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Updated on Wednesday, June 24, 2020
The coronavirus pandemic has turned many of our systems upside down. Still, essential workers remain on the frontlines, raising the question of whether they are paid fairly for the immediate dangers they now face.
In a new study by MagnifyMoney, we found that without any hazard pay provisions, 9.4 million essential workers would actually make less at their job than they would on unemployment — even when taking into account the additional $600 in unemployment funding provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
To make this determination, MagnifyMoney compared essential workers’ weekly earnings from 2018 to the supplemented unemployment benefits they could receive once laid off in 2020. We recognize that a subset of these 9.4 million workers will have already been laid off due to the crisis, while others may have since been hired, depending on the industry. Additionally, some workers may have received bonus payouts due to the crisis, while others may have seen their hours cut.
In addition to determining how many workers would earn more from unemployment, we also identified the essential industries and occupations that are most at risk for receiving unfair wages.
- Key findings
- How essential workers’ wages in each state compare to unemployment benefits
- Industries where more workers make less than unemployment
- How to file for unemployment
- Our study found that 58.1% of essential workers in the U.S. — roughly 9.4 million people — earn less each week from their work pay than they would earn if they received unemployment insurance, including the $600 weekly unemployment supplement from the CARES Act.
- In 46 states, more than half of essential workers earned less than the supplemented benefits.
- North Dakota has the highest percentage of underpaid essential workers. We found that 74.1% of workers there earned less than they would if they were able to collect unemployment.
- On the opposite end of the spectrum, Alaska has the lowest rate of underpaid essential workers among the 50 states and the District of Columbia. In Alaska, 41.3% of workers earned less through their work pay than from unemployment benefits.
- New Jersey ranks toward the middle of the pack, but essential workers there would need to earn the highest amount — $1,313 each week — to break even with weekly supplemented unemployment benefits.
- Mississippi essential workers, on the other hand, require the lowest weekly wage at $835 to break even.
- The three industries with the highest prevalence of workers who would take home more money if they were laid off are all health-related. This includes hospitals, skilled nursing care facilities and home health services.
How essential workers’ wages in each state compare to unemployment benefits
Unfortunately, there’s a sizable percentage of essential workers in every state, plus the District of Columbia, who would make more money from unemployment benefits than from their working wages. In fact, only in four states (Alaska, Arizona, Maryland, Nevada) and the District of Columbia is the percentage of workers who would earn more from unemployment than from weekly wages less than half of essential workers in the state.
Of essential workers in North Dakota, 37,674 workers — or 74.1% of the state’s essential workforce — could make more from unemployment than from their wages.
- An essential worker in North Dakota would need to make $1,200 a week to break even with the weekly supplemented unemployment benefits.
Oklahoma and Kentucky have the second- and third-highest rates of essential workers who would make more on unemployment, at 72.2% and 71.2% of workers, respectively.
- Kentucky has slightly more essential workers affected at 158,029, compared to 129,311 workers in Oklahoma.
- Kentucky essential workers would also need a slightly higher weekly wage than Oklahomans to match the supplemented unemployment payments. Kentucky essential workers need to earn $1,152, while Oklahoma essential workers would need to bring in $1,139.
While North Dakota has the highest percentage (74.1%) of essential workers making more on unemployment than from their wages, California has the largest number (871,580) of essential workers who bring in less from their income than they would on unemployment.
- Essential workers in California would need to make $1,050 each week at work to match supplemented unemployment payments.
Meanwhile, the District of Columbia has the lowest number of essential workers on this list who would earn less from their working wages than from supplemented unemployment benefits. In total, this would be the case for 12,484 essential workers — 48.8% — in the nation’s capital.
- Essential workers in the District of Columbia would need to earn a $1,044 weekly wage to match supplemented unemployment benefits.
Alaska has the lowest percentage of essential workers who would make more on unemployment, at 41.3% of workers.
- Essential workers in Alaska would need to earn $970 each week to match weekly unemployment benefits.
Nevada and Maryland round out the bottom three, where 47.5% and 47.7% of their essential workers, respectively, earn less at work than they would receive from unemployment with the supplement.
