The number of Americans who first filed applications for unemployment benefits last week was the largest in two months at 898,000, the US Labor Department said Thursday. Of the 22 million jobs that the American economy has lost due to the COVID-19 epidemic, almost 11 million have not yet been returned.
According to the Federal Reserve Bank of New York, only about 28 percent of the funds received by the Americans in the form of unemployment benefits by the end of June were spent. About half of the amount went to pay various debts, and the Americans chose to save about a quarter of the money. This also negatively affects the growth of the economy, which in the United States is highly dependent on consumer activity.
In general, US residents are now trying to save much more money than spend. At the same time, the end of federal lump sum payments also highlighted the sharp unevenness in benefit payments across states. In Arizona, for example, the maximum weekly payment is only $ 240, while in neighboring California it is $ 450. In Florida and Tennessee, the maximum weekly amount is $ 275, in New Jersey – $ 713.
After the recession of 2008-2009, about a dozen states have lowered their benefit ceilings, according to a report by the Century Foundation. In North Carolina and Wisconsin, for example, it is no longer set as a proportion of the state’s average weekly wage, which typically increases each year. Instead, they are determined using formulas referring to the recipient’s previous income.
Most states had to borrow billions of dollars to fund unemployment benefits during and after the Great Recession of the late 2000s. To cut budget spending, many responded by cutting their weekly payments and their duration, and few have canceled them since.
“This is a steady downward trend,” says Andrew Stettner, senior fellow at the Century Foundation. “The formulas have gradually become more stingy.”
Some of the lowest benefits are provided in states where black Americans are the largest recipients. In Mississippi, for example, 54% of recipients in August are African American, according to the Century Foundation. The maximum payout in this state is $ 235 per week. Black Americans are disproportionately employed in restaurants, retail stores, hotels, and other service industries that have severely lost jobs.
In South Carolina, more than a third of residents receiving unemployment benefits are black, with a maximum benefit of $ 326 per week.