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Increase in Unemployment Insurance Benefits
Unemployment insurance continues to be front and center in the news. Issues under discussion include the legislation pending in Washington, DC, to extend long-term benefits; changes in state and federal unemployment law; and the rise of unemployment rates across the country. How did everything get so out of control? Here is an overview of how we got here and where we seem to be going.
Background
Unemployment insurance benefits (UI) came about in 1935 as a social welfare program during the Great Depression to help unemployed persons pay for their basic necessities while looking for jobs. It was created by federal law and is administered by the federal Department of Labor's (DOL) Employment and Training Administration and by individual states. UI is financed through both state and federal taxes on employers, based on payroll. Federal taxes are mainly used to pay for administrative costs, while state taxes pay for benefits. Tax revenue is deposited into individual state trusts that are managed by the federal Treasury Department.
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