Being “OUT OF WORK” is said to be the most challenging phase in the world. Unemployment is one of the worst nightmares someone can imagine, particularly in a competitive period where everyone is attempting to thrive and advance. You may feel worthless, as if all your hard work in school and earlier experience has been for naught, but is being unemployed really such a dreadful situation? My personal experience of going through this stage of life has convinced me that the answer is NO!
Unemployment is definitely not a desirable situation to be in, but it does teach you lessons that you don’t get to learn on a regular basis. It teaches you patience, as well as how never to give up and keep your hopes up. Never stop applying, and never give up if you don’t think you can. It tells you that if you try hard enough, anything is possible and attainable. Have you ever applied to one job and waited months for a response, or do you keep applying until you obtain the position you want? I’m confident you’d agree with the latter. It teaches you to be patient while never giving up since success will not come to you; you must go out and acquire it.
The complex phase of unemployment teaches you to believe in yourself because how can you expect others to believe in you if you don’t believe in yourself? Therefore, this phase also leads you to believe in yourself, no matter how difficult the circumstances are, how many times you’ve been told NO. Despite the numerous regret emails you receive – every moment teaches you something new, to look up, and keep moving until you reach your final destination, which is the job you want. Know that you are not alone if you are currently unemployed and reading this article. You just don’t have to give up; instead, you must continue to apply. Every day will present new difficulties and opportunities for personal development. You received a NO today in order to receive a YES tomorrow. You should get up, try your hardest, and expect less. You’ll find work soon.
But while you are going through this phase, you don’t have to suffer the financial issues as well. This is where unemployment insurance comes to support you to meet your day-to-day financial obligations and keep your kitchen running. If you have suddenly lost your job, and are devastated with the thought of struggling with your expenses, fortunately, there are unemployment insurance programs available in each state. Although you cannot use unemployment insurance for the rest of your life, it does offer a certain monetary relief as long as you stay unemployed. Let’s get into the details of unemployment insurance and how you can file for unemployment.
Table of Contents
- 1 What is unemployment?
- 2 What is unemployment insurance?
- 3 What are the initial claims?
- 4 How does unemployment insurance work?
- 5 Requirements for unemployment insurance
- 6 The beginning of unemployment insurance in the U.S.
- 7 Who is eligible for unemployment insurance?
- 8 Who doesn’t qualify for unemployment insurance?
- 9 How to file for unemployment insurance?
- 10 Types of unemployment insurance claims
- 11 Weekly unemployment benefits
- 12 Who pays for unemployment insurance?
- 13 How much does unemployment insurance pay?
- 14 Is UI for all unemployed people?
- 15 Conclusion
What is unemployment?
Unemployment defines a condition in which a person who is actively looking for a job is unable to find work. Unemployment is seen as a significant indicator of the economy’s health. The unemployment rate, which is calculated by dividing the number of jobless persons by the number of people in the labor force, is the most used measure of unemployment. Many governments provide unemployment insurance to select unemployed people who meet certain criteria.
What is unemployment insurance?
Unemployment insurance, often known as unemployment benefits, is a sort of state-funded insurance that pays people money on a weekly basis if they lose their job and meet certain criteria. Those who quit their jobs or were fired for a good reason are not eligible for unemployment benefits. Putting it another way, someone laid off due to a lack of suitable labor and is not at fault frequently qualifies for unemployment benefits.
Despite the fact that unemployment insurance is a federal law, each state manages its own program. Workers must comply with all work and wage criteria set forth by their state, including time worked. State governments are primarily responsible for disbursing the benefits, which are supported by payroll taxes collected specifically for that purpose.
During the coronavirus outbreak, the federal government put in place provisions to assist unemployed Americans. After the former president of the United States, Donald Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020, these additional benefits became effective. They were extended after the Consolidated Appropriations Act of 2021 was passed, and they were extended again on March 11, 2021, when President Joe Biden signed the $1.9 trillion American Rescue Plan Act of 2021. The extra benefits were set to expire on September 6, 2021.
What are the initial claims?
