Unemployment Insurance

The national federal–state unemployment insurance (UI) program provides weekly income to people who lose their jobs through no fault of their own, with states administering programs under federal guidelines. To qualify, individuals must meet eligibility criteria such as involuntary unemployment, minimum earnings during a base period, availability and ability to work, and active job searching. Voluntary quits usually disqualify workers unless for “reasonable cause,” while misconduct, refusal of suitable work, and certain labor disputes also disqualify eligibility.

Most states define the base period as the first four of the last five calendar quarters before filing a claim and require a minimum earnings threshold. A waiting period, usually one week, applies in most states before benefits begin, serving both administrative and cost-control purposes. Weekly benefit amounts vary by state and are generally 50–67% of previous earnings, calculated using one of three methods tied to wages during the base period.

Standard UI benefits last up to 26 weeks, with extended benefits of 13 weeks (and sometimes more during high unemployment or recessions). Some industries also use supplemental unemployment benefits (SUB) through collective bargaining, especially in cyclical sectors like steel. UI benefits are funded by employer payroll taxes under the Federal Unemployment Tax Act (FUTA) and state taxes, with tax rates influenced by an employer’s history of layoffs. The federal government manages funds through the Treasury Department, retaining a small portion for administrative costs and providing bailouts to states with low reserves.