NYS Department of Labor unemployment benefits - where does the money come from exactly?
I just filed my first unemployment claim through NYS Department of Labor and I'm waiting for my first payment. My friend told me it comes from taxes that employers pay, but my coworker said it's from federal funding. I'm getting conflicting information and honestly just curious about how this whole system works. Does anyone know where the unemployment money actually comes from when NYS Department of Labor sends out benefits?
10 comments
Join the conversation
Lia Quinn
Your friend is mostly correct! NYS Department of Labor unemployment benefits come primarily from the State Unemployment Insurance (SUI) tax that employers pay on behalf of their employees. Employers pay into this fund based on their payroll and their experience rating (how many former employees have filed claims). There's also a small portion from the Federal Unemployment Tax Act (FUTA) that helps fund the administrative costs of the system.
0 coins
Jackie Martinez
•So it's not coming out of my own paychecks? That's a relief - I was worried I had somehow paid into this without knowing it.
0 coins
Haley Stokes
i think theres also something about extended benefits during recessions that comes from federal money but regular UI is definitely employer taxes
0 coins
Lia Quinn
•Exactly right! During economic downturns, there can be federal extensions like Extended Benefits (EB) that are funded differently, but your regular 26 weeks of NYS Department of Labor benefits come from the state unemployment insurance fund.
0 coins
Asher Levin
The employer tax rate varies too - companies that have more layoffs pay higher rates into the fund. It's designed so that businesses that use the system more contribute more to keeping it funded. NYS Department of Labor tracks this through what's called an experience rating system.
0 coins
Serene Snow
Wait so if I get laid off multiple times does that make my employer pay more? That seems backwards
0 coins
Asher Levin
•It's not about individual employees but about the company's overall layoff history. If a company frequently lays people off, their unemployment tax rate goes up. It encourages businesses to maintain stable employment when possible.
0 coins
Issac Nightingale
This is actually pretty fascinating! I had no idea there was this whole funding mechanism behind unemployment benefits. Makes me feel less guilty about collecting when I was between jobs last year.
0 coins
Romeo Barrett
The system has been around since the 1930s and it's one of the few government programs that's actually mostly self-funding through employer contributions rather than general tax revenue. NYS Department of Labor manages the state fund but the structure is similar across all states.
0 coins
Jackie Martinez
•That's really interesting! I had no idea it was that old. Thanks everyone for explaining this - makes me understand the system better.
0 coins