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UNEMPLOYMENT INSURANCE

Unemployment Insurance

The U.S. Department of Labor maintains a fund called the Federal Unemployment Account, which provides money for states to ensure that they can maintain unemployment insurance when demand is highest. According to the National Conference of State Legislatures, 30 states currently borrow from this account. California alone has borrowed $8.8 billion so far. Beginning in 2011, the states will have to make $1.4 billion in interest payments on unemployment insurance loans from the federal government. To help pay back the loans, many states have increased unemployment insurance taxes. States should consider reforms that will make the unemployment insurance system more sound and solvent.  For example, the Cascade Policy Institute in Oregon  proposed creating an Individual Asset Account to improve the unemployment safety net and help build up personal assets for difficult times. Read below for more detailed information and solutions.

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    • RESEARCH

      An Unemployment Insurance Balancing Act

      Stateline | by Christine Vestal | February 26, 2011

      Unemployment insurance is helping millions of Americans stay afloat while they search for jobs, but gaps in the safety net are leaving out many who need it most.

    • RESEARCH

      As Unemployment Insurance Debts Mount, Interest Payments Loom

      Stateline | by Pamela Prah | February 26, 2011

      For more than two years, stubbornly high unemployment has been taking a toll on the nation's workforce, but for states, the mounting costs of paying benefits to millions of people who can't find work are only beginning to become clear.

    • RESEARCH

      Unemployment Insurance: State Trust Fund Loans

      NCSL | February 26, 2011

      The Federal Unemployment Account (FUA) provides for a loan fund for state unemployment programs to ensure a continued flow of benefits during times of economic downturn. According to the U.S. Department of Labor, Employment and Training Administration, 30 states and the U.S. Virgin Islands are currently borrowing to cover unemployment benefits. Five states, Maryland, New Hampshire, South Dakota, Tennessee and Texas, have repaid their loans in full.

    • RESEARCH

      Unemployment Legislation Database

      NCSL | February 26, 2011

      State unemployment legislation from the current legislative session is available in a searchable database. You may search all unemployment-related bills or select specific topics.

    • SOLUTIONS

      Turning Unemployment Insurance into an Asset

      Cascade Policy Institute | February 26, 2011

      Unemployment Insurance (UI) and personal assets are safety nets; one is built by government and the other by the individual. Both protections are lacking: UI benefits are faulty - they increase temporary lay-offs, and delay re-employment for that minority share of workers who receive benefits, and individuals are not saving enough to help themselves in difficult times.

    • LEGISLATION

      Model legislation will be placed here when available

      February 23, 2011
    • SOLUTIONS

      Legislative Guide to Unemployment Insurance Reform in the States

      Both Federal and State Governments are responsible for UI. Federal law imposes an unemployment tax on employers, but provides that they may receive credit against most of the tax
      if their State has an approved UI program. This tax offset approach provided the original incentive for all States to enact UI laws.

    • Unemployment Insurance in a Free Society

      The Freedom Foundation | February 8, 2011

      Unemployment insurance was intended to provide a financial safety net for laid-off workers. But the way the system is structured encourages employers to lay off employees and discourages workers from seeking new jobs until their benefits are nearly exhausted.

    • SOLUTIONS

      The Individual Asset Account: Turning Unemployment Insurance into an Asset

      Cascade Policy Institute | February 8, 2011

      Cascade seeks to initiate a pilot program that would allow employers and workers in Oregon to opt-out of the mandatory UI system and participate in an alternative arrangement of Individual Asset Accounts (IAAs).

    • RESEARCH

      Unemployment Insurance: State Trust Fund Loans

      The National Conference of State Legislatures | by Jeanne Mejeur and Diana Hinton Noel | January 25, 2011

      The Federal Unemployment Account (FUA) provides for a loan fund for state unemployment programs to ensure a continued flow of benefits during times of economic downturn. 30 states and the U.S. Virgin Islands are currently borrowing to cover unemployment benefits. Five states, Maryland, New Hampshire, South Dakota, Tennessee and Texas, have repaid their loans in full. This report lists the most recent balances of outstanding state loans.

       


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    • RESEARCH

      State Unemployment Rates for August 2011

      Unemployment rates in the states were little changed in August 2011, according to figures released by the Bureau of Labor Statistics on September 16, 2011. 

    • RESEARCH

      The Costs and Consequences of Unemployment Insurance in the States

      Mercatus | by Eileen Norcross and Emily Washington | February 28, 2011

      The duration and depth of the current recession reveals the risks associated with the federal-state unemployment insurance programs. Unemployment insurance programs in the states have been approaching insolvency for more than a decade, putting pressure on states to raise payroll taxes, cut benefits, or seek federal loans.

    • RESEARCH

      State Unemployment Trust Fund Balances

      NCSL | February 28, 2011

      State governments levy payroll taxes on employers to pay for unemployment insurance benefits. These taxes, calculated on state financing formulas and an employer's history of claims, are deposited into the Federal Unemployment Trust Fund.

    • RESEARCH

      An Unemployment Insurance Balancing Act

      Stateline | by Christine Vestal | February 26, 2011

      Unemployment insurance is helping millions of Americans stay afloat while they search for jobs, but gaps in the safety net are leaving out many who need it most.

    • RESEARCH

      As Unemployment Insurance Debts Mount, Interest Payments Loom

      Stateline | by Pamela Prah | February 26, 2011

      For more than two years, stubbornly high unemployment has been taking a toll on the nation's workforce, but for states, the mounting costs of paying benefits to millions of people who can't find work are only beginning to become clear.

