Why Different States Pay Out Different Unemployment Benefits

A calculator on top of scattered U.S. currency
Karolina Grabowski

The amount of money you receive while on unemployment depends entirely on where you live. Most states provide roughly $300 to $500 weekly for unemployed workers, but some are more generous. An out-of-work Massachusetts resident, for instance, can receive up to $1,220 weekly, while an Arizonan can only get up to $240.

Every state sets its own unemployment policy, but what accounts for such massive differences?

How State Unemployment Benefits are Calculated

Unlike a program such as Social Security, unemployment is entirely in state hands. The federal government took unprecedented action to boost unemployment payments during the coronavirus pandemic, but otherwise, it has always been on the states to determine the amount and duration of unemployment benefits.

Every state does a few things similarly. For example, there are some general eligibility requirements to qualify for unemployment in the first place. Usually, to qualify, you must:

  • Be unemployed by no fault of your own (fired for misconduct is a disqualification)
  • Have been previously employed, not as a contractor or freelancer

In addition, your employer must have paid into the state employment insurance fund, but most businesses do.

Your previous income determines your potential weekly benefit, but every state has a maximum benefit based on the average income. Generally speaking, the goal is to pay workers half of what they used to earn, so many states’ maximum benefit is roughly 50 percent of the average wage. For example, the average weekly wage in Idaho is $800, while the maximum weekly benefit it $414.

Your own prior income will impact your benefit too. Most states will look at your earnings in the year before you lost your job and calculate your benefit based on your highest-earning quarter. Some states base the benefit on your two best quarters, but whatever the calculation, this is a key piece of determining your unemployment pay.

It’s also important to note that the max benefit is far from the average in some higher-paying states. Some states include additional weekly benefits based on the number of dependents you have. Others have a higher benefit cap because they’re more expensive to live in. Although the max benefit in Massachusetts is up to $1,220, the average benefit is more like $450.

The Bottom Line

There’s no clear cut formula for calculating unemployment benefits, and every state policy has its own peculiarities. Before filing for unemployment, it’s always a good idea to do a deep dive into your state’s plan, and try a benefit calculator to get a sense of what you may receive.