Personal Finance

As layoffs loom, unemployment benefits look a lot different from last year. Here’s what you need to know before you file

Key Points
  • Pandemic-era unemployment programs expired in September.
  • Applicants for jobless benefits in the near term will find benefit amount, duration and eligibility to be much different than in 2020 and 2021.
  • Here's what to know about benefits if you're laid off.
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The labor market is strong, and unemployment is low.

But economists fear a recession looms — and 50% of employers expect to reduce headcount in the next six to 12 months, according to a recent PwC survey. Workers who turn to jobless benefits for financial help will find a system significantly altered from the one they leaned on earlier in the Covid-19 pandemic.

That's largely due to the expiration of temporary federal policies enacted in March 2020 and which extended to Labor Day last year. Those policies raised the amount of weekly benefits, increased the duration of aid and greatly expanded the categories of workers who qualify.

"The big difference [now] is the programs that were available during the pandemic [are no longer] available," according to Steve Wandner, a senior fellow at the National Academy of Social Insurance.

Unemployment claims and joblessness are low

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Workers have benefited from a hot job market since early 2021. In that time, the layoff rate fell to historic lows, while job openings and voluntary departures touched record highs and wage growth surged. The unemployment rate was 3.5% in July — tying early 2020 for the lowest rate since 1969.

However, claims for unemployment benefits, while around prepandemic levels, have increased slightly since the spring. Many companies have announced layoffs in recent weeks. The Federal Reserve is also raising borrowing costs to cool the economy and tame stubbornly high inflation. Seventy-three percent of economists polled recently by the National Association for Business Economics aren't confident the Fed can achieve that goal without triggering a recession.

"Claims haven't gone up that much yet — but we're entering an uncertain period," according to Andrew Stettner, a senior fellow and unemployment expert at The Century Foundation, a progressive think tank.

Here are some of the key differences workers will see if they apply for unemployment benefits.

Lower benefit amounts

Unemployment insurance is a joint state-federal program. Certain aspects, such as weekly benefit amount, vary considerably from state to state.

States pay benefits up to a weekly maximum. That cap is less than $300 a week in Alabama, Arizona, Florida, Louisiana, Mississippi and Tennessee, while aid can max out over $600 a week in New Jersey, North Dakota, Ohio, Oregon, Rhode Island, Utah and Washington state.

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The federal government paid an additional $600 a week to all unemployment recipients for about four months in 2020; that supplement fell to $300 a week for periods of 2020 and 2021 before ending nationwide in September.

That federal stipend is no longer available. Without it, the average American received $355 a week from the unemployment system in the first quarter of 2022, according to Labor Department data. Those benefits replaced about 38% of prelayoff wages, on average.

Shorter benefit duration

States also set a maximum duration of benefits. Generally, recipients can collect unemployment insurance for up to 26 weeks. But there are some exceptions.

Massachusetts and Montana offer more — up to 30 weeks and 28 weeks, respectively, according to the Center on Budget and Policy Priorities.

Claims haven't gone up that much yet — but we're entering an uncertain period.
Andrew Stettner
senior fellow at The Century Foundation

Ten states — Alabama, Arkansas, Georgia, Florida, Idaho, Kansas, Michigan, Missouri, North Carolina and South Carolina — offer less, according to the Center. The maximum duration is 12 weeks in North Carolina and Florida, the lowest cap relative to other states.

Not all workers will qualify for the respective state maximum. States determine durations based a worker's earnings history and other employment data.

By comparison, recipients were eligible for up to 75 weeks of benefits when the federal programs were in place — about three times longer than the traditional 26-week cap.  

Slimmer eligibility for benefits

Prior to the pandemic, workers with wage and salary positions were generally the only ones who qualified for unemployment insurance, according to Wandner.

But Congress temporarily extended benefits to millions of others: the self-employed, gig workers, independent contractors, part-timers, students and low-wage workers, for example, Stettner said.

"More people were eligible for benefits than ever before," he said.

Those groups generally don't qualify for benefits under current law, however.

3 more pandemic-related unemployment changes

  1. Remote workers need to figure out where to file a claim: Applicants should file a claim with the state in which they were working. It may be a more complicated calculus for remote workers; they should generally file in their company's state of business, Stettner said. Applicants can always contact the workforce agency in their state of residence for guidance, he added.
  2. States may require extra steps for eligibility: States suspended elements of the application and administrative processes during the Covid-19 pandemic. For example, they waived some requirements relative to searching for work or attending job counseling workshops in order to qualify for benefits, Stettner said. But those requirements have largely been reinstated; that means there may be additional steps applicants and recipients need to be aware of in order to receive benefits or ensure there isn't a delay, he said.
  3. States have implemented stronger identity-verification measures: Applicants should be prepared for potential roadblocks — for example, someone who got married and changed their name at work but not on their license or passport may experience administrative delays, Stettner said. The aim is to cut back on fraud.

Workers who collected benefits in the recent past may not yet qualify for another round of assistance. States use recent earnings history to determine factors such as eligibility, benefit amount and duration. Those who've worked about 15 to 20 weeks at a full-time job since their last unemployment spell will generally have earned enough money to qualify for some benefits, Stettner said.

"You should definitely always file" for benefits, he said. "You have nothing to lose."

There's also one silver lining: Because workers aren't leaning on the unemployment system as heavily as they were in the early days of the pandemic, applicants should be able to reach state unemployment offices with relative ease if they need assistance, Stettner added.

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