An estimated 70,000 people will benefit from the increased benefit amount in the first year after taking effect. Of those, an estimated additional 14,000 people will remain eligible for assistance while accepting partial employment. Under the previous law, the unemployed were penalized after earning more than $30 a week and lost all assistance after earning no more than $240 per week. The new law will provide more people with the opportunity to remain connected to the workforce while they look for full employment.

After the Covid-19 pandemic put Arizona’s woefully low unemployment benefits in the spotlight, legislators from both sides of the aisle worked to draft provisions that would increase the maximum weekly benefit amount and increase the amount a person can earn from partial employment while continuing to receive assistance.

The final bill reflects a compromise between legislation introduced by Senate President Fann and a bipartisan effort by Representatives Cook, Epstein and Friese.

The Grand Canyon Institute (GCI) is proud to have provided research throughout the legislative session to achieve the best possible outcomes for these changes to Arizona’s unemployment insurance program. GCI has published numerous policy briefs on the economic impact of Arizona’s current meagre benefits as well as policy recommendations for improvements.

Changes approved by the state legislature and signed into law by the governor include:

• An increase in the maximum weekly benefit amount to $320 per week, up from $240, the second lowest amount in the nation. That will move Arizona up to 44th in the nation based on current state weekly benefit amounts.
• An increase in the income disregard to $160 per week, up from $30. This is the amount a person can earn from partial employment. Arizona will move from the lowest in the nation to 18th.
• Weeks of unemployment assistance will remain at 26 weeks while unemployment is above 5%. Once the rate drops below 5%, weeks of assistance decline to 24 weeks. Twenty-six weeks is the norm across the United States.

These benefit changes will be funded by expanding the taxable wage base upon which employers are assessed a tax that funds Arizona’s unemployment insurance trust fund. This change will take effect in Calendar Year 2023. The wage base will increase from the first $7000 earned by an employee in a year to $8000 — the first time it has been adjusted in almost 40 years and still one of the lowest in the nation. Covid relief funds and a planned  transfer from the General Fund have helped to bolster Arizona’s trust fund which was significantly depleted due to the pandemic but never reached a zero balance.

Arizona’s current unemployment benefits have led to extreme hardship for the state’s unemployed and those whose work hours were drastically reduced due to the pandemic. In July 2020, almost 3 million unemployment claims were filed at the peak of the crisis. In August 2020, the Grand Canyon Institute estimated that Arizona had lost more than $1 billion in economic activity due to the low benefit amounts paid by the state and those excluded from assistance who also missed out on federal supplemental assistance that has varied between $300 and $600 per week.

As of June 19, 2021, about 134,000 Arizonans were receiving state or federal unemployment insurance. Federal Pandemic Unemployment Compensation, the $300 weekly supplemental assistance, will end early on July 10 due to action taken by Governor Ducey. Federally-funded Pandemic Unemployment Assistance and Extended Benefits funded by the American Rescue Plan Act will remain in effect until Sept. 4, 2021.