Initial claims are a type of employment report that counts the number of new jobless claims made by people seeking unemployment benefits. The report, which was first issued in 1967, also reveals how many unemployed people are eligible for and receive unemployment benefits. Initial claims can be compared to continuing claims, which measure how long people have been unemployed. The number of people expecting unemployment benefits for the first time is counted in the government’s initial claims report. It publishes weekly reports at 8:30 a.m. EST on Thursdays, which track emerging joblessness. It is generally a poor indicator for the economy when a growing proportion of people ready to work are incapable of finding work and must file for unemployment benefits. As a result, financial experts and investors keep a close eye on the initial claims figure.
How does unemployment insurance work?
Individual state governments and the federal government collaborate on the unemployment initiative. Unemployment insurance pays cash stipends to jobless people who are actively looking for jobs. The Federal Unemployment Tax Act and state employment agencies provide compensation to qualifying unemployed workers.
Although each state has its unemployment insurance scheme, all states are required by federal law to follow certain principles. Unemployment benefits are relatively common across state lines, according to federal law. The program is overseen by the US Department of Labor, which ensures compliance in each state. Workers who satisfy certain criteria may be eligible for up to 26 weeks of benefits per year. The weekly cash stipend is intended to replace, on average, a portion of the employee’s usual income. Employer taxes are used to fund unemployment insurance in most states. The majority of employers will pay the FUTA tax on both the federal and state level. 501(c)3 organizations are exempt from the FUTA tax.
Employee contributions to the state unemployment fund are also required in three states. Unemployment insurance beneficiaries’ reportable income includes freelance work and jobs for which they were paid in cash. If your unemployment period extends for more than 26 weeks, you may be eligible for an extended benefits program. Unemployed individuals might get an additional number of weeks of unemployment benefits if they qualify for extended benefits. The availability of extended benefits will be determined by the overall unemployment situation in a state.
Requirements for unemployment insurance
To be eligible for unemployment benefits, a jobless person must meet two fundamental requirements. Unemployed people must meet state-mandated minimums for either earned wages or time working in a given time frame. The state must also find that the qualified person is unemployed due to circumstances beyond their control. When these two prerequisites are met, a person may file an unemployment insurance claim.
Individuals file claims in the state in which they are employed. Participants can file claims over the phone or on the website of the state unemployment insurance office. The processing and approval of a claim usually take two to three weeks after the initial application.
After a claim is approved, the participant is required to provide weekly or bimonthly reports that test or confirm their job condition. To keep receiving benefits, you must submit reports on a regular basis. An unemployed worker cannot decline work during the week, and any income obtained from freelance or consulting engagements must be reported on each weekly or bimonthly claim.
The beginning of unemployment insurance in the U.S.
In the 1930s, a federal-state cooperation program was developed, including a tax on employers to fund it. States were given the latitude and flexibility to define criteria and build their programs within federal parameters. State unemployment offices were established to carry out respective UI programs and distribute payments to eligible workers. People’s eligibility and benefit amounts vary according to their state, previous income, job history, and other variables.
Most unemployed people are eligible for unemployment insurance, which replaces a portion of their wages while looking for work. It is a sort of social insurance in which companies pay into the system on behalf of employees to get financial support if they lose their jobs. It was founded in 1935. During economic downturns, the system also aids in maintaining consumer demand by providing a consistent flow of income for households to spend.
The states administer the basic unemployment insurance program, which the US Department of Labor oversees. In most jurisdictions, the basic program provides unemployed people with up to 26 weeks of compensation, replacing roughly half of their previous earnings. The federal government only pays for administrative expenditures; states contribute most of the funding and cover the actual benefits provided to employees. Although there are certain federal constraints, states have a lot of liberty in defining their eligibility criteria and benefit levels.
In places where the unemployment situation has deteriorated substantially, the permanent Extended Benefits program typically gives an additional 13 or 20 weeks of pay to jobless workers who have exhausted their regular benefits regardless of whether the national economy is in recession. The overall number of weeks available is determined by the unemployment rate in each state and the state’s unemployment insurance laws. Normally, the federal government and states split the expense of EB, but the 2009 Recovery Act enabled full federal financing for a limited time, which lasted until 2013.
