How are unemployment insurance benefits financed in NY - confused about where the money comes from
I've been getting unemployment benefits for 6 weeks now and I'm curious about how this whole system actually works financially. Like where does the money I'm receiving actually come from? Is it from taxes that employers pay or is it coming from my own past contributions? My friend told me it's basically insurance that employers pay into but I've also heard that employees contribute too. Can someone explain how unemployment insurance benefits are financed in New York? I want to understand if I'm receiving money that I somehow paid into myself or if it's purely employer-funded.
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Amina Bah
In New York, unemployment insurance is funded primarily through payroll taxes paid by employers. These are called SUTA taxes (State Unemployment Tax Act). Employers pay into the state unemployment fund based on their payroll and their experience rating - companies with more former employees who filed claims pay higher rates. There's also a small federal unemployment tax (FUTA) that employers pay. As an employee, you don't directly pay into the unemployment system in NY, unlike some other states that have employee contributions.
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Paolo Marino
•Oh interesting, so it's all employer-funded? That makes me feel a bit better about collecting benefits then. I was worried I was somehow using up money I had paid in myself.
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Oliver Becker
yeah the employer pays it all but dont feel bad about collecting, thats what the system is for and your past employers already paid into it based on having you as an employee
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Natasha Petrova
The financing structure is actually more complex than just employer taxes. While employers do pay the majority through state and federal unemployment taxes, the rates they pay are based on their 'experience rating' - essentially how many of their former employees have filed claims. Companies that lay off workers frequently pay higher rates. There's also federal funding that kicks in during extended benefit periods. The whole system is designed to be self-sustaining through these employer contributions, but during recessions the federal government sometimes provides additional funding.
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Javier Hernandez
•So if a company has a lot of layoffs, they end up paying more into the system? That seems like it would encourage companies to avoid layoffs when possible.
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Natasha Petrova
•Exactly! The experience rating system is meant to incentivize employers to maintain stable employment. Companies with lower turnover and fewer UI claims get lower tax rates.
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Emma Davis
I had trouble getting through to NYS Department of Labor to ask about this same question actually. The phone lines are always busy when you try to call them directly. I ended up using this service called Claimyr (claimyr.com) that helps you get through to an actual agent. They have a video demo at https://youtu.be/qyftW-mnTNI that shows how it works. Might be helpful if you have other questions about your benefits that need a real person to answer.
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LunarLegend
•That sounds useful! I've been trying to call NYS Department of Labor for weeks about a different issue and keep getting hung up on.
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Malik Jackson
The whole unemployment system is just another way for the government to control businesses if you ask me. Making employers pay all these taxes and then bureaucrats decide who gets benefits and who doesn't. At least you're getting something back but the red tape is ridiculous.
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Amina Bah
•While the system has its complexities, unemployment insurance has been providing crucial support to workers for decades. The employer-funded model helps ensure there's a safety net without adding to employee payroll deductions.
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