Where does the money from unemployment come from in NYS - confused about funding source
I've been getting unemployment benefits for 6 weeks now and my dad keeps asking me where this money actually comes from. I know it's through NYS Department of Labor but like... is it taxpayer money? Is it from some special fund? I tried looking it up but got confused by all the technical stuff about trust funds and employer contributions. Can someone explain this in simple terms? I feel dumb asking but I really want to understand how this whole system works.
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Mei Chen
It's actually funded by payroll taxes that employers pay, not regular income taxes. Every employer in NY pays into the State Unemployment Insurance fund based on their payroll and claim history. So technically it's employer-funded, though they factor those costs into their business expenses. The federal government also contributes for extended benefits during high unemployment periods.
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Jamal Harris
•Oh wow, so it's not coming out of like general tax revenue? That makes me feel a bit better about collecting it honestly.
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Liam Sullivan
Your employer basically paid into this system while you were working - it's like insurance they were required to buy on your behalf. The NYS Department of Labor manages the fund but the money comes from employer contributions. You earned this benefit through your work history, so don't feel guilty about using it.
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Amara Okafor
•exactly this! i always tell people it's not welfare or charity, you literally worked for this benefit
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CosmicCommander
I was confused about this too when I first filed! The way it was explained to me is that employers pay unemployment insurance premiums just like they might pay for workers comp insurance. Higher-risk employers (ones with more layoffs) pay higher rates. It's all kept in a separate trust fund that NYS Department of Labor administers.
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Jamal Harris
•That makes so much sense! So it's like actual insurance that employers have to pay for their workers.
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Giovanni Colombo
If you're having trouble getting through to NYS Department of Labor to ask questions like this directly, I had good luck with claimyr.com - they help you actually reach an agent by phone. There's a demo video at https://youtu.be/qyftW-mnTNI that shows how it works. Sometimes it's nice to hear explanations directly from NYS Department of Labor staff when you have questions about the system.
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Fatima Al-Qasimi
•Interesting, never heard of that service before. Does it actually work for getting through?
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Giovanni Colombo
•Yeah it worked for me when I couldn't get through on my own. Way less frustrating than sitting on hold for hours.
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Fatima Al-Qasimi
The whole system is basically employers pre-paying for the possibility that they might have to lay people off. It's required by law and the rates vary by industry and individual employer track records. So when you collect UI benefits, you're getting money that was already set aside for exactly this purpose.
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Dylan Cooper
my mom asked me the same thing lol, i think a lot of people dont realize its not taxpayer funded
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