How Does Unemployment Insurance Work?
No matter what is happening in the economy, no worker is immune to being laid off. For instance, a company could decide to outsource operations to a country where wages are lower. Unemployment insurance provides a temporary safety net to workers who lose their jobs by replacing a portion of their salary for certain periods. Each state administers its own unemployment insurance program.
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Eligibility
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To receive unemployment insurance payments, you must have lost your job through no fault of your own. If you quit your job or lost it because of poor performance or another justifiable reason, you are not eligible for unemployment insurance benefits.
Verification
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Workers wait in the unemployment line. As soon as you apply for unemployment insurance, an agency with the state in which you live will verify that you were a victim of a layoff by contacting your previous employer and making sure you lost your job due to lack of work and not an action within your control.
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Calculation
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After the state verifies you were indeed the victim of a layoff, your weekly payment is calculated. Your payment will be a percentage of what you made in your previous job, generally between 20 percent and 50 percent, depending on your state. Unemployment insurance replaces only a portion of your previous pay because it is intended to pay only for the essentials of living such as food and utilities until you find new employment.
Account Creation
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Once you have been accepted, you will be given an unemployment insurance account with the state. The account will be created over the Internet or the telephone.
Waiting Period
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Before you begin receiving benefits, you must complete a waiting period of typically one or two weeks. If you find a new job during this period, you will not be eligible for unemployment benefits, even if the job does not pay you as much as your previous job. After the waiting period, you will begin to receive your weekly payments.
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References
- Photo Credit work image by Alison Bowden from Fotolia.com standing in line image by Antonio Oquias from Fotolia.com
