A record number of Americans are collecting unemployment benefits at a time when many major companies are seeking to hire hundreds of thousands of temporary workers ahead of the holidays.
If you’re one of the more than 20 million Americans receiving jobless aid and are having trouble finding sustainable work, you might be considering a seasonal gig at a place like Amazon, Target or UPS.
But is taking a seasonal job while you’re receiving unemployment benefits a good idea?
“There’s not really any disincentive to take a seasonal job,” said Michele Evermore, a senior policy analyst and expert on unemployment insurance at the National Employment Law Project. “It gives a little bit more cushion, so I think it’s pretty smart as long as it’s suitable.”
We’ll detail what a suitable replacement job is and explain why, in general, you don’t need to worry that taking a seasonal job could cost you your benefits.
What Happens if You Get a Seasonal or Temp Job While on Unemployment
In an interview with The Penny Hoarder, Evermore explained how taking a seasonal job could affect the duration of your unemployment benefits and the amount you receive each week.
Let’s break it down.
Duration of Benefits
Pandemic notwithstanding, the majority of states offer Unemployment Insurance benefits for 26 weeks. According to an analysis of unemployment programs from the Center for Budget and Policy Priorities, “seven states provide fewer weeks and one provides more.”
On the lower-end of the spectrum, Florida and North Carolina provide up to 12 weeks of benefits. On the higher end, Montana provides up to 28 weeks.
Those 12 to 28 weeks of typical benefits do not have to be in a row. They can pause and resume as needed. The main stipulation here is that those weeks must fall within your “benefit year.”
Your benefit year is a 365-day period that starts when you’re first approved for benefits, Evermore explains, and it doesn’t necessarily sync up with the calendar year. For example, if you were approved for benefits in June 2020, your benefit year would last until June 2021. Generally speaking, you can use any number of those 12 to 28 weeks of benefits throughout that year-long period.
But if you use them all up quickly — including all available extensions — you won’t be able to get more benefits until your benefit year expires and a new one starts. This is where strategically taking employment, even a temporary gig, can help your benefits last a little longer.
“It doesn’t extend your benefit year, but it extends your eligibility farther through the year,” Evermore said.
“So I’m entitled to 26 weeks of benefits during that year. If I can fill in some of that year with work, then I’m at lower risk of running out of benefits before finding a good, permanent replacement job,” she added.
This scenario is the case for regular, state-level Unemployment Insurance programs. Emergency legislation in response to the pandemic created federal unemployment programs — including Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC) — that are only available for a specific period of time.
Both federal programs expire on Dec. 26, unless they are extended by Congress. If you’re on one of them, you will not be able to receive benefits past Dec. 26. Likewise, you won’t be able to resume collecting those federal benefits if you take a seasonal job that lasts beyond Dec. 26.
The latest data from the Department of Labor shows that more than 13 million Americans receive benefits through PUA and PEUC. If you’re one of them, it may be in your best interest to rely on these benefits now and search for a long-term job instead of a seasonal one.
Amount of Benefits
In many cases, your weekly unemployment compensation will pause while you’re working.
Let’s say you receive a $300 weekly payment. You decide to take a three-month, temporary position at Best Buy, which pays $600 a week. First, tell your state agency that you found temporary work. Then, during the course of your employment, your benefits will pause. Once your temporary gig expires, you can resume your $300 weekly payments.
However, if you take a new job that doesn’t pay as much as your weekly benefit amount, you may qualify for partial benefits. Each state has their own rules, but typically your unemployment benefit will be reduced dollar-for-dollar while you work, Evermore says.
So if you receive $300 per week in benefits and take a part-time job that pays only $150 a week, in most cases your state will make up the difference and chip in $150. In this scenario, each week of partial benefits will still be counted toward your weeks of eligibility — that 12- to 28-week total mentioned above.
If you’re worried about your benefits being reduced after your seasonal job ends, don’t be. Many people think that once they resume their unemployment benefits, that the payments will be based on the income of their seasonal job and ultimately lower their weekly payments.
Evermore says that’s a common misconception. As long as you are still within your benefit year, your weekly payments are likely to return to normal.
What Else You Should Consider
While Evermore sees no major disincentives to taking a seasonal job, her recommendations come through the lens of finding a new job that’s a “suitable match.”
To understand what she means, let’s wax philosophical for a moment and consider the purpose of unemployment benefits. The programs are there to help you get back on your feet after you’ve been laid off at no fault of your own.
If you used to be a dental hygienist who made $80,000 a year, is that $15-an-hour seasonal job really helping you get back on your feet?
“One of the reasons unemployment insurance is an economic stabilizer,” Evermore said, “is it keeps people from being desperate enough to take horrible jobs. It keeps a recession from allowing employers to totally take advantage of an unemployed, desperate workforce.”
The phrase “suitable employment” might have a legal meaning with your state unemployment agency. Suitable employment refers to jobs related to your credentials, work history and previous pay.
According to a recent white-paper report from the National Bureau of Economic Research, longer and more generous unemployment programs help people find better replacement jobs during a recession.
“We find that UI generosity allows workers to search longer and eventually find jobs better suited to their skills,” the report states.
In some cases, your time and effort might be better spent looking for a long-term job that’s comparable, or better than, the one you lost.
“You don’t necessarily want people taking the first temporary, low-paying, low-hour job that comes along,” Evermore said.
This was originally published on The Penny Hoarder, a personal finance website that empowers millions of readers nationwide to make smart decisions with their money through actionable and inspirational advice, and resources about how to make, save and manage money.