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Can You Live on Unemployment Benefits?

Are Unemployment Benefits Enough?

The goal of the unemployment insurance program, according to the Center on Budget and Policy Priorities, is to provide people with about half of their normal wage. However, it almost never works out this way. The average American collected $295 in weekly unemployment benefits in the third quarter of this year, according to the most recent government data. But the average weekly salary in that same quarter was $865, which means the jobless benefits replaced just over a third of the average worker’s salary.

In fact, even as Congress has successfully extended the time period one can collect jobless benefits four different times in recent years, from 26 weeks to 99 weeks, the actual amount that the average person collects relative to the wage he or she earned before becoming unemployed has slightly decreased. In 2007, before the recession began, unemployment benefits compensated 35.6% of one’s last salary. In the third quarter of this year, that number was 34.2%.

Part of the problem, according to Rebecca Dixon, a policy analyst at the National Employment Law Project, a national advocacy group for low wage workers, is that only a handful of states actually adjust the amount of benefits offered to meet annual increases in wages. In the states that do, like Pennsylvania, New Jersey and Kentucky, benefits tend to be significantly higher and come closer to meeting the standard of living that workers might have grown accustomed to. New Jersey, for example, offers maximum jobless benefits of $598 a week, nearly the twice the national average.

But whether you’re living on half of your normal salary or a third of it, getting by on these benefits alone is nearly impossible.

“The benefits definitely aren’t adequate,” Dixon said. “If your benefits are replacing 40%-50% of what you used to make, or less, there are a lot of bills you won’t be able to downsize quickly enough.”

Indeed, some might argue that’s the point. If you give the unemployed too much money for too long, it could theoretically take away their incentive to search for work. Instead, unemployment benefits are essentially intended to provide just enough money to keep jobless Americans – and the economy as a whole – temporarily afloat.

But as the term “temporary” has come to mean 99 weeks or longer, many Americans have had to find ways to get by, whether by cutting corners or occasionally supplementing their benefits whenever possible by taking little odd jobs.

Tricks To Get By on Unemployment Benefits

When Janet Raiffa lost her job as a director of recruiting at a New York City law firm back in 2008, her salary dropped from more than $200,000 a year to the roughly $20,000 she was eligible to collect during her first year on unemployment benefits. Though Raiffa did have money in savings, her lifestyle quickly started to bleed her bank account dry.

“My mortgage and maintenance are more than $3,000 a month, not counting all the other necessities,” Raiffa said.

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