Coronavirus in rural America (Part XXX): unemployment benefits, state variations, and cost of living

Here is a chart from the NYT a few days ago showing state-to-state variations in what the federal boost in unemployment benefits did to state unemployment benefits in place before the federal top up.  The story's lede explains: 

Before the coronavirus, people receiving unemployment benefits in most states got, on average, less than half their weekly salaries. 

Now, as millions file claims, many are poised to receive more money than they would have typically earned in their jobs, thanks to the additional $600 a week set aside in the federal stimulus package for the unemployed. 

That calculation is based on an analysis of the so-called replacement rate, which is the share of a worker’s wages that is replaced by unemployment benefits.

Bottom line, in about half the states, the $600/week is certainly sufficient to keep workers at home--one of its goals, depending on who you ask--because it means they earn more from the combination of the federal supplement of $600/week and the state unemployment benefits than they would if they were working. 

Of course, a person's ordinary income (barista wages of $10 to $15/hour versus more skilled/highly valued labor) and the state's cost of living are key variables when assessing the generosity and appropriateness of the current benefits. 

Here's a story from NPR about how these variations played out in Kentucky, a state that already had a generous unemployment benefit.  The dateline for this story is Harlan, Kentucky, a notoriously impoverished part of the state, and Scott Horsely reports, interviewing Sky Marietta who, with her husband, opened a coffee shop last year in Harlan with the goals of providing "good coffee, good Internet services, and some opportunity in a community that has been starved of all three."  The Mariettas hoped to "transform the downtowns and main streets of eastern Kentucky" and they provided much needed jobs, interviewing perhaps 100 applicants when they opened.  The Mariettas stayed open during  the first few weeks of the coronavirus shut down, which came just a few months after they opened the doors of their establishment.   

The No. 1 people that we're serving right now are health care workers. I feel like they don't have a lot of options, and they certainly deserve at least some coffee in this, right?

But once the $600/week payments started flowing, many employees asked to be laid off.  Marietta wrote on her blog:

Not because they did not like their jobs or because they did not want to work, but because it would cost them literally hundreds of dollars per week to be employed.

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We basically have this situation where it would be a logical choice for a lot of people to be unemployed.

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You also have to think, the benefit of not having to go to work, especially during a pandemic. It's not that we don't wish that we could pay our employees at that level all the time. You're always wanting to pay your staff the best you possible can. But to be put in a position where you can't compete with them being at home, unemployed. It's really tricky. It's a really difficult situation to be in.

Marietta wonders if she'll get her employees back in July, when the benefits run out.