Patricia A. O'Malley
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Unemployment Compensation: Myths and Facts
The GOP is still trying to set Americans against each other.
June 29, 2017


Most Americans will collect unemployment benefits sometime in their lives, but those who don’t are frightfully ignorant of the system and the people that they are so quick to criticize. You’ll be lucky if you never need unemployment benefits, but you should know how the system works. 

America’s official unemployment rate stands today at 4.3 percent, down from 10.2 percent in April 2010. But what’s behind those numbers? Who are the unemployed?  How are they counted? How much money do they receive, and where does it come from?

Unemployment compensation is not welfare.
Unemployed people are not lazy, or stupid, or incompetent, or criminals. Most people lose their jobs because their employers go out of business or can’t provide enough work for all of the employees. Not all people without jobs are counted as “unemployed”. Benefits don’t last indefinitely and they certainly aren’t lucrative. Membership in a labor union does not give you any more benefits or better treatment than anyone else.  Congress created the program in 1935 as part of President Franklin Roosevelt’s New Deal.  Each state regulates and operates its own program under supervision by the U.S. Department of Labor.

Who is “Unemployed”?
Only those people who are actually collecting unemployment compensation payments are counted in the “unemployment” rate. Self-employed people, independent contractors, elected officials voted out of office, teachers and school employees on summer break, and those working “under the table” cannot collect benefits, and are never counted. Children under age 16, retired, unemployable disabled, incarcerated, those just entering the workforce, and people not looking for work are not counted. You are not counted after your benefits expire, no matter how hard you look for work.

When discussing the subject, Republicans wave a hand in the air and make a vague reference to people who “left the work force”.  If you work for a living, you know that unless you retire, hit the lottery, are independently wealthy, or someone else is supporting you, you never leave the work force. 
You must always work, somehow, somewhere, to survive.

In June 1984, Ronald Reagan’s White House instructed the U.S. Bureau of Labor Statistics to change the way it measures the unemployment rate.  We used to have something called the civilian unemployment rate.  Then BLS added the entire U.S. military to the base workforce number.  Since all of those people are employed, that reduced the percentage of people without jobs. 

We used to count everyone looking for work as unemployed.  Then BLS declared that ONLY people who are actively collecting unemployment checks would be counted.  That’s right.  If your benefits have expired, you are not counted as unemployed, no matter how hard you’re looking for work.

Collecting Benefits
You must be able and available for work in order to collect benefits. Your “base year” covers the first four of the last five completed calendar quarters. For example, if you applied for unemployment compensation on July 1, your base year would run from April 1, 2016 to March 31, 2017.  The most recently completed quarter – April 1 to June 30 – doesn’t count.  The wages that you earned during the base year determine your benefit level.In Pennsylvania, you must have at least 18 credit weeks, earning  at least $116 in each of those weeks, in your base year to collect any benefits at all.Your application will be denied if you quit a job without good cause or if you are fired for willful misconduct.

Actual benefits are about half of your wages from previous employment. The minimum payment in Pennsylvania is $35 per week. The maximum is $573. Your savings, investments, and spouse’s income don’t count at all.

When unemployment levels are extremely high, the law permits states to cut benefits to all recipients by whatever percentage is necessary to ensure that there is enough money in the fund. Right now, all Pennsylvania unemployment benefits are cut by two percent. Unemployment compensation payments do count as income and are taxable to the federal government.

Benefits are stated as a weekly dollar amount, but are paid every two weeks.  Most states pay  for a maximum of 26 weeks in a 52-week period, called your benefit year. Construction and seasonal workers whose employment is sporadic might have several periods of unemployment in a single year. Those who find a few days’ work at a time or have reduced hours can receive partial benefits. That may extend their benefit year for a few weeks until their total benefits run out.

Paying for Unemployment Compensation
Employers, not tax dollars, pay for basic benefits. Employers pay a percentage of their total payroll amounts into the states’ unemployment trust funds.  No regular tax dollars go into benefits for the basic program. Congress usually authorizes – and pays for – extended benefits of additional 13 or 20-week periods during recessions.

Punishing Unemployed People
Once you apply, the first week of your benefit year is called the “waiting week”. No, you are not waiting for a check to arrive in the mail. You will never be paid for that week. The Pennsylvania legislature has decided that you don’t ever need that money. Yes, really.

­­The term is deliberately misleading. It’s designed to fool people into thinking that they are receiving payments for all of the weeks that they are unemployed. They are not. Words have power. They are humans’ primary means of communication. So we need to change this name to something more honest. Today. I suggest that we call this the “UNPAID week”. Make your legislators understand what they’re doing to you and your family.

Once again, the republithugs won’t be happy until we return to the good old days of unrestricted child labor, absence of workplace health and safety standards, sweatshops, and robber barons. Contact your state legislators. Tell them to support working families who pay taxes, not the corporations that don’t.

Tell them WE ARE ONE.

For More Information:
Center on Budget and Policy Priorities: Introduction to Unemployment Insurance
Unemployment Lifeline – Help for Unemployed People
Pennsylvania Unemployment Compensation
U.S. Bureau of Labor Statistics

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Patricia A. O'Malley

Social Policy & Programs Consulting

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