Historically, during recessions and when unemployment is high during recovery, the federal government has introduced temporary, entirely federally sponsored programs that provide additional weeks of benefits. Emergency Unemployment Compensation (EUC), the most current scheme, lasted from June 2008 until December 2013. Additional benefits can also be available in some states through other state-funded programs.
Who is eligible for unemployment insurance?
If anyone loses his job due to no fault of his own, he is eligible for unemployment insurance. Before you file for unemployment, you must qualify for benefits and must meet specific criteria. Employees’ wages and the causes for their unemployment are used to ascertain basic eligibility for the unemployment insurance program. Weekly benefit eligibility may be affected by certain restrictions and types of employment. Each state decides who is eligible for unemployment benefits, although you are normally eligible if you meet the following criteria:
- You are jobless due to no fault of your own. In most states, this implies that you had to leave your previous position due to a lack of accessible work.
- Comply with all labor and wage standards. You must meet the standards of your state for money earned or time worked over a fixed period of time known as a ‘base period.’ This is usually the first four out of the last five completed calendar quarters before submitting your claim in most states.
- Comply with any additional regulations imposed by the state. Find out more about your state’s program.
States use these general requirements in a variety of ways. Some states, for example, only cover part-time workers if they are willing to work full-time, while others enable them to qualify even if they are looking for another part-time employment. In addition, states have some control over the employment time utilized to determine eligibility.
The bulk of unemployed workers do not receive unemployment benefits in normal times. This is the case because unemployment insurance does not cover circumstances where a person is seeking their first job, nor does it cover those who voluntarily leave their positions. It also excludes persons who want to re-enter the labor after a period of voluntary unemployment. Furthermore, under existing criteria, students, self-employed employees, undocumented workers, and gig workers are not eligible for benefits. Workers must have been gainfully employed for a minimum time before being laid off, depending on the state.
If your state mandates that persons work for at least six months before being laid off, yet a person has only worked for three months, they will not be eligible for unemployment benefits. Furthermore, many jurisdictions have minimum pay requirements before a layoff, so if your state’s threshold is $10,000 and an employee only earned $5,000 before being laid off, they would be ineligible for compensation. Low-wage workers are disproportionately affected by this system since they are the least likely to earn enough to reach the earnings level while being the most likely to be laid off.
Except during recessions, fewer than half of the unemployed employees have received unemployment benefits since the late 1950s. To be clear, unemployment insurance isn’t meant to cover everyone unemployed; it excludes those who willingly leave a job, people seeking their first job, and re-entrants who previously left the labor force voluntarily. However, the growing number of jobless individuals who fit the essential criteria outlined above but do not meet their state’s eligibility rules – created decades ago (in a totally different labor market) – has made it more difficult for UI to carry out its mandate.
If you are considered eligible for unemployment benefits, DUA (disaster unemployment aid) will calculate a weekly benefit payment based on your previous earnings, the cause for your separation from your previous job, and various other factors.
Who doesn’t qualify for unemployment insurance?
On the following basis, you may get disqualified for unemployment insurance.
- Committing fraud: You will be disqualified from getting assistance if you do not declare new income or new employment. You may even be required to refund your benefits or serve time in prison if you are found guilty of fraud.
- Severance pay: If you received severance compensation, you might not be eligible for unemployment benefits in several states. For example, if you receive eight weeks of severance compensation, your unemployment insurance eligibility begins nine weeks after you lose employment.
- Unable to work: You may lose your eligibility if you’re on maternity leave, dealing with a family emergency, temporarily incapacitated, or otherwise unable to work. However, if you quit your employment for medical reasons or care for an ailing family member, you may be eligible for benefits in some jurisdictions.
- Not actively searching for work: Each week, you must declare to your state’s unemployment insurance program that you’ve applied for a specified number of jobs. If you don’t disclose this information on time, you could lose your benefits or cease looking for work.
- Refuse the right job: If you choose a position similar to the one you lost, you will most likely lose your benefits. When determining what constitutes a suitable work, your state may consider criteria such as compensation, your skills and history, and safety.
- Dismissed for misconduct at the workplace: Intentionally breaking safety standards, theft, embezzlement, assault, and other illegal behaviors are all considered misbehavior and prevent you from getting benefits. Failure to pass a drug test might also be considered misbehavior.
