Personal Finance

Biden’s $400 unemployment boost would replace 86% of lost wages for many workers

Key Points
  • President-elect Joe Biden's $1.9 trillion Covid relief package, the American Rescue Plan, would boost unemployment benefits by $400 a week through September.
  • Unemployment benefits replaced about 38% of pre-layoff wages, on average, in the third quarter of 2020, according to Labor Department data.
  • An extra $400 a week would bump that wage replacement rate to 86%.
Alex Wong | Getty Images News | Getty Images

A $400 boost to weekly unemployment benefits being pushed by President-elect Joe Biden would replace about 86% of lost wages for the average worker, according to a CNBC analysis of Labor Department data.

Biden called for jobless benefits to be raised in a Thursday night speech outlining a $1.9 trillion Covid relief package, the American Rescue Plan. The $400 enhancement would be available through September 2021.

More from Personal Finance:
Biden wants to increase stimulus checks to $2,000
Biden calls for $30 billion more in rental assistance
Biden calls to raise the federal minimum wage to $15 per hour

He also wants to extend benefits through September for the long-term unemployed, in addition to sending more stimulus checks, rental assistance and other relief.

$400 weekly boost

Workers got $323 a week in state benefits, on average, in the third quarter last year, according to most recent U.S. Labor Department data. That aid replaced about 38% of their average pre-layoff wage, which was $843 a week.

A $400 increase in benefits would bump that replacement rate to 86%.

The supplement would go further in some states, especially those that tend to pay more meager benefits.

President-elect Biden unveils $1.9 trillion Covid relief plan
President-elect Biden unveils $1.9 trillion Covid relief plan

In Louisiana, for example, the average worker got $183 a week in benefits in November, according to the U.S. Labor Department. For them, a $400 boost would represent a 219% increase in weekly benefits.

Massachusetts, on the other hand, gave $491 a week to the average person, the largest payout among states in November. A $400 enhancement for that worker would yield an 81% increase in benefits.

More than 18 million Americans were collecting unemployment benefits at the end of 2020, according to the Labor Department.

States are currently in the process of issuing a $300-a-week enhancement to benefits provided by the recently passed $900 billion Covid relief law. It's slated to end in mid-March.