- With 154,220 affected essential workers, Maryland has a lot more underpaid essential workers than Nevada, which has 47,901 essential workers earning less than unemployment.
- There isn’t a stark difference in the weekly wage needed to break even with unemployment, however; Maryland workers need to make $1,030 a week and Nevada workers need to make $1,069 a week.
Industries where more workers make less than unemployment
Collectively, the top three industries where workers make less than supplemented unemployment benefits — hospitals, skilled nursing care facilities and home health care services — represent 45% of all workers who stand to make more on unemployment.
- However, workers in these industries only represent 26.1% of all essential workers.
Almost 2.2 million hospital workers — those directly on the front lines of the COVID-19 crisis — are underpaid.
- This total accounts for 23.3% of all workers earning less than unemployment, and 13.5% of all essential workers.
Customer service representatives, cooks and nursing assistants are the top three essential occupations within essential industries where workers earn less than supplemented unemployment benefits.
- Interestingly, with the exception of nursing assistants, the top three essential occupations don’t really fall under the top three essential industries.
- Customer services representatives are the hardest hit. About 2.5 million customer service representatives are being paid less than unemployment, even as they face longer hours and an increase in calls. They make up over a quarter of all workers earning less than unemployment.
- The number of cooks who could make more on unemployment isn’t far behind, at 2.2 million, or 22.8% of all workers earning less than unemployment.
How to file for unemployment
If you’re one of the millions who has been laid off or faced cut hours, there’s a chance that you could be making even more on unemployment than from your previous work wages. Here’s how to file for unemployment benefits.
1. Determine your eligibility
You are eligible for unemployment if you lose your employment through no fault of your own, and meet other work, wage and state requirements. The CARES Act extended unemployment benefits to those who have lost their jobs due to the coronavirus pandemic, which includes those laid off, quarantined and/or taking care of loved ones or children due to the pandemic. Self-employed and gig workers may also apply for unemployment benefits at this time.
Unemployment benefits and requirements are run and set by each state, so it’s best to check your state’s unemployment policies to know if you are eligible to apply.
2. Collect your necessary information
When you file, you will need to provide the usual personal and contact information, including your name and Social Security number, as well as bank account information if you’re signing up for direct deposit. You will likely have to provide information about your past employment and employers, including their names and contact information, as well as the date you last worked and why you lost your job.
3. File your application in the state where you work
You can file for unemployment in the state where you last worked, or in any one of the states you worked if you worked in multiple states. You can find your state and its unemployment application materials and requirements here.
Given the high levels of unemployment at the moment, it is likely safer and quicker to apply for unemployment on your state’s unemployment office website or over the phone instead of visiting the office in person.
Depending on your state’s unemployment policies, you may have to “certify for benefits” every week or every other week. This requires you to prove that you are still eligible for benefits. However, check with your state, as it may have temporarily waived this requirement during the pandemic. In addition, you should note that you must file unemployment benefits as income on your tax return.
Using unemployment formulas reported by the Department of Labor and included in the CARES Act material, we calculated the weekly wage at which an essential worker would take home the same amount from unemployment benefits, plus the $600 weekly supplement in each state.
We then estimated the number of people in each state who would qualify for unemployment but earned more than the break-even amount, using microdata from the 2018 American Community Survey from the U.S. Census Bureau and hosted by IPUMs. We excluded anyone who was unemployed at the time of the survey, worked fewer than 13 weeks in that year or earned less than $1,885 during that year. Cut off income was scaled down by 6% to account for the average increase in hourly wages between 2018 and 2020 reported by the Bureau of Labor Statistics.
Weekly earnings of ACS respondents were calculated by dividing reported annual wages by the hours they reported working in the same year. Because the weeks worked are reported in ranges, we used the midpoint of the range, except for 51 to 52 weeks, for which we used 52. Secondarily, we calculated the weekly unemployment benefit, both with and without the $600 supplement, for the average wage in each state, as reported by the Bureau of Labor Statistics as of Q3 2019 (the last available data).
Essential industries and occupations are those identified by the U.S. Department of Homeland Security. Each state can develop its own list; we chose the DHS list for the sake of uniformity.