- Dismissed for misconduct outside of work: Some states prohibit companies from firing employees for misconduct outside of the workplace, whereas others do. In this situation, you may be ineligible for unemployment insurance benefits.
How to file for unemployment insurance?
If you are going to file for unemployment, you should do some homework. A little preparation will always come in handy.
Gather the necessary information
Your last employer
Information about your last employer should be all set with you. This includes the company name, your last supervisor’s name, company physical address, email address, and contact number. If you were a business owner or self-employed, consider yourself as your last employer. You must also know your last day at work and the reason why you are not working anymore. You should also have your total gross earnings figures in the last week, beginning with Sunday and ending on the day you stopped working. If you were self-employed, you would be required to provide the net earnings after the tax deductions.
Your employment history
In your employment history, you will be required to provide the information of all the employers you worked with in the past one and half years (18 months). This would include their company names, company addresses, contact numbers, the dates of employment, gross wages earned, the hourly rate of pay, hours worked, and reason for leaving.
You will be required to provide your identity documents, depending on the requirements of your state. You might be asked to have a video call identification if you are applying online; otherwise, submit two primary documents or one primary and two secondary documents for the identity check. The primary and secondary identity documents are listed below;
Primary documents may include;
- Driver license (US or foreign)
- Passport or passport card (US or foreign)
- US Permanent Resident Card (I-551)
- Employment Authorization Card (I-766) issued by the United States Citizenship and Immigration Services
- Certificate of Naturalization (Form N-550 or N-570)
- Federal or State ID
- Veteran health ID card
- Transportation Security Administration (TSA) ID Card
- Department of Homeland Security trusted traveler cards (Global Entry, NEXUS, SENTRI)
- National ID card (only if you live outside of the US)
- Homeland Security Presidential Directive 12 (HSPD-12) Personal Identity Verification card
Secondary documents may include;
- US health insurance card
- Social security card
- US birth certificate
- School documents (ID with a photograph, school record, report card)
- US voter registration card
- US citizen ID card (Form I-197)
- Certificate of Release or Discharge from Active Duty (DD214)
- National Guard Report of Separation and Record of Service (NGB Form 22)
- Foreign birth document
- Certificate of Birth Abroad (FS-545)
- Certification of Report of Birth (DS-1350)
- Consular Report of Birth Abroad (FS-240)
- Border crossing card
- Native American tribal document
- Tribal-issued photo ID card
- Canadian Indian and Northern Affairs card
- US Coast Guard merchant mariner card
Prepare to apply
In the first week after losing your work or having your hours decreased, file for unemployment. Your unemployment claim will commence on the Sunday following the week in which you applied for unemployment. Before receiving UI benefits, you must serve a one-week unpaid waiting period on your claim. Only certify for benefits and complete all eligibility requirements for that week can you serve the waiting period. If you fulfill the qualifying requirements for both weeks, your initial certification will generally involve a one-week unpaid waiting period followed by one week of payment. To keep receiving benefits, certify for benefits every two weeks.
How to file for unemployment?
Now that you have all the information and are ready to file for unemployment, you must choose a method that suits you the most. There are two ways to file for unemployment; online and by phone.
- Online: If you choose to file for unemployment through an online portal, you must first create an account on your state’s UI portal. After creating the account, proceed with the UI application form following your portal’s prompts.
- Phone: If you want to apply on a phone call, each state has its helpline numbers that are mostly toll-free. You can simply dial your state’s Telephone Claim Center and proceed accordingly.
What happens after you file for unemployment?
- If you meet the eligibility criteria, your first payment will be made within two to three weeks of completing and processing your UI claim. In some circumstances, we’ll need more information before making a payment, so your first payment may take longer. We’ll utilize this time to review and process your benefits application. In the meantime, you will not be eligible for any benefits. This is why your claim status may appear to be ‘pending.’
- Any questionnaires, messages, or phone calls from your state’s UI program should be returned as soon as feasible. If you fail to do so, it will cause your claim to be delayed, or your benefits will be denied or suspended. Most state office calls appear as a ‘PRIVATE NUMBER’ on your phone screens. The representative will identify himself by sharing your claim application date and type of claim. Once you verify the call is not fake, you will be required to provide your social security number.
