Temporary Work May Hurt Those Collecting Unemployment Insurance Benefits

Believe it or not, it is true: in certain states, depending on the nature of the unemployment insurance laws, working a part-time job to supplement your unemployment benefits while finding a full-time job can actually reduce your benefits to the point where you could be taking in less total than if you did not work part-time at all and simply collected the unemployment benefits.

Over at the Examiner, Michael Thornton reports on this situation. In Massachusetts, when people are out of work for more than a year, if they take even a temporary or part-time job within that year, their new claim is set to their most recent salary - often far, far lower than their last full-time job. People can see their benefits cut by up to 75%, as in this Globe article.

The vast majority of people do not want to stay on unemployment and wish to work full time. However, until they can land a full-time job, many have obligations (debt, mortgage, transportation, etc.) in addition to the basic expenses needed to get by (food, heat, electricity, etc.). For most people unemployment benefits are nowhere near sufficient, and they need to supplement them however they can. Part-time work is one way to do this.

To actually penalize people for taking the initiative to take some work in the attempt to improve their situation is the height of absurdity.

This is one of those things that leaves me scratching my head about the unemployment insurance system. The other is the fact that unemployment benefits are taxable - it just boggles my mind. "Here's some emergency money...minus a few bucks for Uncle Sam."

What are the laws like in your state?

Have you experienced reduced benefits because you took a temporary job while collecting unemployment?

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