Chapter 4: Unemployment Insurance
A variety of benefits may be available to unemployed workers to provide them with income support during a spell of involuntary unemployment. The primary source of this support is the joint federal-state Unemployment Compensation (UC) program, which may provide income through the payment of state UC benefits for up to a maximum of 26 weeks in most states. Other programs that may provide workers with income are more specialized. They may target special groups of workers, be automatically triggered by certain economic conditions, be temporarily created by Congress with a set expiration date, or target typically ineligible workers through a disaster declaration.
Originally, one purpose of the UC program was to help counter economic fluctuations such as recessions. This intent is reflected in the current UC program’s funding and benefit structure. When the economy grows, UC program revenue rises through increased tax revenues while UC program spending falls as fewer workers are unemployed. The effect of collecting more taxes than are spent dampens demand in the economy. This also creates a surplus of funds or a “cushion” of available funds for the UC program to draw upon during a recession. In a recession, UC tax revenue falls and UC program spending rises as more workers lose their jobs and receive UC benefits. The increased amount of UC payments to unemployed workers dampens the economic effect of earnings losses by injecting additional funds into the economy.
UC benefits may be extended at the state level by the permanent Extended Benefit (EB) program if high unemployment exists within the state. Once regular unemployment benefits are exhausted, the EB program may provide up to an additional 13 or 20 weeks of benefits, depending on worker eligibility, optional state laws, and economic conditions in the state. The EB program is typically funded 50% by the federal government and 50% by the states who decide to operate a program.
In addition, Congress can authorize temporary unemployment insurance programs: most recently, the Emergency Unemployment Compensation (EUC08) program, which began in July 2008 and expired at the end of December 2013. The expired EUC08 benefit was 100% federally funded. State UC agencies administered the EUC08 benefit along with regular UC benefits and the EB program. The creation of the EUC08 program was the eighth time Congress created a federal temporary program to extend unemployment compensation during an economic slowdown.
Congressional Research Service (CRS) Reports
The House Ways and Means Committee is making available selected reports by the Congressional Research Service (CRS) for inclusion in its 2016 Green Book website. CRS works exclusively for the United States Congress, providing policy and legal analysis to Committees and Members of both the House and Senate, regardless of party affiliation. For prior reports, please see the 2012 Green Book and 2014 Green Book.
Programs and Benefits
Trust Fund and Financing
Other Unemployment Benefits and Alternative Programs
The document provided below, Chronology of Federal Unemployment Compensation Laws, was prepared by the Department of Labor and provides information on the history and chronology of unemployment compensation law since 1935. This version was last updated on April 18, 2016.
This page was prepared October 2016 for the 2016 version of the House Ways and Means Committee Green Book.