The nationwide unemployment rate peaked at nearly 10% in 2009 during the height of the financial crisis. A decade later, unemployment levels have sunk to 4.0% or lower. But the rate of underemployed workers—those who are out of work and have stopped looking for a job, and those who are working part time involuntarily but would prefer full-time jobs—is higher, as much as 7.0% of workers nationwide.
While unemployment benefits are generally intended for those who are out of work, partial unemployment benefits may be available for underemployed workers. Even if you are doing some work, you may be eligible for partial unemployment if you're earning less than you'd receive in unemployment benefits if you were fully unemployed.
The eligibility rules for unemployment, including partial unemployment, are set by state law. Generally, however, you must:
For more information on these rules, see Eligibility for Partial Unemployment.
Each state has its own formula for calculating unemployment benefits, including partial benefits. In every state, however, benefit amounts are based on prior earnings. Some states use the applicant's average earnings over a one-year period to calculate benefits; others use the applicant's average earnings in the highest paid quarter of the base period; and others use another method.
Benefits are based on some percentage of these prior earnings. For example, a state might replace half of your average weekly earnings in the base period, subject to maximum and minimum benefit amounts.
Partial benefits must also take into account what you are actually earning. Typically, states don't count all of your earnings against you. The amount that isn't counted is intended to encourage applicants to take any work that's available, even part-time work that doesn't pay that well, rather than being fully unemployed. After setting aside this amount, the unemployment agency will generally subtract the rest of your earnings from what you would have earned as an unemployment benefit if you were fully unemployed, and pay you the difference.
Example. Bob works in New Jersey. His weekly unemployment benefit if he were fully unemployed, based on his prior earnings, would be $450. He currently earns only $300 a week, because his hours were cut back. New Jersey allows him to set aside $5 or one-fifth of his weekly benefit amount, whichever is more. One-fifth of his weekly benefit amount is $90. If Bob is eligible for partial unemployment benefits, he could expect to receive a weekly check of $240: $450 minus $210.
To find out your state's rules for partial unemployment benefits, contact your state's unemployment agency.