- You will get a Monetary Determination in the mail when you submit your application for a new claim for benefits. This document will tell you your weekly benefit rate, the base period used to establish your claim, and the employers and salaries utilized to compute your weekly benefit rate.
- Please include proof of work and wages to expedite our consideration of your claim. You may include any documentation that can be used as verification if you do not have pay stubs.
- Sign in to your account to check when your most recent payment was made or get a history of all payments made on your claim.
- If you previously submitted a claim and received benefits via direct deposit, any benefits owed to you on this claim will be deposited into the bank account we have on file. If your bank account information has changed, please update it as soon as possible using your state’s UI website.
- If you used a debit card to get benefits on a previous claim and do not have the card, get a card or renew it if your card has expired.
- Unemployed persons are usually forced to look for jobs and keep track of their progress. The governor, with the agreement of the legislature, suspended the job search requirement at the onset of the pandemic as a result of the COVID-19 problem. Since then, the suspension has been prolonged. With the economy improving, the need to look for work has resurfaced. This implies that in order to keep your unemployment benefits, you must hunt for work and document at least three permitted job search actions each week.
- Every week while you are unemployed, you must apply for weekly benefits. The week after you file your unemployment benefits claim, you will make your first weekly benefit request.
Types of unemployment insurance claims
Individuals who are unemployed due to no fault of their own and meet all other eligibility standards can receive interim benefits under the unemployment insurance program. If you want to file for unemployment insurance, you should know about the types of claims. The following are the various types of UI claims that can be made:
- Regular Unemployment Insurance: These claims are based on wages paid from the UI fund by employers covered by the state’s unemployment insurance statute. The claim is based on salaries paid by the state during particular quarters.
- Pandemic Unemployment Assistance: These claims are part of new federal rules that assist unemployed people who aren’t eligible for state unemployment benefits. This comprises business owners, self-employed workers, independent contractors, and people with less job experience who have gone out of business or decreased their services due to the COVID-19 pandemic.
- Unemployment Compensation for Federal Employees: Former or partially unemployed federal civilian employees can file these claims for unemployment benefits. The Internal Revenue Service or the United States Postal Service are two examples of federal civilian employees. The federal government pays for these claims, which are subject to standard state eligibility requirements.
- Unemployment Compensation for Ex-Service Members: Former service members who have been released from active military service are eligible for unemployment compensation under this program. These claims are also supported by federal monies and are subject to the same eligibility restrictions as other state claims.
- Joint Claims: A combined claim includes earnings from multiple sources during the base period, such as federal civilian wages, federal military pay, and normal state-covered wages. These allegations are based on both state and federal pay.
- Interstate: These claims might be made against profits earned in another state in California. An unemployed New Yorker who recently relocated to California, for example, will make an “interstate claim.”
- Combined Wage: Wages earned in two or more states are used to support these claims.
- Trade Readjustment Allowances: People eligible for the Trade Adjustment Assistance (TAA) program under the Trade Act of 1974 can file these claims to receive additional federally funded compensation. The Department of Labor must certify that increased imports or a shift in production to foreign countries contributed to the worker’s unemployment before an individual can apply for TAA benefits or a Trade Readjustment Allowance. Unless the training requirement is waived, workers must be enrolled in or have completed an approved training course in order to earn these benefits.
- Work Sharing: Employees of participating employers who have had their hours and wages decreased are eligible for UI benefits under this scheme. These claims are thought to be a better alternative to layoffs.
- Partial: Employers can use this method to keep trained employees on staff during slack times. As business improves, employees become available for full-time employment. Employers can use the partial program if their employees work fewer hours or have been laid off for no more than two weeks. Employees laid off for more than two weeks due to a lack of a job must file a claim for benefits and complete ordinary UI requirements.
- Disaster Unemployment Assistance: This federal program provides financial support and employment resources when displaced workers and self-employed people become unemployed due to a catastrophic natural disaster.
