UNEMPLOYMENT INSURANCE IN 2010
The Federal-State Unemployment Insurance Program provides temporary financial assistance to unemployed workers who find themselves unemployed through no fault of their own (as defined state law). The program is administered at the state level. Each state offers its own version of the unemployment insurance program. The U.S. Department of Labor (DOL) has compiled a
state-by-state comparison of significant provisions of state unemployment insurance laws (revised in March 2010).
Although there are many differences between the states in terms of eligibility, rates, and benefits, all state programs must include basic guidelines established under federal law.
The Almanac of Policy Issues provides some interesting facts about state unemployment compensation, including the following:
Due to the current level of extended benefit payments and exhaustion of state unemployment trust funds, many states have been forced to borrow billions from the Federal Unemployment Account to cover their unemployment obligations. According to the DOL, outstanding trust fund loans from the Federal Unemployment Account totaled more than $40.8 billion as of April 19, 2010. California was the largest borrower with an outstanding loan balance of over $8.8 billion. See the full report for state-by-state loan balances.
As the loan report indicates, most states are struggling to find ways to balance the need for increased unemployment funding with the goal of helping businesses to survive in a financial downturn. In an effort to avoid burdening businesses that may already be financially strapped with huge tax increases, we will likely see state legislators provide some relief in situations where automatic increases are mandated under current law. In fact, Florida is one state that has already faced this challenge.
Florida law required an automatic increase in the state unemployment tax rate if their trust fund fell below 4 percent of taxable payroll. Due to the depletion of their trust fund during 2009 and prior years, Florida unemployment insurance rates were scheduled for a substantial increase effective January 1, 2010. Some employers braced for increases of as much as 1200 percent. Under the scheduled increase, the minimum unemployment rate would increase from $8.40 per employee to more than $100. The maximum rate would increase from $378 per employee to $459.
Due to business group protests led by the Florida Chamber of Commerce, Governor Charlie Crist and the state legislature quickly passed a revised statute on the first day of their annual legislative session in March to suspend the scheduled rate increase until 2012 and postpone increases in the minimum amount assessed per employee until 2011.
According to Propublica, a non-profit news service devoted to matters of public interest, approximately 36 states face rising unemployment rates in 2010 and 6 states have cut back or frozen benefits for the unemployed. In Pennsylvania, payments to unemployed workers decreased by 2.3% during the first 26 weeks of unemployment. In Indiana, benefit recipients will lose up to 43% of their benefit amount if they turn down suitable jobs, regardless of whether significant pay decreases accompany the new position. If the U.S. jobless rate does not improve, more states will likely be forced to raise their rates and/or decrease benefits. States that have already raised rates may find they'll need further increases. As a result of this crisis, expect to see unemployment issues rise to the forefront of future political election campaigns.
Contacts for state (including Puerto Rico) unemployment insurance information and assistance can be found on the U.S. Department of Labor website at: http://www.unemploymentinsurance.doleta.gov/unemploy/agencies.asp
state-by-state comparison of significant provisions of state unemployment insurance laws (revised in March 2010).
Although there are many differences between the states in terms of eligibility, rates, and benefits, all state programs must include basic guidelines established under federal law.
The Almanac of Policy Issues provides some interesting facts about state unemployment compensation, including the following:
- The standard State unemployment tax rate is 5.4 percent.
- State unemployment rates vary from zero percent to 10%.
- Unemployment tax is assessed on at least the first $7,000 of wages annually.
- Some states tax as much as $34,900 of wages annually (e.g., Hawaii).
- Extended Benefit programs are available in every state and federal funds only cover half of the cost.
- Even though state unemployment trust funds may be depleted during times of economic depression, the states are legally required to continue to pay benefits.
- States that have exhausted their trust funds must borrow from the Federal Unemployment Account to cover benefit payments.
- Each state must find ways to fund its unemployment compensation program which could include mean an increase in unemployment taxes.
Due to the current level of extended benefit payments and exhaustion of state unemployment trust funds, many states have been forced to borrow billions from the Federal Unemployment Account to cover their unemployment obligations. According to the DOL, outstanding trust fund loans from the Federal Unemployment Account totaled more than $40.8 billion as of April 19, 2010. California was the largest borrower with an outstanding loan balance of over $8.8 billion. See the full report for state-by-state loan balances.
As the loan report indicates, most states are struggling to find ways to balance the need for increased unemployment funding with the goal of helping businesses to survive in a financial downturn. In an effort to avoid burdening businesses that may already be financially strapped with huge tax increases, we will likely see state legislators provide some relief in situations where automatic increases are mandated under current law. In fact, Florida is one state that has already faced this challenge.
Florida law required an automatic increase in the state unemployment tax rate if their trust fund fell below 4 percent of taxable payroll. Due to the depletion of their trust fund during 2009 and prior years, Florida unemployment insurance rates were scheduled for a substantial increase effective January 1, 2010. Some employers braced for increases of as much as 1200 percent. Under the scheduled increase, the minimum unemployment rate would increase from $8.40 per employee to more than $100. The maximum rate would increase from $378 per employee to $459.
Due to business group protests led by the Florida Chamber of Commerce, Governor Charlie Crist and the state legislature quickly passed a revised statute on the first day of their annual legislative session in March to suspend the scheduled rate increase until 2012 and postpone increases in the minimum amount assessed per employee until 2011.
According to Propublica, a non-profit news service devoted to matters of public interest, approximately 36 states face rising unemployment rates in 2010 and 6 states have cut back or frozen benefits for the unemployed. In Pennsylvania, payments to unemployed workers decreased by 2.3% during the first 26 weeks of unemployment. In Indiana, benefit recipients will lose up to 43% of their benefit amount if they turn down suitable jobs, regardless of whether significant pay decreases accompany the new position. If the U.S. jobless rate does not improve, more states will likely be forced to raise their rates and/or decrease benefits. States that have already raised rates may find they'll need further increases. As a result of this crisis, expect to see unemployment issues rise to the forefront of future political election campaigns.
Contacts for state (including Puerto Rico) unemployment insurance information and assistance can be found on the U.S. Department of Labor website at: http://www.unemploymentinsurance.doleta.gov/unemploy/agencies.asp