Unemployment Insurance & Benefits: an overview

Since the COVID-19 shut down began, an enormous number of creative workers and businesses have lost work, suffering a whole or partial loss of income that in many cases threatens financial ruin.  

As with other industries in the US, one of the primary strategies for keeping creatives afloat during the crisis is to use the Unemployment Insurance (UI) system to distribute funding to those who have lost work.  For many of us, this isn’t usually an option since we often work as independent contractors and sole proprietors.  But COVID, and the related economic crisis has changed all of that, and many from our industry are now learning the many benefits and challenges to unemployment.

This article is a part of the Financial Survival Handbook [link forthcoming], which is one section of the COVID-19 HANDBOOKS FOR THE CREATIVE SECTOR.  All this month, we will post new daily articles on Financial Survival and other refreshed articles from the Handbook.

Much of the information in this section is abridged from a much longer article by the Center on Budget and Policy Priorities (CBPP), a progressive think tank in DC with a stated mission to “conduct research and analysis to help shape public debates over proposed budget and tax policies, and to help ensure that policymakers consider the needs of low-income families and individuals in these debates.” 

HOT TIP

Consider the COVID19 RESPONSE FOR WA ARTISTS Facebook Group, which has all kinds of resources and information, but is especially rich with discussions about the Unemployment Insurance system.

What is Unemployment Insurance?

The combined federal and states UI system helps people who have lost their jobs by temporarily replacing part of their wages while they look for work.  Created in 1935, it is a form of social insurance in which taxes collected from employers are paid into the system on behalf of working people to provide them with income support if they lose their jobs.  The system also helps sustain consumer demand during economic downturns by providing a continuing stream of dollars for families to spend.

The basic unemployment insurance program is run by the states, although the US Department of Labor oversees the system.  In most states, it provides up to 26 weeks of benefits to unemployed workers, replacing about half of their previous wages, on average. States provide most of the funding and pay for the actual benefits provided to workers; the federal government pays only the administrative costs.  Although states are subject to a few federal requirements, they are generally able to set their own eligibility criteria and benefit levels.

During pre-COVID times, the UI Extended Benefits (EB) program typically provided an additional 13 or 20 weeks of compensation to jobless workers who have exhausted their regular benefits in states where the unemployment situation has worsened dramatically. And during recessions, the federal government has historically created temporary, wholly federally-funded programs providing further weeks of benefits, much like the CARES Act did earlier in 2020.

For more information about the nature, practice and triggering events for UI EB during economic downturns, check out this article by the Brookings Institute.

What Benefits Does Unemployment Insurance Provide?

Workers receive unemployment benefits from the state where they were employed, even if they reside in a different state.  When someone applies for benefits, the state determines whether the person is eligible and the amount of benefits for which he or she qualifies.  The benefits provided to any particular individual will vary in two respects:  the number of weeks that they last and their weekly dollar amount.

Number of weeks

While some states simply provide the same number of weeks of benefits to all unemployed workers, most states (Washington included) vary the number of weeks according to the amount of a worker’s past earnings, whether the worker had earnings in each of the four calendar quarters that make up the base period, and how evenly those earnings were distributed over the base period.  See below how special COVID-related extensions have changed that variance in 2020.

Washington is similar to most states in that workers are eligible for a maximum of 26 weeks under typical pre-COVID conditions.  In normal economic times, most workers find new jobs before using the maximum number of weeks available, with an average duration of 15 weeks.  2020 has changed all of that though, including extensions to regular benefits of up to 33 weeks in Washington.  All told, most regular full-time employees who have lost work are eligible for almost 14 months right now. 

Dollar amount

The typical average unemployment benefit nationwide is a little more than $300 per week.  However, individual benefit levels vary greatly depending on the state and the worker’s previous earnings.  In addition, in several states, workers receive higher benefits if they have dependents. 

State laws typically aim to replace about half of a worker’s previous earnings up to a maximum benefit level.  The maximum state-provided benefit in 2014 ranged from $133 in Puerto Rico and $235 in Mississippi (the lowest for a state) to $679 ($1,019 with dependents) in Massachusetts.  

