COVID-19-era unemployment insurance unlikely to cover basic needs
A study found the average unemployment insurance was insufficient to cover studio apartment rent in 25 cities.
Millions of Americans are still reeling from the effects of COVID-19 and rely on unemployment insurance (UI) to meet essential expenses. Too often, though, these monthly payments fall short of a person’s basic needs. According to a new report from Real Estate Witch, UI fails to cover minimal rent, food, and transportation costs in 75 of the 109 cities in the study.
The report finds significant regional differences in the amount of UI that people receive, directly affecting their ability to pay rent. (Each state determines the amount of UI, usually based on prior earnings and number of dependents.) The findings are sometimes surprising: While the South boasts a lower cost of living, it’s actually the most unaffordable region for those on UI. The Northeast, in contrast, is the most affordable.
The differences in the amount of UI can be striking. For instance, weekly unemployment insurance ranges from $5 in Alaska to $1,234 in Massachusetts.
Average UI payments in the Northeast ($1,738.32 per month) are more than twice those in the South ($870.81); in the Midwest, payment average $1,311.18 and in the West $1,249.65.
Moreover, there are big regional differences in the duration of benefits. Most while most states (42) allow residents to claim unemployment benefits up to 26 weeks, those in the South offer less: North Carolina (12 weeks), Florida (12 weeks), Georgia (14 weeks), and South Carolina (20 weeks).
The result is that 65% of people in the Northeast can afford a studio apartment on UI, compared to 42% of those in the Midwest, 25% in the West, and just 15% in the South.
But even eliminating food and transportation costs, the average UI was insufficient to cover studio apartment rent in 25 cities, says the report: “Nearly all of those metros reside in California (20%) and Florida (36%) — both of which have strong representation on our ‘worst metros’ lists — along with other southern states (40%).”
As for larger family rentals, the study finds that residents of just 12 cities out of 109 can afford rent for a two-bedroom apartment on top of basic expenses. Of those 12, six are in Ohio, two in western Massachusetts, two in Pennsylvania and one in Washington and Iowa. In the Southern cities in the study, a two-bedroom apartment is out of reach for those on UI.
Where people live affect their housing situation, but the bottom line is that UI benefits are generally “underwhelming” — potentially leaving “many Americans in financial distress, especially during a pandemic that may result in many unable to find jobs for long periods of time.”
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