Unemployment insurance in the United States
Each of the 50 U.S. states, as well as the District of Columbia, Puerto Rico, and U.S. Virgin Islands, administer their own unemployment insurance programs.
[1][2] Benefit amounts for eligible workers vary by state, ranging from maximum weekly payments of $1,015 in Massachusetts to $235 in Mississippi as of 2022.
As many European countries created unemployment insurance programs in the early 20th century (beginning with Britain in 1912), Progressive Era reformers advocated for a similar policy in the United States, but to little avail.
[8] In the early 20th century, some trade unions and employers set up private unemployment insurance programs for workers, but these were only available to a small portion of the workforce.
[9][10] Following the onset of the Great Depression, advocates pushed Congress and state legislatures to create public unemployment insurance programs.
[9] In 1931, governors from New York, Ohio, Massachusetts, Pennsylvania, New Jersey, and Connecticut organized an interstate commission on unemployment insurance.
[9] In 1932, Wisconsin passed the first public unemployment insurance program in the United States, offering 50% wage compensation for a maximum of 10 weeks, funded through a payroll tax imposed on employers.
In 1937, the Supreme Court held that federal unemployment law is constitutional and does not violate the Tenth Amendment in Steward Machine Company v. Davis, 301 U.S. 548.
[13] Additionally, FUTA provides a fund that states can borrow from when needed to continue paying UI benefits.
[14][a] Employers can deduct up to 90% of the amount due if they paid taxes to a state to support a system of unemployment insurance which met Federal standards.
[14] Although FUTA mandates a taxable wage base of $7,000 per employee, only Arizona, California, and Puerto Rico use this minimum as of 2020.
[citation needed] In July 2010, legislation that provides an extension of federal extended unemployment benefits through November 2010 was signed by the president.
[37] In the State of New Jersey, claimants that were discharged as a result of a misconduct may still receive unemployment benefits after their disqualification period of six week has ended.
[41] If a worker receives benefit payments for which they are not eligible, the state is empowered to recoup the excess amount paid to the claimant (an overpayment).
[42] Willfully misrepresenting or concealing relevant facts in order to get excess benefits is considered unemployment insurance fraud.
However, the U.S. Department of Labor authorizes blanket waivers for certain categories of overpayments made under the three temporary federal programs that were created during the COVID-19 pandemic (FPUC, PEUC, and PUA).
[42][45] Reemployment Services and Eligibility Assessment (RESEA) is a federally funded program with the aims of improving employment outcomes for claimants and of preventing and detecting overpayments.
[46] Five states (Delaware, Mississippi, New Hampshire, New York, and Oregon) have Self-Employment Assistance (SEA) programs, which allow claimants to work full-time on starting a new business while continuing to claim unemployment benefits.
[49][50] During national recessions, the federal government often extends unemployment insurance benefits temporarily as part of a broader countercyclical economic policy.
Unlike in previous recessions, the federal government also covered 100% of the cost of the automatic Extended Benefits program.
This expired at the end of July, 2020, though was partially replaced by executive order of President Trump by money allocated to FEMA, for states that contribute matching funds.
[51] On August 8, 2020, President Donald Trump signed an executive order that provided $300 to $400 extra benefits per week.
[54][55] In January 2021, newly inaugurated President Joe Biden's administration announced a proposal that would further extend unemployment insurance with additional payments of $400 per week through September 2021.
[60] To better meet this substantial increase in claims and comply with federal fraud prevention requirements, states accelerated their plans for modernizing their unemployment insurance systems.
[61] Congress allocated $2 billion in the American Rescue Plan Act of 2021 to help states improve access to unemployment benefits, reduce payment delays, and combat fraud.
[64] Its headline number is the seasonally adjusted estimate for initial unemployment claims filed during the previous week in the US.
Since this statistic is published weekly, it is commonly depended on as a current indicator of the labor market and the economy generally.
[citation needed] Twice a year, the Office of Management and Budget delivers an economic assessment of the unemployment insurance program as it relates to budgetary issues.
They point out that policymakers in the New Deal era made intentional compromises "to make the program appealing for the strong base of conservative white Southern Democrats who held the most powerful seats in Congress."
[67] Both left- and right-wing critics allege that the structure of unemployment insurance discourages people from returning to work.
