Angelika Due to the recession, the number of unemployed people in America is steadily increasing. In February, the unemployment rate for the USA was 8%, and in California, we have now reached 10%. Many workers rely on unemployment benefits, and I thought you might want to know how unemployment insurance works in this country, which is not exactly known as a leader in social safety nets.
President Roosevelt introduced unemployment insurance as part of the Social Security Act in 1935. The insurance is based on a national law that establishes the general framework. Incidentally, the financing of unemployment insurance in almost all states is exclusively through employer contributions. Each state has its own unemployment insurance program, which leads to varying benefits across the states because, among other reasons, there are different criteria for when unemployment benefits are paid.
Many states, for example, exclude part-time workers from the outset. In general, unemployment benefits are only available if the loss of employment is through no fault of one's own, meaning, for example, layoffs have occurred, and the person is willing and actively seeking work. The individual states define differently what is considered to be no fault of one's own.
Most states pay benefits for up to 26 weeks. During times of high unemployment, there is the possibility to receive benefits beyond the 26 weeks (on average, up to an additional 13 weeks). Obama added to this in his stimulus program, so that in states with high unemployment, the 13 weeks can temporarily increase to a maximum of 33 weeks. We in California fall under this category.
States are currently receiving financial injections from Washington if they are willing to relax their criteria and thus pay more unemployment benefits (e.g., by including part-time workers). The benefits amount to approximately 50% of the salary, up to a maximum limit set by each individual state. California pays a maximum of $450 per week, in Texas the weekly maximum is $392, and in Michigan it is $300. By the way, we couldn't even cover our rent with that.
The tax office IRS also has a hand in it, as the received benefits must be declared in the tax return. However, for the 2009 tax year, there is an exemption of $2,400, thanks to Obama's economic stimulus program.
Unemployment insurance does not cover health insurance payments. Under the COBRA law, employees are allowed to remain in their employer's health insurance plan for 18 months, provided they had one in the first place. However, they must pay the entire premiums themselves (Rundbrief 11/2004), and for a family, that can easily be $800 per month.
To receive unemployment benefits, one generally needs to have earned a certain minimum amount within a quarter during the designated calculation period, known as the "base period" (usually 12 months). In California, this means either $1,300 in one quarter of the base period, or at least $900 in the quarter with the highest earnings, provided that a total of at least 1.25 times $900, which is $1,125, was earned during the entire base period. Is your head spinning yet?