Unemployment insurance: Who pays?

The House voted this week to extend unemployment benefits another 13 weeks.

If approved by the Senate, it would be the fourth time Congress has extended federal jobless benefits since the recession began in December 2007.

The latest 13-week extension would be available to residents in the 25 states that have had an average jobless rate of at least 8.5% for three months – about 70% of the U.S. population House Democrats said

So who pays? Well most people think its the Government, but in fact businesses pay dearly when workers are laid off and forced to apply for unemploment insurance. It generally ends up in higher UI insurance premiums for, not just that business, but when faced with today’s unemployment rates, all businesses. But that’s the long answer. Here’s the short one and its classic Ben Stein.

Remind you of anyone else?

4 replies
    • Steve McGough
      Steve McGough says:

      Yes, businesses only, not employees, pay a payroll tax – generally a percentage of payroll – directly towards the unemployment insurance premium. You will not see a line item on your pay stub with a deduction from your paycheck towards the insurance premiums.

      That said, there is a good argument the insurance premiums are indirectly taken from the employees paycheck because the employer has to pay the premium on the total payroll paid. If they have employees, they are paying. It is not like the 15.3 percent FICA (Social Security and Medicare) tax, where the employer pays half and the employee pays half.

      From what I remember, I think Canada does pull a small amount out of paychecks to cover the unemployment insurance costs there.

      In the Bahamas, an employee does not have any deductions either. The employer pays premiums to the NIB.

    • Jim Vicevich
      Jim Vicevich says:

      Not to mention "s" corps, like mine, or SPs … pay the entire 15% (for themselves). Small business gets hammered at every end by government. And yet these job generators are continually hammered as greedy and rich. They earn every penny … unlike the government.

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