Unemployment Compensation
Unemployment compensation is a benefit offered during the job search period to citizens who have been officially considered unemployed. Such payments are intended to provide a jobless person time to look for a new job. In other words, it is financial support introduced for a certain period of time. In order to receive unemployment compensation, claimants must meet the following requirements: they must have worked a certain amount of time and are currently putting time into finding a new job.
Payments are usually deposited to the account, once direct deposit is established, or an unemployed has an opportunity to receive a paper check.
Unemployment Compensation explained
Unemployment compensation is spread in many advanced and emerging economies. In the U.S., the system is run by the state and federal governments. The compensation is calculated based on the average pay for the past 52 weeks. However, each state estimates the benefits differently and it’s not easy to calculate exactly what benefits a person can get.
The federal government imposes payroll taxes on wages and salaries and uses the revenue to provide unemployment compensation to eligible workers. Unemployment benefits are usually available for 26 weeks, though the duration of the program varies from 12 to 30 weeks.
Some states may provide additional weeks in response to a high level of unemployment.
Historical background
In 1911, the Liberal Government passed the National Insurance Act, the first State unemployment insurance law in the U.K. It was aimed at creating two independent contributory systems of health and unemployment insurance. The Act created a system of benefits for one group — low-paid workers whose earnings were 1.5 shillings a day and who did not pay contributions. The benefits were formed from contributions made by entrepreneurs, other well-paid workers, and state subsidies.
The first program related to unemployment compensation was introduced in the U.S.under the State unemployment insurance law in 1932 to support economic recovery.
Eligibility requirements
Each state may set its own eligibility criteria. For instance, the benefit amount is determined by taking the total of wages a person received before dismissal (earnings for the last two calendar quarters). One quarter's wages must be at least $2,600. Period wages must be at least 1.5 times the highest quarters wages. The maximum weekly benefit outlined by the state is $504 and the minimum a citizen may receive is $104.
COVID-19 federal unemployment programs
Donald Trump signed the "Coronavirus Aid, Relief, and Economic Security Act" (the CARES Act) in 2020. It includes stimulus measures intended to boost the economy and provide unprecedented support to the U.S. citizens and businesses. This bill allotted $2.2 trillion, an amount that is twice the size of grants given to overcome the effects of the financial crisis in 2009.
It created three new emergency initiatives for states:
- Pandemic Unemployment Assistance (PUA) is provided by the states to individuals who work for oneself, look for a part-time job or don’t match requirements on regular unemployment benefits.
- Federal Pandemic Unemployment Compensation (FPUC) is an additional weekly compensation. It is paid on top of regular unemployment compensation. The extra $300 payment a week was available for unemployed until March 14, 2021.
- Pandemic Emergency Unemployment Compensation (PEUC) gives an opportunity to extend unemployment benefits by up to 24 weeks if a jobless person has used all the benefits.
Besides, the Congress adopted the $1.9 trillion American Rescue Plan to reduce the impact of the pandemic on the economy. It had a number of additional benefits for American families and introduced extended unemployment compensation.
