Amelia Thomson-DeVeaux and Jasmine Mithani:
The United States is not known for its generosity to the unemployed. But the coronavirus crisis has transformed our system for compensating jobless workers. As tens of millions of workers suddenly became unemployed, Congress passed an expansive relief package with an unprecedented $600-per-week supplement for jobless workers. The goal was to replace their wages so they could survive the economic lockdown.
As a result, though, many people may now be eligible for substantially more money while unemployed than they made while they were working. A new analysis by Peter Ganong, Pascal Noel and Joseph Vavra, economists at the University of Chicago,1 uses government data from 2019 to estimate that 68 percent of unemployed workers who can receive benefits are eligible for payments that are greater than their lost earnings. They also found that the estimated median replacement rate — the share of a worker’s original weekly salary that is being replaced by unemployment benefits — is 134 percent, or more than one-third above their original wage. A substantial minority of those workers, particularly in low-wage professions like food service and janitorial work, may end up receiving more than 150 percent of their previous weekly salary.2