How much would a person have to make an hour to match what they collect in unemployment? We did the math

Indiana

FORT WAYNE, Ind. (WANE) – As employers have reopened business after the pandemic’s peak, many have struggled to find workers. Many are saying people collecting more unemployment money than they would make working at their jobs is to blame.

“If we’re looking at it as a market right now, workers theoretically have the power,” said Rachel Blakeman, the director of Purdue University Fort Wayne’s Community Research Institute. “Because if you need people to get there, then you’re going to need to be able to make your offer a competitive offer.”

As it stands now, the maximum state unemployment payment is $390 a week. Through the CARES Act, people who are unemployed can also collect a $300-a-week supplemental federal payment on top of state benefits. This totals to $690 per week, or $17.25 an hour.

According to Indiana’s Department of Workforce Development, the average weekly claim is about $295 plus the $300 from the federal government, totaling $595, or $14.87 an hour.

Because of this, until the governor’s job search requirement executive order, many didn’t have much of an incentive to work. For example, according to Zip Recruiter, the average server makes $590 per week, or $14.74 an hour.

So why would someone want to work for making the same amount of money, or less, when they could just collect these checks?

To combat this, Eric Holcomb signed an executive order Tuesday that puts the job search requirement back in place starting June 1. The order means that those seeking unemployment benefits must submit a weekly report on their job-seeking efforts, which can include applying for work, attending job fairs or participating in state workshops.

However, Blakeman says that this is only a fraction of the labor shortage.

“If we think that the removing the additional unemployment or adding in the search requirement so that people are going to have to take jobs and that’s going to end our labor shortage, that is an incorrect analysis,” said Blakeman.

As of the end of April, in Northeast Indiana there are 12,000 open jobs and only 3400 people collecting unemployment. Indiana’s current unemployment rate is 3.9%, which is near pre-pandemic levels. In April 2020, it peaked at 16.9%.

Blakeman said the best way for employers to attract employees is to raise their wages. According to her, it’s still to early to see how many employers have decided to do this.

“When you’re driving around, you don’t see people advertising that they’re paying $8 an hour, they’re advertising that they’re paying $12 or $15 and $19 an hour,” said Blakeman. “So we think that there’s probably some upward pressure on wages to a certain extent, but we don’t know yet exactly how that is going to play out so well it will be later this year at earliest.”

For now, the CARES Act providing the supplemental $300-per-week is in effect until September, 2021.

To hear Blakeman’s breakdown of the current job market, click here.

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