Washington State’s maximum benefit is $844 and minimum is $201.  The actual amount depends on the earnings in a worker’s “base year” which is worked out upon application.

Information on estimating benefits is available at the Employment Security Department site.

Who is traditionally eligible for unemployment benefits (pre-COVID)?

Typically, to qualify for unemployment insurance benefits in most parts of the country, a person must:

  1. have lost a job through no fault of his or her own;
  2. be “able to work, available to work, and actively seeking work;” and
  3. have earned at least a certain amount of money during a “base period” prior to becoming unemployed. 

Washington State further details the basic eligibility to require that a person:  

  1. Have worked in the state during the past 18 months;
  2. Worked at least 680 hours in your base year;
  3. Earned some wages in Washington;
  4. Have a qualifying reason for un- or under-employment; and
  5. Are eligible for employment during the weeks claiming benefits.

In Washington you cannot apply for unemployment benefits or file weekly claims if you did not work in the state during the past 18 months.  The only exceptions are if you were in the military or worked for the federal government.  You must file your claim with one of the state(s) where you worked in the last 18 months. Contact each state where you worked to find out your claim options for those states.

Furthermore, WA requires that workers have worked at least 680 hours within their “base year,” and that at least some of their wages be earned in Washington State.  The qualifying reasons for unemployment include consideration of whether the worker:

Other special considerations include

Of course, this is hardly a typical time and therefore many if not most of the people facing employment challenges are doing so because of COVID-19.  Especially within the creative sector, many of these workers and makers do not qualify under the typical Unemployment Insurance qualifications listed above.  

If this applies to you, please read on to the next section for information about eligibility for extended unemployment insurance benefits due to COVID.

How is 2020 different? How have benefits been extended during the pandemic?

Under the Đạo luật CHĂM SÓC and a FEMA-related Executive Order, there are four ways that regular unemployment insurance has been extended in 2020:

  • Pandemic Unemployment Assistance (PUA)
  • Pandemic Emergency Unemployment Comensation (PEUC)
  • Extended Benefits program
  • Lost Wages Assistance

Pandemic Unemployment Assistance (PUA) is a separate benefit program available Feb 2 – Dec 26, 2020.  PUA provides a financial safety net to many people who do not qualify for regular unemployment, including:

  • Self-employed people
  • Independent contractors
  • Part-time workers (with fewer than 680 hours)

Pandemic Emergency Unemployment Compensation (PEUC) is an extension of regular unemployment benefits that is available March 29 – Dec. 26, 2020 for workers who have qualified and received the typical unemployment benefits as listed above. It provides an additional 13 weeks of benefits on top of the 26 weeks of regular unemployment benefits.  Most workers who have qualified to receive regular benefits will qualify for PEUC and then can go on to the Extended Benefits program below (another 20 weeks).  This means that workers that qualify for regular benefits may be eligible for up to 59 weeks (almost 14 months) of paid benefits.  This program is not available to self-employed individuals, independent contractors or part-time workers (see PUA above).

Extended Benefits Program is an ongoing program that is triggered by high unemployment rates in Washington. As mentioned above, it provides an additional extension of 20 weeks. One accesses these extended benefits after the use of all 26 weeks of regular unemployment benefits as well as the 13 weeks of PEUC benefits for a total of just over 13 months of paid benefits. This program is not available to self-employed individuals, independent contractors or part-time workers (see PUA above).

Find out more about PEUC and other benefit extension programs you may qualify for after you run out of regular unemployment benefits. 

Lost Wages Assistance Program is a federal program that adds $300 for each week the program remains federally funded.  (As of this writing, the only approved weeks of the program are those ending August 1, 8, 15, 22, 29 and September 5.  If one receives unemployment benefits for the approved weeks under any of the programs listed above  one is unemployed or working fewer hours due to disruptions caused by COVID-19, they may be eligible for these benefits, which will be paid retroactively.

Please refer to our full article on Applying for benefits as a Freelancer, Contractor or other Self-Employed Worker.

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