The coronavirus pandemic has exposed yet another failure of government, namely the unemployment insurance system. The basic rationale of the unemployment insurance program is that it is supposed to tide people over who find themselves unemployed. But it doesn’t do that. Not even close. In Alaska, the maximum weekly benefit amount is $370. The minimum weekly benefit amount is $56.
Let’s just focus on the minimum benefit: $56 per week. That’s $224 per month. That is also $8 per day. Try living on $8 per day. Let’s see now, one’s basic expenses include food, shelter, clothing, transportation, and a few other things, like toothpaste, shampoo, and of course, toilet paper. The cheapest rental that I could find in Juneau in preparing this piece was a 400-square-foot, one-bedroom unit for $1,175 per month. That’s $39.17 per day, and the tenant would have to pay electricity. Most of us would find it difficult to even eat on $8 per day, even if Top Ramen were a staple.
I am sure that since the system pays so little, many do not bother to file an application. No wonder the sudden rush of applications when, through the stimulus package, unemployment benefits will be boosted by $600 per week, at least for a period of four months. When it is over, we will be back to a system that pays as little as $8 a day. An article in the New York Times on April 23 indicates that Alaska has the lowest replacement rate in the country. The replacement rate is the share of a worker’s wages that is replaced by unemployment benefits.
No wonder so many people are so fed up about a government that cares so little about its citizens. Just think, what if we had an unemployment insurance system that did what it is supposed to do?