I’m a little ashamed to say that I sometimes like to watch Judge Judy. If she asks a litigant (usually the defendant) what he or she does for a living, and the litigant says that they are currently unemployed, JJ usually spouts off “So Byrd and I are supporting you!” She gets pretty pissed off about it.
But do she and Byrd really support that person?
Ten years ago I was unemployed for 15 months. Was the government supporting me, or was I just getting some of my own money back? How do the numbers shake out?
And where does the money come from? Is it state or federal money? If either, what do employers pay unemployment compensation for? A friend’s brother recently had to fire someone, and he had to fight tooth and nail not to pay her unemployment, because it would come out of his own profits.
So if I get laid off tomorrow, who pays my bills? Me, from my past taxes? My last employer? Joe Taxpayer? The state? The Feds? Judge Judy?
If you are chronically unemployed, and stay that way for the full length of your benefits, odds are you got more out of the system than your contributions.
In Canada, for example, a person with $42,000/yr income or more pays the maximum of about $1000 for UIC. The payout is about $900/month IIRC, so if you worked and paid in for 10 years, you are just getting your own money back. If you worked the minimum 1 year and collected almost a year, people like me who haven’t collected for the last 20 years are paying your way. (The employer also contributes a premium based on your wages)
Not sure how the US system works, but I’m sure the numbers are similar, and the people who appear in Judge Judy tend to be on the minus side of the ledger.
(Does the US system have a specific deduction for the Unemployment Insurance fund?)
See this - File:Fy2010 spending by category.jpg - Wikipedia
Unemployment and welfare is the 3rd-largest category of spending by the feds - so obviusly some systems are not supported just by worker/employer premiums, unlike the Canadian system today.
Some states may have such a deduction - I worked in New York City for a bit in the early 90s and there was a deduction that I think was for unemployment. In general however, there’s no deduction from the paycheck; it’s something the employer pays.
To give you an example of the scope: the employer’s portion maxes out at 8,000 of income in my state (Virginia) per employee. So from an unemployment tax standpoint, it’s cheaper for me to hire one person at 16,000 a year (since half of that has no UI tax), than to hire two people at 8,000 a year.
There’s a separate Federal unemployment tax which similarly maxes out at 7,000 (I think) of salary per employee.
As far as what I paid: The most I ever paid the state was about 40 or so dollars, the most I ever paid the Fed was 56 dollars (from memory; those figures may be slightly off but they’re in the right ballpark). When we let our nanny go after 10 years, let’s say I paid 1,000 dollars total. She got more than that within a couple of months, I suspect.
The state figure varied according to a number of factors: how everyone had done the prior year, plus my own “experience” (i.e. how many people had I laid off). Some years the rate was zero percent since the state had had a good year. The year I let the nanny go, my rate was subsequently jacked up a LOT - if I’d rehired someone, I’d have been paying 400 dollars to the state. I don’t think there’s a similar linkage for the Federal side.
All that said, I don’t know the factual answer to the OP’s question. I expect it’s some combination of taxes collected that year, plus money paid out by the state / fed (since the Federal government has passed bills to extend unemployment a few times when things have been bad). But if someone comes up with a factual answer, I’d be fascinated to hear it.
Employers pay both federal and state unemployment taxes for each worker they employ. The state tax varies, but this CSM article says that the average is $274 per employee per year. The Federal tax was $56 when the article was published. So if you have 10 employees, you’d pay an annual tax of $3,300.
In most (all?) states, the per-employee rate is based on the number of former employees who collect benefits. So the more people you layoff, the higher rate you have to pay for your existing employees going forward. That’s why so many employers (26% according to this article) fight claims.
ETA: when unemployment spikes, as it has in recent years, the fund runs at a deficit. Congress has to find a way to cover the gap. Same thing when they choose to extend benefits for a longer time period,
Yeah - it’s a dick move in my opinion (fighting all claims, that is - I have zero problem with fighting claims for people who’ve been fired for cause). It may be diluted somewhat perhaps if you’re a larger employer but with my one experience, the rate went up tenfold.
And the rate can be affected by the general economic climate, as I found - some years I paid zero percent, some years it was several times that, even though I hadn’t laid anyone off.
To be fair, Judge Judy earns upwards of $45 million/year, so it’s quite likely that she’s single-handedly paid for not only that guy, but dozens if not hundreds of others.
The Federal unemployment tax applies only to the first $7,000 of income. So the slacker working part-time in 7-11 is generating as much for unemployment as Judge Judy is at the federal level.
State unemployment taxes vary, so I’m not sure of the answer for Judge Judy specifically, but I do know that AZ follows the federal cap of $7,000 while WA has a cap of around $38,000.