    • RESEARCH

      Unemployment Insurance: State Trust Fund Loans

      NCSL | February 26, 2011

      The Federal Unemployment Account (FUA) provides for a loan fund for state unemployment programs to ensure a continued flow of benefits during times of economic downturn. According to the U.S. Department of Labor, Employment and Training Administration, 30 states and the U.S. Virgin Islands are currently borrowing to cover unemployment benefits. Five states, Maryland, New Hampshire, South Dakota, Tennessee and Texas, have repaid their loans in full.

    • RESEARCH

      Unemployment Legislation Database

      NCSL | February 26, 2011

      State unemployment legislation from the current legislative session is available in a searchable database. You may search all unemployment-related bills or select specific topics.

    • RESEARCH

      Unemployment Insurance: State Trust Fund Loans

      The National Conference of State Legislatures | by Jeanne Mejeur and Diana Hinton Noel | January 25, 2011

      The Federal Unemployment Account (FUA) provides for a loan fund for state unemployment programs to ensure a continued flow of benefits during times of economic downturn. 30 states and the U.S. Virgin Islands are currently borrowing to cover unemployment benefits. Five states, Maryland, New Hampshire, South Dakota, Tennessee and Texas, have repaid their loans in full. This report lists the most recent balances of outstanding state loans.

       

    • SOLUTIONS

      Unemployment Insurance Taxes: Options for Program Design and Insolvent Trust Funds

      The Taxpayer Foundation | by Joseph Henchman | November 21, 2011

      Unemployment Insurance reforms should be considered, including eliminating the "firewall" between administrative costs and benefits, reducing cross-subsidies to high-layoff employers, and relying more on face-to-face training and advising. More significant reforms that could be considered include adopting elements of state workers' compensation programs and experimenting with individual accounts.

    • SOLUTIONS: Delaware

      Personal Unemployment Accounts

      The Caesar Rodney Institute | by David Stevenson | February 28, 2011

      Less than half of Delawareans receive unemployment insurance benefits when they lose their job. The claims process is time consuming and demeaning for many. Errors in payment and outright fraud waste millions. There is a better way. Personal Unemployment Accounts (UA), run like a 401K or IRA, can provide an attractive alternative.

    • SOLUTIONS

      Turning Unemployment Insurance into an Asset

      Cascade Policy Institute | February 26, 2011

      Unemployment Insurance (UI) and personal assets are safety nets; one is built by government and the other by the individual. Both protections are lacking: UI benefits are faulty - they increase temporary lay-offs, and delay re-employment for that minority share of workers who receive benefits, and individuals are not saving enough to help themselves in difficult times.

    • SOLUTIONS

      Legislative Guide to Unemployment Insurance Reform in the States

      Both Federal and State Governments are responsible for UI. Federal law imposes an unemployment tax on employers, but provides that they may receive credit against most of the tax
      if their State has an approved UI program. This tax offset approach provided the original incentive for all States to enact UI laws.

    • SOLUTIONS

      The Individual Asset Account: Turning Unemployment Insurance into an Asset

      Cascade Policy Institute | February 8, 2011

      Cascade seeks to initiate a pilot program that would allow employers and workers in Oregon to opt-out of the mandatory UI system and participate in an alternative arrangement of Individual Asset Accounts (IAAs).

    • BLOG

      Will the Real Unemployment Numbers Please Stand Up?

      by Kristen De Pena | July 6, 2012

      It may be equally as worrisome to know that the Department of Labor is also engaging in the practice of publishing one set of rosier numbers, only to amend them to the real numbers days later, thereby avoiding dissemination of the worst numbers.

    • BLOG

      Study lays out problems with the current unemployment insurance system, offers solutions

      by Cory Eucalitto | October 24, 2011

      Along with a funding crunch brought about by record high unemployment rates, many states are now having to repay billions in federal loans granted under the American Recovery and Reinvestment Act.

    • BLOG: Florida

      Florida Governor Signs Bill Reforming State Unemployment Compensation Program

      by Cory Eucalitto | July 5, 2011

      Last Monday, Florida Governor Rick Scott signed a bill that broadly reforms Florida’s unemployment compensation program. The new law makes Florida the only state in the country to tie state benefits to unemployment rates.

       

    • BLOG

      Experts debate state bankruptcy

      by John Stephenson | January 31, 2011

      In the two months since David Skeel, a law professor at the University of Pennsylvania, published an article arguing in favor of a bankruptcy code for the states, public policy experts have been vigorously debating the merits and drawbacks of such a radical prescription to the states' fiscal ills.

    • BLOG

      States Bracing to Pay for High Cost of Unemployment Insurance Loans

      by John Stephenson | January 3, 2011

      Starting this year, the states will have to make $1.4 billion in interest payments on those loans. This could mean higher taxes on the struggling business community or further strains on already broken state budgets, but it also presents an opportunity for reform.

    • BLOG: California

      Bankruptcy for the States?

      by John Stephenson | December 13, 2010

      Is the bankruptcy option for states an effective tool to address the looming state fiscal crises?

    • Washington

      State budget bailout on the ropes

      by Jason Mercier | June 21, 2010

      Despite intense lobbying from President Obama and governors, the U.S. Senate has rejected an effort to increase one-time federal Medicaid funds that states across the nation gambled would be approved. 

    • Weekly State Budget Update

      by Bob Williams | April 2, 2010

      Though some states are voicing their concerns about the burdens that they will have to bear as a result of the newly passed healthcare bill, they will likely face financial disaster even without any new federal mandates. The unfunded pension obligations of all units of government has reached a crises level.