Under terms of the $2 trillion stimulus package being sent to President Trump for his signature, a typical laid-off worker in Tennessee would earn $825 a week in combined state and federal unemployment benefits for up to four months.
The amount includes Tennessee's average unemployment benefit, $225 per week, plus a $600-a-week federal supplement provided in the stimulus package. That translates to $825 a week or $20.63 an hour for a full-time worker on the job for 40 hours a week. A worker earning the maximum Tennessee state benefit, $275 a week, would earn $875 a week under the combined benefit or $21.88 an hour.
The Tennessee portion of the temporary unemployment benefit uses a sliding scale based on a worker's recent wages. The state portion is paid using money from state's Unemployment Insurance program, paid by Tennessee employers. In Tennessee, workers can receive benefits for up to 26 weeks. The average claimant receives benefits for 13 week, according to the state.
At $825 a week, a worker would earn at the rate of $42,900 a year. At $875 a week a worker would earn at the rate of $45,500 a year. The U.S. Bureau of Census said in 2018 the median per capita income in Tennessee was $28,511.
The enhanced federal unemployment payments are for four months and also cover freelance and gig workers, in addition to regular workers.
The goal of the stimulus package is to quickly provide the average out-of-work American with 100% wage replacement, backers of the proposal said.
But some low and moderate income people could end up making more while unemployed than while working.
"People may be motivated to quit their jobs to get higher pay," Gary Burtless, an economist and senior fellow at the Brookings Institution, a left-leaning think tank, told CNBC. "This is, I think, a challenge in the time of coronavirus."
Treasury Secretary Stephen Mnuchin acknowledged this week "it's not a perfect system" but it is designed to work quickly to keep the economy going and limit the hardship on individuals losing their jobs through no fault of their own.
Mcnuchin said many state unemployment offices have 35-year old computer systems, and a more complicated unemployment formula would have taken months to correct.
"The simplest way, and the fairest way, was $600 per person," Mnuchin told Fox News. "In certain states that might be a little bit too much money."