Humanities › Issues All About Unemployment Benefits Unemployment Benefits at the Federal and State Levels Share Flipboard Email Print Yellow Dog Productions / Getty Images Issues The U. S. 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With the costs of the program shared by state and federal government, unemployment compensation is intended to provide jobless workers with a source of income until they are re-hired or find another job. In order to qualify for unemployment compensation, jobless workers must satisfy certain criteria such as actively looking for jobs. Unemployment compensation is a government benefit nobody wants to have to accept. But as the United States officially entered its worst economic recession since the Great Depression in December 2007, and an additional 5.1 million Americans had lost their jobs by March 2009. More than 13 million workers were unemployed. The national unemployment rate stood at 8.5 percent and rising. By the end of March 2009, an average of 656,750 Americans a week were turning in their first-ever applications for unemployment compensation. Fortunately, things have improved considerably since then. In February 2020, the U.S. unemployment rate stood at just 3.6%—the lowest in 50 years. In January 2020 alone, employers added 225,000 new jobs. Where does the money to pay unemployment benefits come from? Here's how it works. Defense Against Economic Despair The federal/state unemployment compensation (UC) program was created as part of the Social Security Act of 1935 in response to the Great Depression. Millions of people who had lost their jobs were unable to buy goods and services, which just led to even more layoffs. Today, unemployment compensation represents the first and perhaps last line of defense against that ripple effect of joblessness. The program is designed to provide eligible, unemployed workers with a weekly income sufficient to allow them to afford the necessities of life, such as food, shelter, and clothing, while they look for new jobs. Costs are Truly Shared by Federal and State Government UC is based on federal law, but it's administered by the states. The UC program is unique among U.S. social insurance programs in that it's funded almost totally by either federal or state taxes paid by employers. Currently, employers pay federal unemployment taxes of 6 percent on the first $7,000 earned by each of their employees during a calendar year. These federal taxes are used to cover the costs of administering UC programs in all states. The federal UC taxes additionally pay one-half of the cost of extended unemployment benefits during periods of high unemployment and provide for a fund from which states may borrow, if necessary, to pay benefits. State UC tax rates vary from state to state. They may be used only to pay benefits to unemployed workers. The state UC tax rate paid by employers is based on the state's current unemployment rate. As their unemployment rates go up, the states are required by federal law to raise the UC tax rate paid by employers. Almost all wage and salaried workers are now covered by the federal/state UC program. Railroad workers are covered by a separate federal program. Ex-service members with recent service in the Armed Forces and civilian federal employees are covered by a federal program, with states paying benefits from federal funds as agents of the federal government. How Long Do UC Benefits Last? Most states pay UC benefits to eligible unemployed workers for up to 26 weeks. "Extended benefits" may be paid for as long as 73 weeks in periods of very high and rising unemployment nationwide or in individual states, depending on state law. The cost of "extended benefits" is paid equally from state and federal funds. The American Recovery and Reinvestment Act, a 2009 economic stimulus bill, provided for an extra 33 weeks of extended UC payments to workers whose benefits were scheduled to expire at the end of March of that year. The bill also increased the UC benefits paid to some 20 million jobless workers by $25 per week. Under the Unemployment Compensation Extension Act of 2009 signed into law by President Obama on Nov. 6, 2009, unemployment compensation benefit payments were extended for an additional 14 weeks in all states. Jobless workers were for an additional six weeks of benefits in states where the unemployment rate was at or above 8.5 percent. As of 2017, maximum unemployment insurance benefits range from $235 a week in Mississippi to $742 a week in Massachusetts plus $25 per child dependent as of 2017. Unemployed workers in most states are covered for a maximum of 26 weeks, but the limit is only 12 weeks in Florida and 16 weeks in Kansas. Who Runs the UC Program? The overall UC program is administered at the federal level by the U.S. Department of Labor's Employment and Training Administration. Each state maintains its own state unemployment insurance agency. How Do You Get Unemployment Benefits? Eligibility for UC benefits as well as methods for applying for benefits are set by the laws of the various states, but only workers determined to have lost their jobs through no fault of their own are eligible to receive benefits in any state. In other words, if you're fired or quit voluntarily, you probably will not be eligible.