"Massachusetts had the highest unemployment rate in July, 16.1 percent," the federal Bureau of Labor Statistics reported on August 21, 2020.
What the BLS did not mention is that Massachusetts also had the nation's highest maximum weekly unemployment benefit—as much as $1,423 a week through July 31, 2020.
That was the maximum benefit, not the average benefit. The average weekly benefit in Massachusetts in June was $425.55, according to the federal Department of Labor. The July stats don't seem to be available yet online. That was third after North Dakota ($426.29) and Hawaii ($456.19).
Now, it's possible that the high unemployment in Massachusetts was driven primarily by how hard-hit the state was by Covid-19 infections, rather than by the generosity of the unemployment benefits. Or by the fact that Massachusetts has a lot of hospitality-industry jobs that were hurt by declines in business and leisure travel. New York, which was also hard-hit by the virus and is also a travel destination, was second to Massachusetts; the Empire State had a 15.9 percent seasonally adjusted unemployment rate for July. The New York jobless benefits were stingier than are those in the Bay State, paying a maximum of $1,104 a week through July 31, 2020.
So maybe it is just a total coincidence that the state with the highest reported unemployment rate was also the one offering the most money to people who successfully filed for unemployment. But you don't have to be a cynic to suspect that there might be some causal relationship, and that incentives at the margins affected decisions. If an employer knows that an employee can earn $1,423 a week on unemployment, that employer might be less reluctant to borrow money or burn cash reserves to keep that idle employee on the payroll. And if the employee knows he or she can earn $1,423 a week on unemployment, the employee might find a way to let the employer know that the employer shouldn't feel too badly about letting the employee go.
