Our System is Broken: Some Americans Get More Money from Unemployment Than Their Former Jobs
Trump's economy was failing Americans even before COVID. What are your thought?
FiveThirtyEight Reports: Many Americans Are Getting More Money From Unemployment Than They Were From Their Jobs
Our system was broken even before we were dealing with the impacts of COVID-19. Many Americans are bringing in more money now with unemployment benefits than they were with their previous jobs.
A new analysis by Peter Ganong, Pascal Noel and Joseph Vavra, economists at the University of Chicago,1 uses government data from 2019 to estimate that 68 percent of unemployed workers who can receive benefits are eligible for payments that are greater than their lost earnings. They also found that the estimated median replacement rate — the share of a worker’s original weekly salary that is being replaced by unemployment benefits — is 134 percent, or more than one-third above their original wage. A substantial minority of those workers, particularly in low-wage professions like food service and janitorial work, may end up receiving more than 150 percent of their previous weekly salary.
In addition to exposing the massive wealth gap in the US, COVID has also shown the inequalities in unemployment across states as they set their own rates. For instance, in MA, a worker is eligible for an estimated 125% of their former salary while it is 166% in Mississippi where the cost of living is significantly cheaper.
The researchers uncovered other kinds of inequality, too. In some professions, like janitorial work, people who are employed by essential businesses are continuing to show up to their jobs under hazardous conditions. But in doing so, they may be eligible for less money than janitors who have been laid off or furloughed by a nonessential business. In an ideal world, Ganong said, the people who have kept working at hospitals or grocery stores would be receiving some kind of hazard pay. “But that’s generally not the reality, which means there’s a weakness in the current system,” he said. “We’re giving more money to certain workers to stay home than to other workers who are putting themselves at risk by going to work.”
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