Arizona’s Unemployment Rate 7.8% in November–Improve Work Allowance to reward work for 90,000 and gain $500 million in economic growth

December 18, 2020

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Policy Brief

Dec. 18, 2020

(updated Dec. 21,2020)


Fixing Unemployment Compensation:

Reward work for 90,000 and gain $500 million in economic growth

Dave Wells, Ph.D., Research Director

Max Goshert, MA, Associate Director

Key Findings

  • Arizona has among the worst state unemployment insurance (UI) in the country.
  • Since $300 weekly federal unemployment supplements ended in September, Arizona’s unemployment rate has jumped from 6.5% in September to 7.9% in October and 7.8% in November, suggesting that Arizona’s economic performance is being dragged down by its poor state unemployment compensation system.
  • 60,000 Arizonans who have seen their weekly hours reduced by about 12 hours are NOT receiving partial unemployment assistance but would in other states. This is critical as Congress has reauthorized supplements for 11 weeks through mid-March 2021.
    • Increasing Arizona’s weekly allowed income before losing benefits from zero (for these workers currently) to $160 would have a significant economic impact.
    • Using a fiscal multiplier of 1.7, Arizona’s economy could gain $360 million in economic growth through newly qualifying individuals receiving $300 weekly supplements under the latest COVD relief bill soon to be voted on in Congress.
  • Another 30,000 Arizonans currently receiving unemployment insurance while working limited part-time hours would see on average a $67 weekly boost in assistance received
  • Total Economic Gains from boosting benefits through March 2021 is $500 million.
  • Added Cost to the Unemployment Insurance Trust Fund is no more than $5 million a week


After the $300 per week Lost Wage Assistance federal unemployment supplement ended in mid-September, Arizona’s unemployment rate, has jumped significantly from 6.5% to 7.9% and 7.8% in October and November, respectively.  Arizona has moved from having an unemployment rate more than one percentage point less than the national average to one exceeding it by more than a full percentage point.[1]

While other factors influence unemployment, the lost economic stimulus combined with Arizona’s poor unemployment compensation are likely contributing factors.

Arizona’s weekly unemployment assistance is capped at $240 per week, about half the cap of most states. Arizona also provides little flexibility for people when their earnings are reduced.  This combination of a low benefit cap and low-to no-earned income allowance[2] has led to the complete exclusion from assistance for 60,000 Arizonans each week, which would not be the case if they lived in any other state in the southwest. Working Arizonans who have either returned to work at reduced hours or remained employed but had their hours cut, but who earn more from work than their state unemployment benefit do not qualify for any state unemployment or pandemic unemployment insurance.[3] Consequently, they also will not receive the more meaningful $300 federal weekly supplement that will on December 27 through mid-March of next year.[4]

These working Arizonans have typically had their weekly hours dramatically reduced from 31 hours to 19 hours.  Take a person who earns minimum wage and was working 31 hours per week. That person normally made $372 weekly.  If her hours are cut to 19 hours, her pay falls 40% to only $228 weekly.  But since a person earning $372 only qualifies for an unemployment insurance level of $186, she loses all unemployment benefits.  Whereas, if she was allowed to keep the first $160 of earnings, she would still receive $68 in weekly assistance or $254 total.

Another 30,000 Arizonans estimated to be currently working limited hours while on unemployment would see a boost in their weekly checks by about $67.

GCI urges lawmakers to make it a top priority to adopt a $160 weekly earnings allowance to ensure those experiencing unemployment or working reduced hours are covered by unemployment insurance when they return in January and to make benefits retroactive to December 27, 2020.

At stake is not only assistance to 90,000 Arizonans struggling to get by, but up to $500 million in economic activity to be realized from payments through March 2021.

[1] U.S. Dept. of Labor, Bureau of Labor Statistics, Arizona Economy at a Glance (

[2] Technically called an Income Disregard. It is akin to an earnings allowance. It represents the amount of money a person can earn before having their unemployment assistance reduced. This is relevant for people who return to work at a reduced number of hours than their prior employment or for those who have had their hours reduced to the point that they qualify for unemployment assistance.

[3] Technically Arizona has a $30 income disregard, where the first $30 of earnings does not diminish a person’s benefits.  However, anytime an individual’s earnings equal or exceeds their benefit amount, for example if the benefit amount is $240 and earnings are $240 or higher—then by statute the individual is defined as not unemployed and the income disregard does not apply. See A.R.S. 23-621 (A).

[4] Current Congressional negotiations are for 10 weeks of a federal unemployment supplement.