Unemployment Compensation FAQ: "No, you don't pay into the fund, your employer does."

[Towlie]

I'd like to hear what you think about this basic concept, which I know is not unique to my state. It influences quite a few of the policies across our nation concerning the relationship between employers and employees.

From http://www.floridajobs.org/unemployment/Frequently%20Asked%20Questions.doc

Q: I paid into this fund for years so it’s my money.

A: Employees in Florida do not pay into the Unemployment Compensation Fund. There are no deductions made from your wages to finance this program. The program is entirely funded by the taxes paid and reimbursements by the employers in Florida.

Does this make sense to you?

It seems to me that an employee has to do enough work to cover all of the expenses associated with his employment, plus provide a profit for his employer. If he doesn't do that then there's obviously no point in keeping him as an employee; the employer would lose money. Therefore, regardless of whether or not any employment-related expense is listed on the paycheck stub, it's still an expense that the employer pays for with his work.

I say the questioner in the FAQ excerpt above is right: It is his money.

What do you think?

[lonestarnot]

1. Employees pay in here. FICA

[MiniMe]

14. FICA is social security and medicare, and it is a federal tax

In DC is is SUTA and FUTA, State and Federal Unemployment Tax

[glowing]

2. It certainly changes the "expense" portion of an employee.

A company that offers insurance normally only shoulders a portion of the cost onto the employee... you don't see that in your check.. but the employer does tabulate it as a cost of the employee.. along with unemployment tax... the employer also fights it tooth and nail if you apply for the use of it. Not sure how much extra it costs the employer when an employee requests unemployment?

[doctor jazz]

3. It's just part of the cost of doing business. One could make the same (fallacious) argument

about the building he works in or the machinery he works with.

[old mark]

4. This is a cost of doing business, and can be chargd to the taxpayers.

As for health insurance, there are varying laws that were supposed to protect workers who got sick from retaliation by their employers for increasing the cost of healthcare. There are many and varied ways to punish workers for using their "benefits". Someone who works in Human resources shoulkd be able to tell you how it works. There are national conferences on these things for HR big shots every year, on health care family leave, etc, explaining how to turn these laws into laws that favor the company and penalize the worker for having the nerve to actually use them.

mark

[Larkspur]

5. The $$ that are not employer money are the new $ from the economic stimulus package

That's OUR money.

Yes, employers pay into unemployment and not employees. When employers outsource jobs to foreign lands or import H-1B visa holders to take American jobs, I shed NO tears for employers regarding unemployment compensation. I was laid off in November 2008 and my duties taken over by an H-1B visa holder from India. I'm on unemployment compensation right now.

[Bandit]

6. Here is the deal as a business owner. If you make me pay for your unemployment

then I will have to pay you less money. It is very simple...

[imdjh]

7. Ultimately you could argue that the field hand and the miner pay all the taxes.

But it doesn't work that way.

[trotsky]

8. Let's put it this way:

Do you really think that if tomorrow, no employer was required to pay into the Unemployment Compensation Fund, that they would then turn around and increase their employee's salaries by whatever amount they were paying for the fund?

Give me a break! LOL

[imdjh]

9. Sure they would.

Don't you listen to Republicans? If we just stop taxing the wealthy then the retail prices will come down too.


Damn, a pig just flew by my window.

[Vickers]

11. "Damn, a pig just flew by my window."

Har!

[trotsky]

12. Haha

:)

[angrycarpenter]

10. I think Florida's unemployment system is designed to make you give up.

I spent three months going through their appeals process after I was denied. When I finally got the problem cleared up there was another problem requiring yet another appeal. I knew when I was beat, I gave up. I told the man on the phone after a week of calling that the system was designed to make people give up. He denied it, but I told him that the end result was the same "I give up, where can I find a good cardboard box to live in?" He said "I don't know, is there something else I can help you with"?

[MiniMe]

13. For those states where the employer pays the unemployment insurance,

The rate they pay is based on their experience with claims. So an employer who has been laying off or firing a lot of people will be paying a higher rate on everybody else. That discourages employers from firing a lot of people.

[imdjh]

15. And o the flip side it's designed to discourage people from going directly to benefits

The whole thing is supposed to be a little difficult and a little adversarial to prevent abuse, to discourage employers and employees, and to create stability. It also wasn't really designed for middle class workers, so the original design had a shame component to it.

[Pab Sungenis]

16. Employees pay in here in New Jersey, too.

It's similar to Social Security, where there is withholding from the employee and a contribution from the employer.

