Can someone explain how unemployment benefits are financed?

[closeupready]

I got into a heated discussion with someone recently about UI; they claimed taxpayers financed unemployment benefits; I maintained that employers paid the mandatory premiums on behalf of each employee.

So I guess my question is, what percentage of revenues paid out - both normally and during times when extended benefits are approved - are financed by employer-paid premiums, and what percentage is paid out from general revenues.

[NightWatcher]

1. I believe its a state based insurance program and the premiums dont cover the increased filings

so then it comes from general state funds and many states have had to borrow from the feds to cover the difference

[closeupready]

3. But my follow up would be, since premiums increase for employers who lay off workers en masse,

(that is, laying off workers results in higher premiums later on), then it must be true that the impact to taxpayers generally is kept to a minimum.

[CountAllVotes]

2. You pay into unemployment insurance

and if you don't, you don't get any unemployment benefits.

:dem:

[sinkingfeeling]

4. Only 3 states require employee contributions.

http://workforcesecurity.doleta.gov/unemploy/uifactsheet.asp

State Unemployment Insurance Benefits
Purpose
In general, the Federal-State Unemployment Insurance Program provides unemployment benefits to eligible workers who are unemployed through no fault of their own (as determined under State law), and meet other eligibility requirements of State law.
Unemployment insurance payments (benefits) are intended to provide temporary financial assistance to unemployed workers who meet the requirements of State law.



Each State administers a separate unemployment insurance program within guidelines established by Federal law.



Eligibility for unemployment insurance, benefit amounts and the length of time benefits are available are determined by the State law under which unemployment insurance claims are established.



In the majority of States, benefit funding is based solely on a tax imposed on employers. (Three (3) States require minimal employee contributions.)

[CountAllVotes]

7. if you work for a non-profit organization you are screwed

I know that much. My friend worked for the Salvation Army and got laid off. Being they don't pay into unemployment (exempt due to their non-profit status) you get nothing from that venture either.

Also, Federal employees likely don't get anything either as the Federal government doesn't pay into unemployment either.

Let's hear it again for those lazy Federal workers! :sarcasm:

:(

:dem:

[notesdev]

5. The program covers 26 weeks

that's what the unemployment insurance tax is for on your paycheck.

The rest of the 99 weeks have been covered by the taxpayers or lumped into government debt.

[alstephenson]

6. Then there should have been a surplus in the unemployment insurance fund when unemployment was at 5%

Or was that "raided" just like SS?

[defendandprotect]

11. Exactly ... and penalties on corporations laying off people should have increased as the

unemployment figures rose -- and it should also reflect long term unemployed which

it no longer does --

GOP has screwed with everything -- methods of calculation, statistics, the whole thing!

[TreasonousBastard]

8. Here's some light reading...

from a couple of years ago that isn't intended to answer your question, but does answer most of it:

http://www.nelp.org/page/-/UI/Trust%20Fund%20Solvency%20Update%202008-Final.pdf

Essentially, employers are taxed on their payroll by the states and put any excess money into a trust fund. When the fund runs low, or out, they can go to the Feds and get more money. Obviously, any Federal extensions, such as the one being debated now, are paid for from general revenues-- i.e taxes. (or borrowing)

Now, since somebody is paying a tax, yes, it is all of us "taxpayers" who are ultimately paying, just like we pay for the pay, pensions, health care, workers comp, and every other employee cost we pay for when we spend money. The real question, then, is whether or not we, as a society, have some obligation to help out those who have fallen on hard times through no fault of their own.

If the extra nickel your associate spends on his or her latest gadget or weekly food shopping is too much to keep the lights on for an unemployed neighbor, the problem is not the cost of unemployment insurance, or who pays for it, but that this person is cheap, miserable shit.

[AnArmyVeteran]

13. Bottom line: We the workers pay 100% of everything.

Whether it is through taxes or lower wages. Businesses don't pay a dime. They pass off those costs to the consumer or their employees. We the people pay EVERYTHING, regardless of the formula.

[Igel]

9. All sorts of ways.

Sometimes employees pay directly. Not in most states.

Usually employers do the actual payment, but because employers tend to figure your benefits and salary level and take unemployment contributions into account it's part of your compensation package, the cost of hiring you. That money is supposedly banked. If an employer has a claim against "his" insurance then usually the rates go up for him and his.

Some unemployment funds get interest and capital gains. I'm guessing far from all, and it's not much.

Some states contribute to the unemployment fund from their general revenues, too, if the fund runs low. How much varies from state to state; I suppose some states don't bail out their UE fund.

The federal government often springs for unemployment benefit extensions, esp. when unemployment is high or protracted. It used to do it far less, so this time around the number of people on long-term unemployment is higher than usual--there's less churning in the employment market and more people just stay unemployed. Good, bad, whatever.

[defendandprotect]

10. Corporations used to finance it and were more heavily taxed when they laid off employees....

somewhere along the way it was switched to employees financing it --

like the Superfund which corporations were supposed to pay for -- they've been

let off the hook for the costs they create!!

[Mimosa]

12. Is there any help for the self-employed when they can't find work?

I've always wondered whether there is any help available to independent contractors and self-employed people when they can't fins work.