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Meltdown 101: How are jobless benefits funded?

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Omaha Steve Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 07:45 PM
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Meltdown 101: How are jobless benefits funded?

http://www.google.com/hostednews/ap/article/ALeqM5jmhy7...

By DENNIS CONRAD

WASHINGTON (AP) Joblessness has reached new heights that would have been shocking just a few months ago, and all signs point to more layoffs as the recession drags on. That means more and more Americans are relying on unemployment benefits to get by.

What's the source of funding for these payments and is there any chance the coffers might dry up?

Here are some questions and answers about the money that's distributed in unemployment benefits.

Q: Where does the money come from?

A: It's raised through state and federal unemployment insurance taxes on employers. The federal tax is 6.2 percent on the first $7,000 in annual wages to each employee. State tax rates vary from state to state, as does the amount of each worker's income that's subject to the tax which ranges from $7,000 to $34,000.

Q: Do all employers in a given state pay the same?

A: No. The rate they pay depends on how many former employees have drawn jobless benefits the more such workers an employer has, the higher the tax rate it must pay the state.

The irony is that employers responsible for the most joblessness as a percentage of their work force the ones that have gone out of business cannot pay their share of unemployment taxes because they've gone under.

FULL story at link.

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BrklynLiberal Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 07:49 PM
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1. There was a story on the news today that NJ is teetering on the edge
of no more money from unemployment payments. Gov Corzine is hoping for Federal help.
How about getting Exxon/Mobil and the other oil companies to contribute?
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economicgeography Donating Member (93 posts) Send PM | Profile | Ignore Mon Dec-08-08 07:50 PM
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3. re:
Why oil?
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economicgeography Donating Member (93 posts) Send PM | Profile | Ignore Mon Dec-08-08 07:50 PM
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2. re:
For what it's worth, most taxes on employers like that aren't really paid by the employer...I think it's generally assumed that it's just wages forgone by the employee.

I.e. Let's say the cost of an employee to an employer is 20 dollars per hour. The employer doesn't care whether it's 20 dollars to the employee or 10 to the employee and 10 to the insurance fund. The cost to the employer is the same.


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lib2DaBone Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 09:43 PM
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4. Florida still hasn't paid a penny of Unemployment authorized on Nov 23rd.
.. they don't answer their phone or return e-mails.

It looks doubtful that any funds will make it to the unemployed before Christmas.

Either they are hoarding the funds for the General Operating Fund or they are broke. Something is not right?
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