- Business owners say that an extra $300 per week in unemployment is making it harder to hire workers.
- In three states, the average unemployment benefit plus the $300 supplement exceeds average weekly wages.
- Average state and federal unemployment benefits exceed the minimum wage in every state in the US.
- See more stories on Insider’s business page.
As some business owners claim that enhanced unemployment insurance is making it impossible to hire workers, an Insider analysis reveals how benefits match up with average pay across every US state.
Using data from the US Employment and Training Administration, we reviewed how unemployment benefits compared to wages as of the fourth quarter of 2020, the most recent period for which figures are available. This map shows the average weekly unemployment benefit paid out, plus the $300 federal weekly boost to unemployment, as a share of the average weekly wage:
In all but three states, total average weekly state and federal benefits were lower than the average weekly wage. The exceptions are:
- Montana, where UI benefit plus $300 supplement is 111.2% of average wage
- Wyoming, where UI benefit plus $300 supplement is 103.4% of average wage
- North Dakota, where UI benefit plus $300 supplement is 100.4% of average wage
In six additional states, the enhanced unemployment insurance adds up to 90% or more of the average weekly wage. These include:
- Kansas, where UI benefit plus $300 supplement is 99.4% of average wage
- Idaho, where UI benefit plus $300 supplement is 97.3% of average wage
- Iowa, where UI benefit plus $300 supplement is 95.4% of average wage
- Utah, where UI benefit plus $300 supplement is 94.9% of average wage
- South Dakota, where UI benefit plus $300 supplement is 93.9% of average wage
- Oklahoma, where UI benefit plus $300 supplement is 93.2% of average wage
- Hawaii, where UI benefit plus $300 supplement is 91.9% of average wage
However, in many states, enhanced unemployment insurance is not even close to average weekly wage. Some examples are:
- California, where UI benefit plus $300 supplement is 53.6% of average wage
- New York, where UI benefit plus $300 supplement is 54.9% of average wage
- Connecticut, where UI benefit plus $300 supplement is 59.6% of average wage
Average weekly wages do not take into account costs associated with employment such as transportation and childcare – funds that someone would not need to spend if unemployed. Conversely, employment often comes with additional benefits, such as healthcare and 401(k) plans, as well as the prospect of future career advancement.
The $300 weekly federal boost to unemployment was part of the stimulus package that President Biden signed into law in March.
Insider also analyzed how unemployment benefits compare to paychecks for minimum-wage work.
In this analysis, the average unemployment benefit and $300 supplement exceed the weekly minimum wage in every US state, as the federal minimum wage is $290 per week. However, that comparison comes with a major caveat.
Because weekly benefits are tied to pre-layoff pay, someone who was earning minimum wage would be receiving lower-than-average benefits. So, while on average someone would earn more from enhanced unemployment insurance than a minimum-wage job, people who were laid off from a lower-paying position would not receive the same level of benefits as someone laid off from a higher-paying role.
Some states are ending federal unemployment benefits
States including Montana, South Carolina, and Alabama have announced plans to back out of federal unemployment benefits, meaning unemployed workers will no longer receive the additional $300 per week. The decision to end benefits has been driven largely by business owners arguing enhanced unemployment benefits are making it difficult to hire.
“The biggest challenge out there is the federal government and the state government are going to continue with this unemployment,” McDonald’s franchisee Blake Casper told Insider in April.
“That is truly creating the incentive to not work right now,” Casper added. “And, how do you blame somebody? You can make more money on unemployment.”
Critics have pushed back on assertions that unemployment benefits are to blame for hiring struggles. Yale economists found that higher federal benefits did not reduce employment during the pandemic. Experts say that other factors are making it difficult to hire, including businesses rapidly reopening, workers unable to find childcare, and pre-pandemic labor shortages.
“The US economy is still down 8.2 million jobs from what we had prior to the pandemic – and if you account for people newly entering the workforce since then, we are down over 11 million jobs,” David Cooper, a senior economic analyst at EPI, recently told Insider. “So, the economy is simply not at a place where we should be cutting back UI benefits. There are far more people looking for work and unable to find it than there are employers unable to fill vacancies, and pulling back on UI will only slow down the recovery.”