The federal-state unemployment insurance system (UI) helps many people who have lost their jobs by temporarily replacing part of their wages while they look for work. Created in 1935, it is a form of social insurance in which taxes collected from employers are paid into the system on behalf of working people to provide them with income support if they lose their jobs. The system also helps sustain consumer demand during economic downturns by providing a continuing stream of dollars for families to spend.
The basic unemployment insurance program is run by the states, although the U.S. Department of Labor oversees the system. The basic program in most states provides up to 26 weeks of benefits to unemployed workers, replacing about half of their previous wages, on average. States provide most of the funding and pay for the actual benefits provided to workers; the federal government pays only the administrative costs. Although states are subject to a few federal requirements, they are generally able to set their own eligibility criteria and benefit levels.
CBPP – Introduction to Unemployment Insurance
Unemployment Insurance Costs:
Unemployment Insurance allocated for Texas in FY2016: $123 million total [roughly]
For state unemployment tax purposes, only the first $9,000 paid to an employee by an employer during a calendar year constitutes “taxable wages.”
Texas Workforce Commission – Unemployment Tax Basics
- Raise the taxable wage for employers to $30,000 annually
- Amend the Texas constitution so that the maximum weekly benefit amount is higher than 47.6% of the average weekly wage
- Amend the Texas constitution so that the unemployment insurance can be received beyond 26 weeks
How to finance state unemployment insurance without federal dollars?
Code – Labor Code
Chapter – 201 Unemployment Compensation Act
Section – 204.006 Initial Contribution Rate
Chapter – 207 Benefits
Section – 207.002 Benefits for Total Unemployment