The Unemployment insurance in United States provides unemployment benefits to its unemployed Citizens who meet the eligibility requirements. Unemployment is a situation of one’s inability to find work for which he is qualified. Therefore, unemployment is a key economic parameter. This is because it reveals the ability or inability of the citizenry to obtain gainful work. And contribute to the productive output of such country’s economy. However, the definition of unemployment doesn’t extend to people who leave their employ as a result of disability. And for higher education or as a result of retirement.


What Is Unemployment Insurance in United States?

Unemployment insurance with the acronym (UI), and also refers to unemployment benefits, is a type of state-provided insurance in the United States of America. This pays money to individuals on a weekly basis when they lose their job. And meet certain eligibility requirements. In the United States, many States offer unemployment insurance to certain unemployed individuals who meet eligibility requirements.

As stated earlier, those who either voluntarily quit their job, or were fired for a just cause or retired are usually not eligible for Unemployment Insurance.

Here, each state administers its own unemployment insurance scheme. This is notwithstanding that the law establishing it is a federal law. But to be eligible, the workers must meet their respective State’s work and wage requirements, including time. The benefits are paid out by the concern state governments. And the funds come from specific payroll taxes for that purpose.

The benefit under unemployment insurance in the United States is also known as unemployment compensation. And it typically last up to 26 weeks, depending on the state in which you live and worked. Meanwhile, persons who do not find employment after the initial 26-week period may be eligible for extension of the benefits program.  The Extended benefits give the concerned workers an additional number of weeks to receive unemployment benefits. And its availability depends on a state’s overall unemployment situation. The United States Department of Labor administers the unemployment insurance program.

What you need to further Understand

The unemployment insurance program is a joint program between individual states governments and the federal government. The initiative provides money by way of stipends to the unemployed who actively seek to work. The Federal Unemployment Tax Act guides the Compensation to eligible, unemployed workers together with various state employment agencies.

Consequently, the states have unemployment insurance program. However, the respective States must follow specific guidelines by the federal law. The United States Department of Labor monitors the program and ensures compliance by each state.

An example of this kind of unemployment benefits occurred when the Federal Government established additional provisions designed to help unemployed Americans during the Covid-19 pandemic. These additional benefits were put in place after former President Donald Trump signed the Coronavirus Aid, Relief and Economic Securities (CARES) Act in the month of March, 2020. And this was followed by the enactment of the Consolidated Appropriations Act of 2021. An extension was also done again by President Joe Biden by signing the $1.9 trillion American Rescue Plan Act, 2021. This is specifically on March 11, 2021.

Requirements for Unemployment Insurance (UI) in the United States

To be eligible for unemployment insurance in the United States, An unemployed person must meet two primary requirements to qualify for the benefits. These requirements include the state thresholds for either wages earned or time worked in a certain period. Another criterion is the person must be unemployed through no fault of theirs. Any person who meets the above requirement is free to file for unemployment insurance benefits. Such individual must file the claim in the states where he had worked. And the filling of a claim may be done through the phone or vide the state unemployment insurance agency’s website. The claim takes about two to three weeks for its processing and approval.

Similarly, after approval of a claim, the beneficiary is under obligation to either file weekly or bi-weekly reports that confirm their employment situation. These Reports must be filled in order to remain eligible for the unemployment insurance benefit payments.

How Unemployment Insurance is Funded in the US

The funding of Unemployment insurance benefits is primarily from the taxes on employers, such as the FUTA and various state taxes. In essence, FUTA charges 6% of the first $7,000 of each employee’s wages.

Also, some states pay for unemployment benefits vide debiting the former employer’s Unemployment Insurance account. It can also be by raising the employer’s Unemployment Insurance taxes in future years.


Unemployment insurance is a form of state-provided insurance that provides weekly payments or benefits to people who have recently been fired or laid off without for fault of theirs. Although, it only provides a fraction of the actual pay-check as opposed to the actual value of pay-check of the worker while still at work. Unemployment Insurance payments help workers take care of their necessary needs while they search for a new job.


Leave a Reply

Your email address will not be published. Required fields are marked *