Unemployment Compensation: Myths and Facts

The GOP is still trying to set Americans against each other.

America’s official unemployment rate stands today at nine percent, down from 10.2 percent in April, 2010. But what’s behind those numbers? How are the unemployed counted? How much money do unemployed people receive, and where does it come from? While most Americans will collect unemployment benefits at some point in their lives, those who don’t are frightfully ignorant of the system and the people that they are so quick to criticize. You’ll be very lucky if you never need unemployment compensation, but you should know how the system works.

Unemployment compensation is not welfare. Unemployed people are not lazy, or stupid, or incompetent, or criminals. Most people lose their jobs because their employers go out of business or can’t provide enough work for all of the employees. Not all people without jobs are counted as “unemployed”. Benefits don’t last indefinitely and they certainly aren’t lucrative. Membership in a labor union does not give you any more benefits or better treatment than anyone else. Since 1935, each state regulates and operates its own program under supervision by the U.S. Department of Labor.

Only those people who are actually collecting unemployment compensation payments are counted in the “unemployment” rate. Self-employed people, independent contractors, elected officials voted out of office, teachers and school employees on summer break, and those working “under the table” cannot collect benefits, and are never counted. Children under age 16, retired, unemployable disabled, incarcerated, those just entering the workforce, and people not looking for work are not counted. You are not counted after your benefits run out, no matter how hard you look for work.

You must be able and available for work in order to collect benefits. Your “base year” covers the first four of the last five completed calendar quarters. For example, if you applied for unemployment compensation today, your base year would run from January 1, 2010 to December 31, 2010. The first quarter of 2011 – January, February, and March – is excluded. The wages that you earned during the base year determine your benefit level. In Pennsylvania, you must earn at least $1,320 in your base year to collect any benefits at all. Your application will be denied if you quit a job without good cause or if you are fired for willful misconduct.

Actual benefits are about half of your wages from previous employment. The minimum payment in Pennsylvania is $35 per week. The maximum is $573. When unemployment levels are extremely high, the law permits states to cut benefits to all recipients by whatever percentage is necessary to ensure that there is enough money in the fund. Right now, all Pennsylvania unemployment benefits are cut by 2.3 percent. Unemployment compensation payments do count as income and are taxable to the federal government.

Benefits are stated as a weekly dollar amount, but are paid every two weeks for a maximum of 26 weeks in a 52-week period, called your benefit year. Construction and seasonal workers whose employment is sporadic might have several periods of unemployment in a single year. Those who find a few days’ work at a time can receive partial benefit payments. That may extend their benefit year for a few weeks until their total benefits run out.

Employers and employees, not tax dollars, pay for basic benefits. Employers pay a percentage of their total payroll amounts into the states’ unemployment trust funds. In a few states, including Pennsylvania, employees also contribute to the fund. No tax dollars go into benefits for the basic program.

Congress usually authorizes – and pays for – extended benefits of additional 13 or 20-week periods during recessions. These are the extended benefits reported in the media every few months. Federal law prohibits any benefits at all beyond 99 weeks. We call those people the 99ers and their numbers are growing.

Once you apply, the first week of your benefit year is called the “waiting week”. No, you are not waiting for a check to arrive in the mail. You will never be paid for that week. The Pennsylvania legislature has decided that you don’t ever need that money. Yes, really.

­­The term is deliberately misleading. It’s designed to fool people into thinking that they are receiving payments for all of the weeks that they are unemployed. They are not. Words have power. They are humans’ primary means of communication. So we need to change this name to something more honest. Today. I suggest that we call this the “UNPAID week”. Make your legislators understand what they’re doing to you and your family.

Twenty six Republican Pennsylvania state legislators have introduced a bill to punish people for being unemployed. House Bill 916 would tighten financial eligibility requirements, put up bureaucratic barriers and hurdles, tighten eligibility for reapplication for benefits, slow the growth of maximum benefit rate, and readjust calculation of the benefit rate.

Once again the republithugs won’t be happy until we return to the good old days of unrestricted child labor, absence of workplace health and safety standards, sweatshops, and robber barons. If you live in Pennsylvania, contact your state legislators. Tell them to support working families who pay taxes, not the corporations that don’t.

Tell them WE ARE ONE.

For More Information:

Center on Budget and Policy Priorities: Introduction to Unemployment Insurance

Unemployment Lifeline – Help for Unemployed People

Pennsylvania Unemployment Compensation

U.S. Bureau of Labor Statistics

Pennsylvania House Bill 916

Contact Pennsylvania Legislators


One thought on “Unemployment Compensation: Myths and Facts

  1. You put out seemingly accurate data, and then you totally destroy your credibility by calling names. That tells me that your loyalty and motivation isn’t to the working or disabled poor, but to a particular political party. What a shame.

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