- School Employee Claims: Individuals who work or supply services for a public or private non-profit school employer are eligible to file these claims. Unless otherwise noted, a school employee is also a school support employee. Employees who work for a non-profit or a government agency and perform services to or on behalf of an educational institution are classified as these. There are certain eligibility restrictions for claims made by school employees. For example, if all of the following occur, a school employee may not be entitled to benefits:
- During recess time, a claim is filed.
- Only school wages are included in the claim’s base period.
- When the recess period finishes, there is an invitation to return to work for a school employer.
Weekly unemployment benefits
You can request weekly benefit payments starting the Sunday following you first applied for unemployment insurance. Even if your claim is still under process or an appeal is underway, you should continue to request benefits every week. You will be paid back for those weeks after your eligibility has been established. You might not be paid for a week if you did not file a claim during that week. If you want to request weekly benefit payments, you must declare whether you actively looked for a job, were available for and able to work, and worked that week, either by phone or through UI Online. There are two options for benefit payment: debit card or direct deposit.
Who pays for unemployment insurance?
Usually, unemployment insurance is funded by a tax imposed on employers by the state they operate in and the Federal Unemployment Tax Act (FUTA). This equates to 6% of any employee’s first $7,000 in earnings. Unemployment insurance spending is excluded from balanced budget standards, and states are permitted to borrow money from the federal government if their resources are depleted.
Any state that borrows money from the Treasury must repay it within three years, or the federal government would automatically raise taxes on those businesses until the debt is paid off. Because the federal government does not set guidelines for how much money laid-off workers should be entitled to, states are free to interpret and make their own reimbursement decisions.
All states have the authority to set their unemployment tax rates and the amount of reimbursement, and the length of time that benefits are provided. States can also set their eligibility standards, such as the minimum amount of time someone must work before being laid off.
How much does unemployment insurance pay?
Most state unemployment insurance programs replace half of the previous weekly earnings, subject to a certain limit. Prior to the coronavirus epidemic, average weekly UI payments were $387 nationwide, ranging from $215 in Mississippi to $550 in Massachusetts. Because payments are capped, UI replaces a lesser percentage of past wages for higher-income workers than for lower-income workers. At the same time, program formulas vary, and the states with greater maximums have higher replacement rates. Hawaii had the highest UI average replacement rate of 55 percent in the fourth quarter of 2019, while D.C. had the lowest average replacement rate of 21 percent.
Is UI for all unemployed people?
The answer is no; most unemployed workers do not receive unemployment benefits in normal times. People who quit their positions willingly, people seeking their first jobs, and people re-entering the labor force after a period of unemployment are not covered by unemployment insurance. Traditionally, self-employed employees, gig workers, undocumented workers, and students have been denied UI benefits. Furthermore, several states need unemployed employees to have worked a certain number of hours or received a certain amount of money from their previous employer in order to be eligible.
In 2019, the minimum earnings required to be eligible for UI payments ranged from $1,000 to $5,000. The percentage of unemployed people who receive UI benefits varies significantly across states due to changes in eligibility criteria. Mississippi had the lowest recipiency rate of 9% in the fourth quarter of 2019, while Massachusetts had the highest rate of 57 percent.
Another effect of the earnings and work history restrictions is that low-wage workers, who are the most likely to become unemployed, are among the people who are least likely to receive unemployment benefits. The fundamental reason low-wage workers are not eligible for unemployment benefits is their low hourly salaries. Instead, it’s because many low-wage workers also have sporadic employment, and most states’ eligibility requirements require laid-off workers to have at least 20 weeks of regular earnings in the previous year to be eligible for benefits.
While unemployment insurance (UI) programs vary depending on economic conditions and state decisions, they all have the same goal: to assist eligible employees who have lost their jobs or qualify under the CARES Act by temporarily replacing a portion of their salaries. These advantages are significant during recessions and economic downturns, such as the COVID-19 pandemic.
Unemployment insurance provides a vital cushion against income losses due to temporary unemployment more than 70 years after its start. It also acts as an automatic stabilizer for the broader economy by bolstering workers’ spending power during downturns. Since its inception under President Roosevelt in 1935, the basic tenet of the unemployment insurance system has been that people who have accumulated a good record of work and on whose behalf unemployment insurance taxes have been faithfully paid should be eligible for temporary unemployment insurance benefits if they are laid off and looking for a new job.