NYS Department of Labor unemployment funding - who pays the unemployment money exactly?

Your coworker is correct - unemployment insurance in New York is primarily funded by employer payroll taxes, not general taxpayers. Employers pay both state unemployment tax (SUTA) and federal unemployment tax (FUTA) based on their payroll. The NYS Department of Labor collects these taxes from employers throughout the year to fund the unemployment insurance program. There's also a small employee contribution in NY (about 0.5% of wages up to a certain limit).

yeah employers definitely pay the bulk of it but like the previous person said, we pay a tiny bit too through payroll deductions. you can see it on your old paystubs as NY SDI or something similar. the amount is really small though

The funding structure is more complex than most people realize. Employers pay different tax rates based on their experience rating - companies that lay off more workers pay higher unemployment tax rates. This is designed to incentivize stable employment. The NYS Department of Labor adjusts these rates annually based on the trust fund balance and economic conditions. During recessions, when more people claim benefits, the fund can get strained and employer tax rates may increase to replenish it.

I had trouble getting through to NYS Department of Labor to ask about my benefit calculation and someone recommended checking out claimyr.com - they help you actually reach an agent by phone. There's a video demo at https://youtu.be/qyftW-mnTNI that shows how it works. I was able to get my questions answered about the funding and how my benefit amount was calculated.

just to add - during the pandemic there was federal funding for extended benefits but that's all ended now. regular state unemployment is back to being funded the normal way through employer taxes