Unemployment Insurance Benefits

Unemployment insurance benefits, as we currently understand the service, originated in Great Britain in the early years of the twentieth century. Around the United States, however, it wasn't until 1932 that Wisconsin first instituted a primitive notion of unemployment insurance benefits with monetary payments to (an extremely small percentage of) the newly unemployed. Nowadays, of course, each state maintains their own distinct forms of unemployment insurance benefits – as well as plans regulated in Puerto Rico and the District of Columbia – but the national government was instrumental in forcing the states to enact their own programs guaranteeing unemployment insurance benefits as part of the 1935 Social Security Act: indeed, threatening to not allocate federal funds if the states didn't comply. As with all types of social safety nets, unemployment insurance benefits have long been a political football, but, given so many families filing claims during this bitter economic recession, the need for financial assistance becomes tragically clear.

Under current guidelines, the financing of unemployment insurance benefits almost exclusively comes from payroll taxes withheld by both the state and federal government from employers that provide wages to their workers of at least fifteen hundred dollars in any financial quarter of a single year. As aid of the larger system of unemployment insurance benefits, the Federal Unemployment Tax Act subsidizes the administrative expenses of the states – including their various career counseling programs – and the federal government has to come up with fully half of the funds required for the extended unemployment compensation which becomes necessary when the unemployment rate rises to a certain level as it has for the past few years. Compensation from unemployment insurance benefits, though technically a form of welfare, is nonetheless considered by the Internal Revenue Service to be a form of income no different than a traditional salary, and the unemployment insurance payments will be taxed in the same fashion.

A good number, perhaps even a majority of Americans, continue to misunderstand the exact nature of unemployment insurance benefits and wrongly believe that, since they've already put in money to the system, they should be able to receive such back immediately. As a matter of fact, if citizens should look to their paychecks to see just how little a percentage of their withheld taxes actually goes to subsidize unemployment, they'd be quite surprised. Most of the funds that are paid out through unemployment insurance benefits originate from the companies themselves depending upon the number of their employees (and the number of their downsized employees) through a complicated equation – though, once again, federal funds deriving from income taxes are utilized once the extension kicks in because of an increase in the unemployment rates as we've so recently seen.

Though the more general rules of unemployment insurance benefits are set in motion by the United States Congress and all of the specific regulations are overseen by the United States Department of Labor, the states themselves largely run the programs and set their own idiosyncratic limitations. Since so many of the particular guidelines are determined by the individual legislatures and are ultimately specific to the citizen's locale, it's impossible to delineate all of the more peculiar and restrictive quirks of each state's administration of unemployment insurance benefits, but, suffice to say, newly jobless heads of household learn to their horror each day that one trifling statute or niggling omission within the paperwork will leave their family without an income. For this reason, much as it may interest consumers to learn about the history of unemployment insurance benefits, every American deserving of financial compensation after their employment has been terminated should look to information about their own state's laws in order to ensure their application for benefits would be approved without dispute.

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