How much do you know about the unemployment system in the U.S.? Unemployment insurance administration has evolved into a very complex system over the course of many decades. Whether you consider yourself an unemployment expert or novice, here are five things you probably didn’t know about the unemployment system.
1. Wisconsin was the first state to enact an Unemployment Insurance law.
During the Great Depression, it became apparent that there was a need for some form of social assistance for the unemployed. Wisconsin was the first state to pass an unemployment bill into law in 1932, though Massachusetts had previously introduced a bill in 1916. California, New Hampshire, New York, Utah and Washington followed suit shortly thereafter. The Social Security Act of 1935 contained official provisiions for an Unemployment Insurance Program, and the first unemployment check was issued to a claimant in Wisconsin on August 17, 1936.
2. The unemployment system in the U.S. is a unique partnership between the federal government and each individual state government.
The unemployment program itself is based on the federal laws outlined in the Social Security Act. However, it is administered at the state level, and the various state programs have evolved differently over time developing their own individual laws and practices. This structure of administration is unique to the United States.
3. Today, more than 85% of all unemployment claims are filed remotely, either over the phone or online.
Technological advances beginning in the 1990’s paved the way for remote claims filing. When the unemployment program was created, claimants would ahve to go to a state unemployment office to file a claim in person. Now, anyone with a phone or internet connection may file an unemployment claim from the comfort of their home.
4. While unemployment programs, by and large, are funded by employer taxes, a few states do tax employees.
While the employer beard the brunt of the financial responsibility, in Alaksa, New Jersey and Pennsylvania, unemployment taxes may also be collected from workers under certain conditions. The employee tax rate is substantially lower than the employer rate.
5. Employees of very small businesses were not covered under the Unemployment Insurance program when it was rolled out.
When the program was introduced in 1935, employers paid unemployment taxes only if they employed 8 people or more. In 1954 that number was reduced to 4. Beginning in 1970, taxable employers are required to pay unemployment taxes for all employees.
Source: US Department of Labor http://www.dol.gov/ocia/pdf/75th-anniversary-summary-final.pdf