US unemployment insurance system at ‘high risk
The Government Accountability Office (GAO) of the United States issued a warning on Tuesday that the unemployment insurance system was “very vulnerable” to fraud, waste, and mismanagement.
The unemployment insurance system, which is set to be revamped next year, has “serious shortcomings” in terms of how it “carries out its goal,” according to the report, which also includes “solutions panelists recommended for modernizing the system.“
The recent “record demand” for unemployment assistance drove the need for the systems to be implemented swiftly, posing “severe issues for states and an increased risk of erroneous payments, particularly those related to fraud,” according to the agency.
The GAO’s chief, Gene Dodaro, said in a statement on Tuesday that “the widespread flaws afflicting the Unemployment Insurance system are exceedingly concerning.”
“Not only is the system failing to satisfy the requirements of workers and the larger economy,” Dodaro continued, “but the potential for massive financial losses might damage public faith in government governance.”
Meanwhile, Senate Finance Committee Chairman Ron Wyden (D-Ore.) told The Washington Post that the GAO research indicates the unemployment system is “broken.”
“While enhanced unemployment benefits saved millions of families from financial devastation during the pandemic,” Wyden stated, “the GAO’s reports show that the unemployment system is dysfunctional – both in terms of program administration and benefit policy.”
“The historic step Congress took — boosting benefits and extending coverage to gig and part-time employees — masked significant vulnerabilities that must be addressed before the next economic collapse,” he continued.
The study comes after Labor Department data released last week indicated that the United States added 390,000 jobs in May, and the unemployment rate remained unchanged at 3.6 percent despite strong inflation.
Video: Unemployment Insurance
What is unemployment insurance?
Unemployment insurance is a social insurance program designed to replace a portion of the income lost by workers who become unemployed through no fault of their own. Unemployment benefits are usually paid out by a government agency and financed through taxes, but they are sometimes subsidized by employers.
The primary objective of unemployment insurance is to prevent poverty. Unemployment insurance should provide at least partial replacement of wages lost as a result of an involuntary job loss, subject to conditions (e.g., minimum earnings requirements) and other restrictions that vary from country to country. In some countries, including Canada and the United States, this benefit is frequently referred to as unemployment insurance (UI) or unemployment compensation (UC).
Unemployment benefits are intended for people who are temporarily out of work, with the expectation that once the economy improves they will find new jobs. The eligibility requirements for receiving unemployment benefits vary from country to country but generally require that the claimant be able to demonstrate that he or she has been actively seeking employment within a certain period of time before they can be awarded any benefits.
In Australia, Ireland and New Zealand, unemployment benefits are based on a percentage of previous earnings (generally around 60%). The amount is set at a level designed to allow recipients to live at the same standard as before becoming unemployed. However, if an individual’s previous earnings were above average they may be eligible for less than this amount – often called “progression”.
Unemployment insurance is a social insurance program designed to provide temporary income to workers who are unemployed through no fault of their own. Unemployment benefits are generally paid by the state government which defines how much it will pay and for how long.
The first unemployment benefit scheme was introduced in Germany after the First World War. In the United States, unemployment insurance began in 1935 by President Franklin D. Roosevelt’s New Deal with the Social Security Act. Unemployment insurance in the United States is funded by state taxes and administered by each state’s agency responsible for unemployment benefits (usually called Employment Security Agency or Department of Labor).
Unemployment insurance is generally not paid out when an individual works full-time and has worked for one company for a specified time period (most commonly one year). However, unemployment benefits can be collected if an individual has lost his/her job due to:
Discharge from employment for reasons other than misconduct (e.g., poor performance or violation of work rules)
Termination of an employee because of difficulty in finding another job within a reasonable time after being laid off (involuntary termination)
Suspension from work without pay because of lack of work or discontinuance of a plant or office.
Types of unemployment insurance
There are three types of unemployment insurance:
State Unemployment Insurance (SUI). This is the most common type of unemployment insurance. It’s administered by each state’s agency and provides benefits to workers who lose their jobs through no fault of their own.
Federal Unemployment Insurance (FUI). FED-UP! has information on this site about how you can get involved with our efforts to improve the FUI program.
Worker Adjustment Retraining Notification (WARN) Act. The WARN Act requires most employers with 100 or more employees to give 60 days’ notice before closing a facility or terminating 50 or more employees at one location within 2 years from the date of closure/termination or before any other permanent mass layoff (such as furloughs over 30 days).
Who Can Collect Unemployment Insurance?
In general, only those who have lost their jobs through no fault of their own are eligible for unemployment benefits. The law requires that applicants must meet certain criteria in order to qualify for unemployment benefits:
They must be able to work full-time, or at least part-time if necessary;
They must be able to work at any job available in their local area;
They cannot quit work without good cause (for example, refusing unsafe working conditions); and
They cannot be fired for misconduct connected with work (for example, stealing from an employer).
How Do I File for Unemployment Insurance in US?
Unemployment insurance benefits are provided by the United States Department of Labor to eligible workers who become jobless due to no fault of their own and meet certain other criteria.
Unemployment insurance is a state-federal program that pays financial compensation to workers who are unemployed. Although each state manages its own unemployment insurance program, all states adhere to the same federal criteria.
Is it true that I am eligible?
Each state determines who is eligible for unemployment benefits, although you are usually 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 set period of time known as a “base period.” (This is usually the first four out of the last five completed calendar quarters before your claim is submitted in most states.)
- Comply with any additional standards imposed by the state. Find out more about your state’s program.
How do I submit my application?
- You must file a claim with the unemployment insurance program in the state where you worked in order to collect unemployment benefits.
- After being unemployed, you should contact your state’s unemployment insurance program as soon as feasible.
- In most cases, your claim should be filed with the state where you worked. If you worked in a state other than where you now live, or if you worked in numerous states, the state unemployment insurance agency where you now live can help you make a claim in other states.
- When you file a claim, you’ll be asked for details like your previous employer’s address and dates of work. Make sure you provide comprehensive and accurate information to avoid having your claim delayed.
- Your first benefit check usually arrives two to three weeks after you make your claim.
Unemployment insurance for small business
Unemployment insurance for small business can be a valuable tool for protecting your company against the loss of workers during a down economy.
Unemployment insurance protects you from losing money if your employees leave to take jobs elsewhere, or if they quit because they can’t find work. It also protects employees who lose their jobs through no fault of their own — such as when an employee is laid off due to lack of work or when an employer goes out of business.
In most cases, unemployment insurance is handled by state governments or other governmental agencies. But in some cases, it may be handled by private carriers that specialize in providing this kind of coverage.