Jumping state lines can hurt your jobless benefit

A post from my colleague Mike Caputo:

States set their own unemployment benefit rate, and Minnesota’s has been among the most generous.

The maximum weekly benefit you can get in the Gopher State is $566. That’s fifth in the nation, behind Massachusetts, Connecticut, New Jersey and Rhode Island.

Notice that the list doesn’t include any of the states surrounding Minnesota. Maximum weekly benefits are anywhere from 28 percent (Iowa) to 47 percent (South Dakota) less than Minnesota’s. See the U.S Department of Labor’s comparison.

That’s bad news if you live in Minnesota but work in a neighboring state. Should you lose your job, the unemployment rules of the state where you work would apply, not those of where you live.

One Public Insight Network source from Duluth (who wants to be anonymous because she’s worried about people in the community knowing about her jobless situation) feels that disparity acutely. She used to work about 10 miles away in Wisconsin until she lost her job about four months ago. Her unemployment check is $200 less per week than it would have been had she worked in Minnesota. She believes that the unemployment rate should reflect the place where one lives, because the benefit should be based on the cost of living.

But federal law bases unemployment benefits on where you work, not where you live, says Monte Hanson, spokesman for the state’s Department of Employment and Economic Development, which oversees unemployment insurance in Minnesota. “It’s really the employer that is paying the benefits,” Hanson says. “So it makes sense to base the benefit on where the employer is.”

State offices that oversee unemployment benefits don’t know exactly how many people this disparity affects. But you could make an educated guess. During the recent debate over tax reciprocity between Minnesota and Wisconsin, state officials in Minnesota revealed that there are roughly 22,500 people who commute from Minnesota to a job in Wisconsin (about 57,000 people drive from Wisconsin to work in Minnesota). If you were to apply the unemployment rate of Wisconsin of about 8.7 percent to that number, you’re looking at potentially 1,957 people being affected by this. Hanson said that Wisconsin has the largest number of employees who live in Minnesota.

So, overall, were ultimately talking about a situation that affects a few thousand people, certainly not a number that would seem to drive public policy. Nevertheless, our Public Insight source wishes that Minnesota would consider taking some of the stimulus money designated for unemployment benefits to supplement those who work out of state and get less of a weekly amount. States have received some aid from the American Recovery and Reinvestment Act for the unemployed.

And Hanson said some of those funds went to give Minnesotans a temporary, $25 a week increase in their benefit (beyond the $566 maximum). But Wisconsin and other states did the same, according to Dick Jones, liaison for the Wisconsin Department of Workforce Development.

The only recourse for Minnesotans who lost a job in neighboring states might be to petition the legislature in that neighboring state, says Hanson. But, really, would Wisconsin lawmakers be swayed by people who cast ballots in Minnesota?

Do you have a story to tell about receiving unemployment benefits. Please share it with us.

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