The rules and limits of unemployment compensation vary considerably from state to state, and then the federal government gets involved too. The U.S. Department of Labor pays out unemployment benefits through its Unemployment Insurance Program, which is funded through unemployment insurance taxes paid by employers and collected by the state and federal government. Employees generally don’t pay into the program, at least if they’re lucky enough not to live in New Jersey, Pennsylvania or Arkansas. These states require that employees contribute, but only under certain circumstances.
Eligibility to Collect
It’s not a foregone conclusion that you’ll be able to collect unemployment if you lose your job. You have to be capable of working, and you’re required to actively look for a new job. You won’t be entitled to benefits if you quit without cause, or if you were let go for misconduct.
You must also have worked a certain number of hours in a given period, or earned a minimum amount of pay during that time. The exact thresholds are set by individual states, and some require that you meet both criteria: hours and earnings.
In addition to actively looking for a new job, your benefits can be terminated if you turn down a job offer. Most states require that you check in weekly, either by phone or by filing a certain form, to confirm your employment status.
How Much Do You Get From Unemployment?
Unemployment benefits aren’t intended to replace your income. They’re meant to replace a portion of your income. How much you get depends on how much you earned while working, and each state has its own formula for calculating the amount.
Some states use your income from your highest-paid recent calendar quarter – which works out to 13 weeks – while others use the two highest quarters, and still others base their formula on how much you made in the last year. Your unemployment benefits are a percentage of this amount; the percentage depends on your state’s laws.
Each state also caps the amount of a worker’s benefits at a certain dollar figure. This is all you’ll receive even if the math based on your earnings works out to more. The average weekly benefit was $363.37 for the 12 months beginning August 2018 and ending July 31, 2019, according to the DOL. On the bright side, all states have minimum amounts, too, so you’ll receive at least as much as this limit.
Workers With Dependents
It’s not a universal perk, but some states will pump up your benefits a little if you have more than just your own mouth to feed. This can work out to an additional $25 or so per dependent, but it could be less depending on your state.
Many States Will Subtract, Too
Some states will reduce your benefits by any income you do manage to earn while you’re unemployed. For example, maybe you held down both a full-time job and a part-time job to make ends meet. You lost your full-time job and applied for unemployment. Your earnings from that part-time job can be subtracted from your benefits, resulting in less.
An Unemployment Calculation Example
Start by going to your state’s website to determine the minimum and maximum amounts it pays, what base period it uses for earnings and how much of a percentage of those earnings you’ll receive.
Let’s say that your state uses your highest paid quarter, and it will pay you 48% of that. That works out to $3,840 if you earned $8,000. But then you have to divide that number by 26, because benefits are usually only payable for half a year, or 26 weeks. This works out to just $147.69 a week.
But the calculation method can vary by state as well. Some states might first divide that $8,000 by 13 – the number of weeks in a quarter – then apply the percentage. In this case, your benefits would work out to $295.38 a week based on $8,000 in earnings.
How Long Does Unemployment Last?
The key word when it comes to unemployment benefits is “temporary.” You might be out of work for a year, but you probably won’t be able to collect that long. Some states cap the duration at 26 weeks, or half a year, but some will go as long as 30 months and others cap it at fewer weeks.
And here’s where the federal government steps in again. Joining forces with individual states, it will increase benefits for as much as an additional 20 weeks under some circumstances. The greatest catch here is that your state’s unemployment rate must top a certain percentage for you to qualify, and this isn’t actually all that common.
- Nolo: How Unemployment Is Calculated
- FreeAdvice Legal: How Much Is Unemployment and for How Long Do Unemployment Benefits Last?
- Nolo: Unemployment Benefits – How Much Will You Get and for How Long?
- Eligibility.com: Where Do Unemployment Benefits Come From?
- United States Department of Labor: Maximum Potential Weeks of UI Benefits for New Claimants
- United States Department of Labor: Unemployment Insurance Data
- Jupiterimages/BananaStock/Getty Images