny how everything is relative in finance. Again, the new enhanced unemployment benefit amount is $300/week, that will go away on September 6, 2021.
States With Highest Unemployment Benefits With Dependents
Please note that the following states below allow for even higher unemployment benefits, depending on the number of dependents:
- Connecticut: $649 max normal a week, up to $749 with dependents
- Illinois: $484 max normal a week, up to $667 with dependents
- Massachusetts: $823 max normal a week, up to $1,234 with dependents
- Ohio: $480 max normal a week, up to $647 with dependents
- Pennsylvania: $572 max normal a week, up to $580 with dependents
- Rhode Island: $586 max normal a week, up to $867 with dependents
Add on another $600 a week in enhanced unemployment benefits under the CARES Act. And you can see these states truly do their best to take care of unemployed families.
Massachusetts is the best state to be unemployed with dependents. But you have to be able to handle the bitter cold four months a year. Ohio is the best value for unemployed families given the low cost of living.
States Where Unemployment Benefits Are Higher Than Average Wages
Here's a chart put together by Evercore ISI Research. It shows states that offer higher unemployment benefits than the average wage. 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.
What's great is that even if you have investment income, you can still collect unemployment benefits. Unemployment benefits are tied to W-2 job income, and not to investment income.
Therefore, it behooves everyone to try and build as much passive investment income as possible for financial independence. It's not good enough to just contribute to your tax-advantage retirement accounts. You must focus on building up your taxable investment accounts and real estate portfolio.
I understand there is a lot of angst, uncertainty, and frustration during this time. This is especially true if you don't have a job anymore. However, the $2.2 trillion stimulus bill provides enhanced unemployment benefits. And remind yourself you won't be without a job forever.
Getting an extra $600 a week in unemployment benefits through July 31, 2020 should be extremely helpful to get most folks through this disaster. However, that has long past and we now have new enhanced unemployment benefits averaging an extra $300 a week in 2021.
Biden is currently talking about another $2 trillion infrastructure package. If so, there will likely be inflationary pressure on the horizon. As a result, I think it's worth buying real estate to ride the inflation wave.
I've personally invested $810,000 in real estate crowdfunding platforms such as Fundrise and CrowdStreet to take advantage of lower valuations and higher cap rates in the heartland. Inflation should push rents and capital values higher. Therefore, I want to benefit as well.
Both platforms are free to sign up and explore.
Negotiate A Severance Package Before A Layoff
If you are still working, consider trying to engineer your layoff. If you want to leave your job anyway, it doesn't hurt to try and get a severance package.
Now is a great time because unemployment benefits are at all-time highs. In addition, you'd be helping your boss save someone who might really need a job.
For a boss or supervisor, having to decide who to furlough or lay off during a downturn is an onerous task. If you raise your hand and have a smart conversation with your boss you could be surprised by the results.
You can get a good amount of unemployment compensation, you can also potentially get a severance package. The propensity to offer a severance package is also at an all-time high.
If you want to get back into the workforce, it's not a bad idea to try and maximize your unemployment benefits until you find your ideal job.
Besides, it's not easy finding a job during a lockdown. Unemployment is the time to reflect on what you have done and think deeply about what you really want to do with your life. With the economy opening up, more job opportunities await!
Start A Fresh New Chapter In Your Life
Who knows, you might enjoy not working for someone else so much that you decide to start a business or if you have enough investment income, to retire. Not a day goes by where I’m not thankful for starting Financial Samurai in 2009. You won’t regret planting your own flag online too.
If you've been thinking about retiring soon, use the unemployment period as an early retirement test drive. It's actually quite similar. Best of luck everyone!
Readers, which states do you think provide the best benefits adjusted for the cost of living? Do you think you could comfortably live off the maximum benefit amounts provided by your state? If there are any unemployment changes/differences you notice from your state, please let me know and I'll update the charts.
To subscribe to the Financial Samurai newsletter with 50,000+ others click here. You'll get more free nuanced personal finance content to help you achieve financial freedom sooner. States With The Highest And Lowest Unemployment Benefits is a FS original post. As we come out of the pandemic, Federal unemployment benefits have been cut.