January 29, 2009

The basics of Unemployment Insurance

Unfortunately there are a rising number of unemployed people right now. As of today the Bureau of Labor Statistics is reporting a 7.2% unemployment rate for December 2008 and its likely risen a bit since then. These people are eligible to receive unemployment insurance. What is unemployment insurance and how does it work?

What is unemployment insurance?

Unemployment insurance is money that you can get paid temporarily after you lose your job. This is not welfare but instead a government run insurance system. Every working person has money paid into the insurance fund to cover the possibility of unemployment. The insurance is funded by payments from working people usually paid by the employer. The unemployment insurance system is managed at the state level and each state runs the programs based on federal guidelines.

Who gets it? How do you get it?

You can normally get unemployment if you've been employed and you lose your job through no fault of your own. That last bit is important. You can not get unemployment if you're fired for cause or if you quit your job. You can get unemployment if you are laid off. In order to get unemployment you have to file a claim with your local state agency. To qualify you may need to meet additional requirements that can differ from state to state. Usually the main thing you have to do is actively look for work and report your job hunting progress to the state. This usually means something like applying for 2-3 openings every week and then letting the state know that you are doing so. They don't want you to just sit in front of the TV and collect a check, the idea is that you are temporarily unemployed and looking for work so you should be looking. But again the details will vary from state to state. There can be other specific requirements that vary by state too. For example you may need to register with a state employment office so they can try and match you with jobs. You might also need to take some form of job hunting or career classes offered by the state. My sister had to take an 8 hour resume writing class once.

How much do you get?

The exact amount of unemployment insurance you get will depend on your wages and the state you live in. The more your wages are then the more your unemployment will be. Every state has a maximum payout. Here is a list of the maximum weekly benefits by state. Most states maximums are in the $300 to $500 range. Looks like the minimum is $210 a week in Mississippi and the maximum is $900 a week in Massachusetts. Of course that doesn't mean you'll get the maximum if you're unemployed, the actual benefit amount is proportional to your wages over the past year in some way. In my state the benefit is roughly 2/3 of your weekly pay up to the maximum. To find out the benefit you might get you could find the unemployment site for your state and see if they have a benefits estimator.

How Long does it last?

Normally unemployment will last 26 weeks. If you get a job first or are otherwise ineligible then payment will stop. Sometimes in when there is high unemployment the government may extend benefits longer. In that case benefits are extended another 13 weeks. In some cases they may add another 7 weeks on top of that. So in total unemployment will last 26 weeks with possible extensions to make it 39 or 46 total. But you should not count on an extension.


So in summary:

  • You will normally be eligible to get unemployment insurance if you are laid off.
  • Unemployment is ran by each state with each system differing in the specifics.
  • To get benefits you must file a claim with the state and then meet their ongoing requirements.
  • Benefits vary state by state with maximums usually in the $300-400 range but varying from $200 level to $900. The benefit you will get will be proportional to your recent pay rate.
  • Unemployment normally lasts 26 weeks but might be extended an additional 13 or 20 weeks.

For specifics on your unemployment insurance benefits refer to your individual states unemployment program.


References:
Department of Labor Unemployment fact sheet.

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