In this post, Markxxx makes a common statement that I’ve heard for years…Employers hate to pay unemployment.
I thought employers paid unemployment to the state whether they ever had to “pay out” or not. Isn’t it collected by the state just like taxes?
The only time we had to OK our employees to get unemployment benefits was when we closed the business so obviously, if we as the employer had to pay something, the state was SOL.
The unemployment premiums the company pays goes up the more claims there are against that company.
Yup, every company has a reserve account (at least in Wisconsin), depending on some combination of claims against the account and the balance of the account the percentage we pay to the state goes up or down.
Often times I’ll fight an unemployment case purely on principle though. A lot of the claims that ex-employees make are BS and Wisconsin is very employee friendly when it comes to that.
Just to put numbers to this: In WA, unemployment is based on experience factors and can range from a low of 0.35% to a high of 6.0%. Most employers fall in the 1% to 2% range. You pay this on the first $37,600 of wages on each employee (per year), so the rate you have is the difference between paying $100 or $2,000 per employee. That’s the kind of difference that can make or break a small business.
WA can also stick you with part of the bill for the actual unemployment costs, but it’s the change in the rates that really spooks people.
I have clients who are putting off hiring because they’re not sure whether the economy will be steady enough to support an employee indefinitely. They’d rather not hire at all than risk making a hire and having to lay that person off six months from now.
You are correct, I oversimplified too much, thank you for the catch.
As other poster noted they hate to pay out because it increases their rate. I should’ve been clearer
In Illinois, the rates were just increased, and now range from 2.7% to 9.8% of pay up to a cap.
Like automobile insurance: the more claims you have, the higher your insurance premiums. Thus, employers hate to have unemployment claims filed. This often leads to what I feel is underhanded trickery: the employer will offer the employee the choice between being fired or voluntary resigning. They’ll play up the stigma of being fired, and they might also add some inducement (take early retirement with a sweetener, or they’ll let you use your office for a month to apply for a new job as though you were doing this on your own, etc.) That can sound like it’s being nice, but in fact, it’s screwing you out of unemployment insurance. You can’t collect unemployment insurance if you’ve voluntarily resigned or retired. (There are a few other situations where you can’t collect unemployment insurance, as well.)
God, you just about gave me a heart attack. It looks like illinois rates have increased from last year, but nowhere near that much - IDES says the minimum is .7% and max 8.4%, not 2.7% (http://www.ides.state.il.us/employer/uitax.asp)
That being said how much unemployment the state has paid out to your former employees definitely determines whether you are at the .7% or the 8.4%.
I employ myself, and have for several years so my rate has fallen to the minimum.
Just for the record, there are actually a few ways you can quit your job and still get unemployment. Bouncing paychecks is one of them IIRC.
Well thanks for the education. I guess I just assumed that the unemployment collected from the employer came from a flat percentage, not one that was increased with claims.
Sorry Markxxx, I wasn’t calling you out. Just when I read your post it reminded me that it was something that I had never truly understood.
Joey is right. I’ve done quite a few private investigations/consulting work assignments that involved my clients having fired someone or gotten them to resign because of something they did. The system here in the Majical Land O’Cheeze is extremely biased in favor of the employee. I’ve seen quite a few people get unemployment benefits when it was grossly obvious that what they had done had more than justified their termination.
I’m wondering, though, what the top unemployment pay is in the U.S.A… If I’m not mistaken (and I’m sure I will be corrected if I am) in Wisconsin it’s $388 per week before state/federal taxes. Is that high/medium/or low?
My house/credit cards/vehicles/bills are all paid off and still no way could I survive in any real comfort on $388 a week before taxes. That’s not me saying they should raise it. that’s me saying I’d do anything to get another job that pays more than that if that’s all I was looking at a week.
Very true. I don’t know how it shakes out with a much larger company that would expect a certain number of claims in any given years, but I can give myself as a microcosm:
We had a nanny for a number of years. All above the table, we paid unemployment etc. Most years, my rate was quite low. It varied based on the previous year’s overall statewide rate, but any given year I paid between zero and 40ish dollars.
The year after we let her go - NOT for cause, and I did everything I could to help her collect unemployment including promptly returning paperwork - my rate was unchanged (we let her go in September). The following year, however… my rate was high enough that I’d have paid 480 dollars in unemployment insurance if we’d hired another nanny.
If you’re just talking about you yourself, you will qualify for food stamps while you’re on unemployment, so you won’t have to pay for food out of that. With all the major stuff paid off, all you’d have to pay for are utility costs, gas, car insurance, and potentially medical care. And then basic non-food items like shampoo and toilet paper. Most people could afford all of that on $1500 a month. Many people manage to live on less than 18k a year. They’d be more comfortable with more money, sure, but I don’t think you’d be in any extreme hardship unless you have severe and expensive medical problems. Your standard of living would go down, sure. You’d have to cut out frills like electronics upgrades for a while. But many people who are already living with roommates could do more than subsist on this, AND pay for rent and a car payment that you don’t have to worry about.
I’m not sure what your standard of living is, of course.
In Missouri, the maximum is $320/week. Not only that, but
Food stamps or not, “many people” are going to have trouble living for any length of time on a maximum of $8,320.
When I retired from the PD my base wage was $1200/week. This was for 40 hours even and did not include any over time. My pension is just shy of 2/3 of that and it’s a hit compared to what I made. Working a part time patrol job plus some private investigations and my gun dealership pushes my income well passed what I used to make. I couldn’t imagine making 1/3 a week what I used to. I’d have to give up so much of what I’m used to.
The vast majority of people have some sort of housing cost,and that tends to be very inelastic in the short run. Even people that own their home free and clear likely have meaningful property taxes/insurance to pay. Furthermore, someone with a significant asset (such as a home or car) almost certainly does not qualify for food stamps.
Interesting - sounds like the US UI systems are quite different from the Canadian one. Here, the employers generally play a flat rate, based on the employee’s income, up to a maximum of just over $1000 per year. Premiums don’t change based on employment patterns, as far as I know. The premiums paid by the employer and the employee both go into a general fund run by the federal government - no individual employer accounts as some in this thread have referred to.
In Illinois you wouldn’t qualify for food stamps if you take home more than $1,127 for a household of one or $1,517 for two, etc etc
Here’s the calculator for Illinois
Plus in Illinois you need to do something to get them if your under 50 years, such as Earnfare, go to drug/alcohol rehab, get your GED or participate in a job search education program.
So for the poster who had $388 that’s 1,681.33/month with a large enough family and and small enough rent you might get some food stamps.
(bolding mine)
Wait, back up, hang on a sec. I thought (U.S.) that you can’t collect unemployment benefits if you’ve been fired only if you were laid off.
It varies from state. Usually the exception is being fired “for cause” where the causes are things like theft from the employer. However, you might fire someone for being the least productive member of their department; in many states, they’d still qualify for unemployment.