An estimated 20% of Americans are receiving unemployment benefits, and since August have had those benefits slashed in half. If you’re considering turning to a side gig for extra income, doing so could disqualify you or limit your employment benefits.
Each state has its own qualifications for unemployment insurance, so start by researching the local regulations. Although everyone still receives the extra $ 300 per week federal unemployment bonus, your second job income could affect your unemployment benefits.
Here’s each scenario to help you consider picking up a side gig while on unemployment.
First, your side gig earnings will be deducted from unemployment benefits
In some states, any income you have will be deducted from the unemployment benefits you qualify for. For example, if you were receiving $ 600 per week of unemployment and picked up a job that makes $ 300 per week, your unemployment will be cut down to $ 300.
The income you earn from a part-time or side job is considered a replacement for the unemployment income you qualify for. If you earned the full $ 600 from a side job, your benefits would be suspended.
[ Read: Coronavirus Unemployment: How to Apply for Benefits If You Lose Your Job ]
If your side gig income is taken directly from the unemployment benefit you receive and not adding to your baseline income, it may not be worth the potential COVID-19 exposure to join the essential workforce. You’d basically be getting a new job for the same payment you’d receive if you didn’t work. But if the income you earn exceeds the unemployment benefit (including the universal federal bonus), go for it.
Benefits depend on how much you make
If your part-time job only earns a portion of the amount you receive from unemployment benefits, your benefits won’t be reduced. In some states, you can earn up to 50% of your weekly benefits from a side job without changing your benefits.
- Let’s say you receive $ 600 in weekly unemployment. That number won’t change if you make $ 300 or less from a side hustle. And if self-employment is the side gig, your benefits can remain unaffected regardless of the amount you make from it. The percentage will change depending on the state. For instance, in South Carolina, you can earn up to 25% of your weekly benefit without a reduction.
- In most industries hiring right now (delivery service, postal, grocery stores, etc.), you’ll find flexibility in the number of hours you work. If you need to stay below a certain income percentage to still qualify for unemployment benefits, you likely have control over that. If you can stay below your state’s benchmark for affecting your benefit, a side gig would provide extra income.
It may also be about how often you work
Another potential qualification is based on how often you work. In some states, like New York, hours or days of work determine your unemployment benefits. If you lose your primary employment but pick up a side gig twice a week, you’ll qualify for partial benefits based on those three days you aren’t working. In Colorado, it’s based on the number of hours. If you work less than 32 a week and earn less than the standard benefit amount, you can qualify for partial unemployment.
[ Read: Do You Qualify for a Coronavirus Hardship Loan? ]
If you can find a part-time job with schedule flexibility, your side gig can be an extra income without impacting unemployment benefits. If your state will only grant full unemployment benefits if you aren’t working five days or 40 hours a week (and the benefit you qualify for is more than potential side gig income) it may not be a wise idea.
So, is it worth picking up a side gig? It depends.
If you’re unemployed, there are personal factors to consider when picking up a side job for extra income. You’ll want to base your decision on the rules in the state you live, how much the part-time job would make and any investment (time, money, health risk) the new gig would require.
The national average income for a food service delivery driver ranges from $ 220 to $ 1,173 per week, likely depending on the city’s market and hours worked. A part-time job at Walmart or a grocery store likely pays your state’s minimum wage. A job with UPS or in the Amazon warehouse often starts a few dollars higher than minimum wage, usually between $ 16 per hour and $ 32 per hour.
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You’ll also want to consider any expenses and investment the job would require. Will it add miles on your car than it’s worth? Do you need to pay for any training or equipment? Can you afford or find a childcare solution for when working?
It may be worthwhile to pick up a new gig if you haven’t been receiving your unemployment benefits at all. Many states have faced major backlogs, system glitches and fraud attempts — meaning thousands of people are not receiving their unemployment benefits.
And keep in mind that not reporting income while collecting unemployment benefits is considered unemployment insurance fraud and could land you in trouble — $ 100,000 in fines, disqualification for receiving unemployment benefits and potentially imprisonment.
Too long, didn’t read?
If you’ve been laid off due to COVID-19 closures, picking up a side hustle or part-time gig can be a wise move to increase your income and supplement unemployment benefits. Each state has regulations for how that side gig income will impact your benefits. Research your state qualifications and the potential income from the job before making a decision.
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