Sacramento, September 1, 2020 — The state of California will begin administering a temporary $300 federal unemployment benefit, the “Lost Wages Assistance” (LWA) program on September 7th, but new research from the California Policy Lab finds that approximately 192,000 unemployed Californians will not receive the extra $300 benefit because of federal eligibility rules.
Under the program guidelines, unemployed workers must receive a Weekly Benefit Amount (WBA) of at least $100 in order to qualify to receive the extra $300 from the LWA program. There are 192,000 Californians who don’t meet this threshold, and their average benefit is $68. For the 3.6 million workers that will receive the $300, the supplement will still leave the majority with poverty-level benefits. With the supplement, the average benefit will be $575 per week, an amount that is below the threshold for being very poor, which in California is $828.50 per week.
“While the LWA program will be a temporary boost for unemployed Californians, it’s a 50% reduction from the $600 that unemployed Californians were previously receiving under the Federal Pandemic Unemployment Compensation program,” explains Till von Wachter, a co-author of the analysis, UCLA economics professor and faculty director at the California Policy Lab. “We also calculate that the $4.5 billion in initial FEMA funding allocated to California is only enough to provide benefits for about four weeks, and it’s unclear if there will be any funding beyond this first allocation.”
Key Research Findings:
1) 3.6 million Californians would likely be eligible to receive the LWA payments
In the week ending August 1st, 3.79 million Californians were paid UI benefits for unemployment experienced during that week, and 95% (3.6 million) had a Weekly Benefit Amount of $100 or more, meaning they would be eligible for the LWA benefit. Individuals who were likely to be eligible to receive UI benefits in the week ending August 1st had an average Unemployment Insurance payment (not including LWA) of $275.
2) Younger workers, women workers, and workers with less education are more likely to be excluded from the LWA benefit
Younger claimants are less likely to be eligible for LWA because of the $100 threshold, with more than 1 in 5 claimants aged 16-19 disqualified for LWA and nearly 1 in 10 of those aged 20-24. However, while younger claimants make up a disproportionate share of ineligible claimants, the vast majority (82.5%) of ineligible individuals are adults older than 20. Over 60% of ineligible claimants were female, and over 57% had only a high school degree or less.
3) The LWA will raise the average weekly UI benefit to $575, but that amount would still qualify as “Very Low Income” by HUD standards
The average weekly benefit of those receiving the $300 LWA supplement will rise from $275 to $575, however, the median family income (MFI) in California is $86,165, which comes out to $1,657 per week. HUD considers 50% of MFI (equivalent to $828.50 per week) to be “Very Low Income.” Since the maximum WBA is $450 in California, even with this $300 LWA benefit, a family with one claimant receiving LWA in addition to the maximum weekly benefit ($750 in total) would still be considered “Very Low Income” by HUD. As a comparison, the now-expired FPUC benefits ($600 per week), would have raised the average payment (for those eligible for LWA) up to $875, above HUD’s Very Low Income threshold, while also providing payments to individuals with Weekly Benefit Amounts below the $100 threshold.