Make over $55,000? Unemployment benefits may replace less than 70% of your wages under HEALS Act

“I was surprised at how low that income threshold was in some states,” said Ernie Tedeschi, an economist at Evercore ISI.

“[At] $55,000, you are not rich,” said Tedeschi, a former Treasury Department official, adding that “that’s pretty solidly middle class” in states with that threshold.

Then, states would shift to a system whereby combined state and federal benefits would replace 70% of a worker’s prior pay. (For comparison, state aid replaced an average 38% of lost wages in the first quarter of 2020, according to the Labor Department.)

But Republicans would cap the federal supplement at $500 a week. Since states also cap their weekly pay, there would be an upper limit on the amount of aid a worker could get.

The ceiling kicks in fastest for unemployed workers in Mississippi, Arizona, Louisiana, Alabama, Florida and Tennessee.

There, anyone with a salary exceeding $54,600 (Mississippi) to $57,571 (Florida and Tennessee) would make less than 70% of prior pay from unemployment benefits, according to a CNBC analysis.

This is due largely to the less-generous nature of these states’ unemployment systems. Mississippi, Arizona, Louisiana, Alabama, Florida and Tennessee cap their aid at between $200 and $300 a week.

By comparison, other states like New Jersey, Connecticut, Rhode Island, Minnesota and Washington cap their weekly unemployment benefits at between $700 and $800.

It therefore takes a much larger salary in these states to hit the income threshold. Only when one’s salary exceeds $90,000 to $96,000 does their wage-replacement rate start to fall below 70%.

In Massachusetts, which has the highest weekly benefit cap (above $1,200), the salary threshold is nearly $129,000.

Of course, this doesn’t necessarily mean lower earners do well under the Republican plan.

The current $600-a-week policy has disproportionately helped lower earners over higher ones.

For one, lower earners have been more likely than higher earners to lose a job during the pandemic.

The $600 weekly supplement also offered a substantial income boost for these workers.

Consider the average bartender, who makes about $13.50 an hour, according to the Bureau of Labor Statistics.

This person would make just $378 a week from unemployment under Senate Republicans’ 70% plan. However, if this worker were collecting the average state unemployment benefit ($321 a week in May), they would take home about $921 a week via current policy — more than twice the amount of the Republican plan.

Of course, this all assumes the 70% plan becomes law — which isn’t a given, since Democrats don’t support the policy.

It also assumes states can implement such a formula, which experts say is more complicated than a flat weekly payment (since it’s individualized for each worker) and would take months to implement.

“It’s a heavy lift for the states to do anything like this,” said Andrew Stettner, a senior fellow at the Century Foundation.