Those with jobs in New York City are likely biting their nails. In December, the city reported a 10% decline in finance-related jobs, and the U.S. Conference of Mayors estimates that across all sectors, New York will shed 181,000 jobs in 2009.
If that's not bad enough, based on the cost of living against benefits for high earners, New York is the worst place in the country to be unemployed. For those on a $150,000 salary in Gotham, the cost of living averages $122,342 a year, according to the Council for Community and Economic Research, an Arlington, Va., research firm. The maximum weekly unemployment benefit is $405; that covers only 17.2% of costs.
It's a situation with which New Yorkers are familiar. When the economy contracts, the city loses jobs faster than most, says Bruce J. Bergman, an economist at the U.S. Bureau of Labor Statistics. That's thanks in part to a heavy concentration of positions in the finance sector.
"In the New York area, about 8% of all private-industry workers were employed in finance and insurance," Bergman says. That figure is 33% higher than the national average, which means downturns in finance disproportionately hit the New York metro area.
Though there's no good in being laid off, if you lose your job in Pittsburgh or Providence, R.I., it's easier to cover food, health and home expenses than if you get your pink slip in Miami or Washington, D.C. In the former two, the maximum weekly payment covers 47.6% and 41% of a $150,000 earner's living costs, respectively; in the latter two, those numbers dip to 18.5% and 20.7%, respectively.
Behind the numbersTo compile our list, we evaluated the nation's 40 largest cities on the unemployment insurance benefits available in their state, based on figures from local government agencies, and the cost of living per city, according to the Council for Community and Economic Research. Many companies offer independent severance packages, but because they're not required by law and vary by company, they weren't included in our analysis.
For each city, we considered how much money was available to a worker who was earning $150,000 a year, the amount needed to receive the maximum weekly benefit across all states. For the sake of consistency, it was assumed that our worker had been employed during the previous year and was let go through no fault of his or her own. Then we looked at how far the weekly unemployment check would go, considering local costs for housing, transportation, health care and utilities.
There was no distinct pattern. The 10 best cities for unemployment pay include expensive Northeastern spots like Boston and Providence but also inexpensive cities like Houston, as well as moderately priced Salt Lake City. The bottom 10 were also regionally and politically diverse. Benefits in Nashville, Tenn., and Tampa, Fla., don't keep pace with cost of living, but neither do the checks in San Francisco or Washington, D.C.
Unemployment benefits are paid weekly and range from a maximum of $660 a week in Rhode Island to $240 a week in Arizona. Cost of living varies just as dramatically. Based on the Council for Community and Economic Research's figures, Providence is 21% more expensive than Phoenix.
Benefits at stakeCity dwellers, as opposed to suburbanites, are particularly squeezed by unemployment benefits, as payments are not adjusted for the cost of living. That's because unemployment funds are set up at the state level, not at a municipal one. As a result, the needs of San Franciscans or Angelenos are treated the same as those in less expensive California locales such as Fresno or Sacramento. Those decisions at the state level are often paid for through state unemployment taxes on businesses.
"The federal government distributes the money, and then benefits vary by state," says Mike DeCesare, a spokesman for Rep. Jim McDermott, D-Wash., the chairman of the House's Income Security and Family Support Subcommittee. "A lot of how it's distributed at the state level has to do with local taxes."
Payouts and eligibility vary by state, but the Nov. 21, 2008, Unemployment Compensation Extension Act extended emergency benefits by 20 weeks nationwide and added 13 weeks on top of that for states with high unemployment. The Feb. 17 American Recovery and Reinvestment Act added $4.7 billion to the federal unemployment fund.
That's good news for those living in the Phoenix area, where unemployment was 6.9% in February, up from 3.8% a year ago, and where the former highest earners who find themselves out of work get a measly $240 a week.
This article was reported by Matt Woolsey for Forbes.com.
Published April 3, 2009