Hundreds of unemployed Kentucky residents wait in long lines outside the Kentucky Career Center for help with their unemployment claims on June 19, 2020 in Frankfort, Kentucky.
John Sommers II / Getty Images
The financial aid that unemployed workers have been receiving to shore up household income during the coronavirus pandemic is poised for a dramatic reduction in just a few weeks.
The CARES Act, a federal aid law enacted in March, provided assistance to unemployed Americans with an additional $ 600 per week. That federally funded supplement adds to the traditional benefits provided by the states.
As a result of that policy, the average American received about $ 980 a week from the unemployment system, according to CNBC analysis of Labor Department data.
That is approximately equal to the lost weekly wage for the average worker.
However, that supplement will end after July 31, in the absence of an extension of Congress, which is not a fact due to opposition from Republican lawmakers.
If it ends, benefits will decrease substantially for the nearly 31 million Americans who receive unemployment benefits.
Instead of receiving around $ 980 per week, the average American would get around $ 380, a reduction of around 61%.
The average worker, instead of completely replacing lost wages, would replace about a third of his previous paycheck, according to a January report published by the WE Upjohn Institute for Employment Research.
The experience for workers will differ dramatically by geography, as states vary in the generosity of their benefit payments.
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The average worker in Mississippi, the least generous state, received $ 213 a week in unemployment benefits before the pandemic, according to Labor Department data.
In Massachusetts, the most generous state, the average recipient received $ 552.
Maximum and minimum benefits
States set minimum benefit limits and amounts for weekly unemployment aid. These are the upper and lower limits that an unemployed worker can expect to obtain from the system.
Most states set minimums below $ 100 per week.
Hawaii’s minimum, the lowest in any state, will be just $ 5 a week if the federal supplement of $ 600 a week expires after July. (This minimum minimum relative to other states is partly attributable to more flexible eligibility rules, according to economists. Workers may qualify for benefits in Hawaii with a lower annual income level than in other states. Meanwhile, Hawaii pays the second highest average weekly benefit, at $ 542.)
Massachusetts pays unemployed workers up to $ 1,234 per week, the highest maximum benefit in any state.
In contrast, Mississippi has the lowest maximum among the states, paying up to $ 235 per week.
With the additional $ 600 a week, unemployment benefits are more generous than they have been at any time since the unemployment insurance system was created in the 1930s, according to labor economists.
Democrats want to extend the $ 600 benefit to prevent revenue from falling severely after July. Republicans, who believe the benefit is a disincentive to work, want to remove it or replace it with a different policy, as a bonus for those who find work.