NYS Department of Labor tax collections drop when unemployment is high - how does this affect my benefits?
I've been thinking about something lately and wondering if anyone knows the answer. When unemployment rates are really high like they were a couple years ago, the government obviously collects way less in payroll taxes and income taxes because fewer people are working. Does this mean the NYS Department of Labor unemployment fund gets stretched thin? I'm currently on week 18 of my claim and starting to worry about whether the money will run out before I find work. My benefits are supposed to last 26 weeks but with so many people out of work in my area, I'm concerned the state might not have enough tax revenue coming in to cover everyone's claims. Has anyone heard anything about this affecting benefit payments?
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Mae Bennett
The unemployment insurance fund operates differently than you might think. It's funded through employer payroll taxes (SUTA) that go into a trust fund, and there are federal backup systems in place. Even when unemployment is high and tax collections drop, your benefits are protected because the fund has reserves and can borrow from federal programs if needed. The NYS Department of Labor has never failed to pay legitimate claims, even during the worst economic downturns.
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Pedro Sawyer
•That's reassuring to hear! I was really worried they might cut benefits short or something. So the 26 weeks is guaranteed as long as my claim stays active?
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Beatrice Marshall
Actually this is a bigger issue than people realize. When lots of people are unemployed the state does collect way less tax revenue AND has to pay out way more in unemployment benefits. It's like a double hit to the budget. I remember reading that during recessions states sometimes have to raise employer tax rates to keep the unemployment fund solvent.
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Melina Haruko
•You're right about the double impact, but the unemployment insurance system is designed for this. Employer tax rates do get adjusted based on the fund's health - it's called experience rating. When the fund gets low, employers pay higher SUTA rates the following year to replenish it. But individual claimants don't lose their benefits because of this.
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Dallas Villalobos
omg I never thought about this but it makes total sense!! like if everyone's unemployed then who's paying taxes to fund the benefits?? this is making me anxious about my own claim now. I'm only on week 3 but what if they run out of money before I finish my 26 weeks???
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Mae Bennett
•Don't stress about this! The system has safeguards built in specifically for economic downturns. Your 26 weeks of benefits are backed by both state reserves and federal support programs.
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Reina Salazar
I had a similar worry when I was dealing with getting through to the NYS Department of Labor about my claim status. Couldn't reach anyone for weeks because the phone lines were so jammed. Finally used this service called Claimyr (claimyr.com) that got me connected to an actual agent who explained how the funding works. They have a video demo at https://youtu.be/qyftW-mnTNI showing exactly how it works. The agent told me the unemployment fund is completely separate from general tax revenue and has its own protection mechanisms.
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Pedro Sawyer
•That's interesting about Claimyr - I might need to try that if I have issues reaching someone. Good to know the funding is separate from regular taxes.
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Saanvi Krishnaswami
yeah this whole system is screwed up if you ask me. when the economy tanks the people who need help most can't get it because there's no money coming in. typical government planning right there
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Melina Haruko
•Actually the unemployment insurance system is one of the better-designed government programs. It's self-funding through employer contributions and has federal backstops. It's specifically built to handle economic downturns.
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Demi Lagos
This reminds me of when my brother was on unemployment back in 2009 during the recession. He was worried about the same thing but ended up getting all his benefits plus extended benefits that Congress approved. The system worked even during the worst economic crisis in decades.
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