Why the $600 coronavirus unemployment bonus is a rip-off for Californians

I know folks in financial stress should be thankful for any gift, but the much-heralded $600 unemployment “bonus” from Uncle Sam is a relative rip-off for most Californians.

Why? The one-size-fits-most formula is part of $2 trillion spent on various stimulus plans, but it cuts short states with pricier cost of living.

Don’t get me wrong. I’m sure the money is helping ease some of the economic pain brought by the pandemic and subsequent business shutdowns. But let my trusty spreadsheet show you how it unevenly it helps the jobless, depending on where they live and how much it costs to live in various towns.

Using federal stats on household spending and size, I created a measurement of weekly average family expenses. By this math, only four states have bigger spenders than Californians at $2,667 per week. Tops? Hawaii at $2,824, then New Jersey at $2,740; Alaska at $2,709 and Massachusetts at $2,674. Lowest? Mississippi at $1,562 then Arkansas at $1,648 and Alabama at $1,658.

Next, look at what a typical unemployment check might be. I took federal data on average unemployment benefits paid in March, then added the $600 nationwide “stimulus” tacked on by congressional action.

By this math, a jobless Californian can expect $937 in weekly benefits. (By the way, 30 states paid more.) Why? California’s earliest layoffs came in tourism-related industries, often filled with lower-income workers.

The biggest benefits were seen in Massachusetts at $1,157, then Hawaii at $1,143 and North Dakota at $1,081. Smallest jobless checks? Louisiana at $811, then Mississippi at $812 and Arizona at $834. Oh, the 50-state median? $953.

So how far do these typical jobless benefits go toward paying an average family’s bills? Keep in mind, the $600 “bonus” was based on a philosophy that this part of the stimulus program should loosely translate to temporary full pay for a typical out-of-work American during this economic emergency.

My spreadsheet tells me the typical unemployed Californian, comparing typical benefits checks with average expenses, is getting 35% of their living costs covered. Only Alaskans did worse at 32%.

Nationally, the typical benefit was 47% of a family’s expenses. And where were the most generous benefits, according to my spreadsheet?  Kentucky at 59%, then Oklahoma at 58% and Iowa at 57%.

California’s federal stimulus looks small no matter how you do this kind of math. And this kind of stimulus funding could determine which states rebound quicker from the coronavirus-linked slowdowns. Or it might prove to be an economic disincentive to return to work.

Not linking nationwide stimulus to regional variances in the cost of living — not a terribly difficult thing to do — creates significant imbalances. And remember, speaking of unfairness, look who’s funding that $600 bonus.

Californian households paid on average $7,670 in federal income taxes in 2017. Folks in only six states paid more.

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Author: Jonathan Lansner

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