[OffWithTheirHeads]

17. It's real simple.

Labor creates all wealth. Either directly or indirectly, my employer makes money by selling the fruits of my labor to someone else for more than he pays me. Ergo, I am the one who made the money that my employer uses to pay into unemployment. My employer does NOT, out of the goodness of his heart, pay into unemployment for me. If I stop producing more wealth for my employer than he pays me, I quickly find myself collecting said unemployment. Note: This paradigm does not apply to CEO's of fortune 500 companies.

[jmm]

18. The rent my company pays for the building I work in

doesn't show up on my pay stub either but my work does contribute to the profit which makes it possible to rent the space.

You are right. Something doesn't need to show up on a pay stub for an employee's work to have contributed to it.

[Dr. Mullion Blasto]

19. Sometimes it is useful

to know a little bit about how programs work before spouting off about them. To give you a little background, I worked for a large state unemployment agency for a long time and I was the principal designer of the computer system that determined employer liability and collected contributions.

The bones of the system were established in the thirties and haven't changed much since then. There are two taxes here, both paid entirely by the employer. One pays into the Trust Fund and is used to finance benefits paid to unemployed workers. It is only paid on the first $8,000 of an employee's earnings (this may have increased since I left this employment) at a rate that is determined by a really complex formula that basically finds the ratio between the taxable wages reported to the system and the benefits paid to workers who were laid off. To give you an idea how complicated this process is, the program that determines rates for the state I worked for took about 24 hours to run on a really powerful mainframe. It replaced a program that took several days to run. These rates do not really reflect the risk of certain employer's practices to the system, as they are capped. Otherwise, some employers in a really bad year would pay rates in excess of 50%. There is also a minimum rate and in my state a whole bunch of industry surcharges and exemptions. To top this off, not-for-profits and government entities can elect not to pay the tax, but to reimburse benefits to the system on a dollar for dollar basis.

The second tax is the FUTA tax. It is, or used to be a flat rate based on the same capped employee wages. This money finances the administration of the unemployment benefits system, as well as the job service divisions, statistical divisions, and state revenue collections.

So to answer the original question, although unemployment compensation is funded by the employers, it is an entitlement from the worker's point of view, just as Social Security, Medicare, and other programs are, provide they qualify under the provisions of the state law. In this sense, it is the worker's money. Lots of the problems with UI are the result of concessions made to employers in the administration of the program during the last thirty years. Because trust fund balances fluctuate directly in proportion to economic cycles, states sometimes find themselves in a deficit situation with respect to their obligations and they need to raise more money. This can only be done by increasing the employer's contribution or by restricting eligibility. Because employers are better organized that the workers, especially with the declining influence of trade unions, the general compromise has been fairly drastic restrictions in eligibility in exchange for relatively modest rate increases and surcharges.

Of course, all these taxes are a write-off for the employers, just as any worker's benefit is. It is also very easy for employer's to default on their obligations to the state portion, though not the federal, mainly becasue of the complexity of the legislation and because the state agencies are chronically underfunded. There was in my state a significant section of the department devoted solely to tracking down cheaters and collecting delinquent contributions, usually with a very small rate of success. The consequences of cheating for the employer are minimal, whereas the consequences for the worker who collects unlawfully are pretty severe. I came to the conclusion that the only real protections the worker possessed in this equation was the inherent bias of the bureau's employees and some of the bureau attorneys in the worker's favor.

[Towlie]

20. So what did I improperly "spout off" about? What exactly offended you?

[Peregrine Took]

21. I was responding

to the whole tenor of the discussion, and probably not to you in particular, so do not take offense. If you read my post, I agreed with you it was an employee right. What I found fault with was the way the issue was framed, and that may be due to the way the Florida FAQs set up the Q&A. But look, it is unnecessary to argue a moral right when you have an unquestioned legal right, and that's what most of this discussion amounted to doing. The other danger with bringing the argument down to who contributed how much is the idea that the worker is just collecting what he already paid for, and that is what he ought to be collecting. This weakens rather than strengthens our case. If you collect UI, you always get more out than you paid in, or what was paid in on your behalf. Rates in most states cap out between 6% and 8%, so if you consider that the tax is only levied on the first $8000 in earnings, the employer only ever pays a maximum of around $600 a head. That individual contribution finances about a month of benefits. So if one frames the issue in this way, one asserts a moral right to about a month's worth of benefits. UI and similar programs are systems designed to ameliorate social costs. Democrats ought to be out front about this, because if we don't assert social rights, we fall into the usual Republican trap that appeals to people who only think about their own well-being.

[Vickers]

22. Wait..are you "Dr. Mullion Blasto" or "Peregrine Took"

You seem to be replying to comments posed to the Doctor, but you are posting as a Hobbit.

:shrug: