COVID Showed Americans Don’t Leech Off Unemployment Checks

In most states, during normal times, you can use unemployment insurance for at most 26 weeks, half the year, and will receive 30-50% of the wages from your previous job, up to a certain income. This means $200-400 a week on average. One must meet a list of requirements to qualify, for instance having been fired from a job due to cutbacks, not through fault of your own. Only 35-40% of unemployed persons receive UI.

This means that at any given time, about 2 million Americans are receiving UI; in April/May 2020, with COVID-19 and State measures to prevent its spread causing mass firings, that number skyrocketed to 22 million. Put another way, just 1-3% of the workforce is usually using UI, and during the pandemic spike it was about 16%. Just before that rise, it was at 1.5% — and it returned to that rate in November 2021, just a year and a half later. Indeed, the number of recipients fell as fast as it shot up, from 16% to under 8% in just four months (September 2020), down to 4% in six months (November 2020). As much pearl-clutching as there was among conservatives (at least those who did not use UI) over increased dependency, especially with the temporary $600 federal boost to UI payments, tens of millions of Americans did not leech off the system. They got off early, even though emergency measures allowed them to stay on the entire year of 2020 and into the first three months of 2021! (The trend was straight down, by the way, even before the $600 boost ended.)

This in fact reflects what we’ve always known about unemployment insurance. It’s used as intended, as a temporary aid to those in financial trouble (though many low-wage workers don’t have access to it, which must be corrected). Look at the past 10 years of UI use. The average stay in the program (“duration”) each year was 17 or 18 weeks in times of economic recovery, 14 or 15 weeks in better economic times (sometimes even fewer). Four months or so, then a recipient stops filing for benefits, having found a job or ameliorated his or her crisis in some fashion. Some “enjoy” the 30-50% of previous wages for the whole stretch, but the average recipient doesn’t even use UI for 20 weeks, let alone the full 26 allowed. This makes sense, given how much of a pay cut UI is. Again, many Americans stop early, and the rest are cut off — so why all the screaming about leeching? Only during the COVID crisis did the average duration climb higher, to 26-27 weeks, as the federal government offered months of additional aid, as mentioned — again, many did not receive benefits for as long as they could have.

Those that receive benefits will not necessarily do the same next year. In times of moderate unemployment, for example, about 30% of displaced workers and 50% of workers on temporary layoff who receive benefits in Year 1 will reapply for benefits in Year 2. The rest do not refile.

However, we must be nuanced thinkers. Multiple things can be true at the same time. UI can also extend unemployment periods, which makes a great deal of sense even if UI benefits represent a drastic pay cut. UI gives workers some flexibility to be more selective in the job hunt. An accountant who has lost her position may, with some money coming in and keeping a savings account afloat, be able to undertake a longer search for another accounting job, rather than being forced to take the first thing she can find, such as a waitressing job. This extra time is important, because finding a similar-wage job means you can keep your house or current apartment, won’t fall further into poverty, etc. There are many factors behind the current shortage of workers, and UI seems to be having a small effect (indeed, studies range between no effect and moderate effects). And of course, in a big, complex world there will be some souls who avoid work as long as they can, and others who commit fraud (during COVID, vast sums were siphoned from our UI by individuals and organized crime rings alike, in the U.S. and from around the globe; any human being with internet access can attempt a scam). But that’s not most Americans. While UI allows workers to be more selective, prolonging an unemployed term a bit, they nevertheless generally stop filing for benefits early and avoid going back.

To summarize, for the conservatives in the back. The U.S. labor force is 161 million people. A tiny fraction is being aided by UI at any given moment. Those that are generally don’t stay the entire time they could. Those who do use 26 weeks of benefits will be denied further aid for the year (though extended benefits are sometimes possible in states with rising unemployment). Most recipients don’t refile the next year. True, lengths of unemployment may be increased some, and there will always be some Americans who take advantage of systems like this, but most people would prefer not to, instead wanting what all deserve — a good job, with a living wage.

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