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How Does Unemployment Work?

The topic of unemployment can be a sensitive subject. Along with it may come feelings of fear, stress, and worry, as many people experiencing the loss of a job are in a vulnerable position. If you’ve recently become unemployed, you may be considering filing for unemployment, or U.S. Department of Labor’s Unemployment Insurance program, a government program that provides financial assistance to people in need.

However, just because someone is. without work does not mean they are automatically eligible for unemployment benefits. To ensure these benefits not abused and are given to the right candidates, the government has outlined rigid guidelines for unemployment eligibility.

While the United States unemployment rate is at a low 3.6%, there are still plenty of people in need of unemployment benefits.

So, how does unemployment work? In this article, we will dive into how unemployment benefits work, uncovering who is eligible, how unemployment benefits are calculated, how to file for unemployment, as well as how long the benefits last.


Unemployment insurance is incredibly helpful for those who genuinely need it. The Unemployment insurance program is controlled by the U.S. Department of Labor and given to those who are not to blame for the loss of their job. In most cases, eligible candidates have experienced a layoff, or the company they worked for shut down. Unemployment is not given to people who were fired from their job, those who quit their job, or have violated a company policy and have been asked to resign, or any other situation in which the employee was at fault (even partially) for the loss of their job.

Both federal and state governments determine the criteria for the program; the federal government provides guidelines for the program that the entire country must follow, while the state govermnent is in charge of the details of the program – who is eligable, what the benefits are, and how long people can receive them. Unemployment programs vary from state to state to accomodate the cost of living in a certain area, as well as things like the state’s job placement rate and unemployment rate.

This program is funded with unemployment insurance tax, a federal tax paid by employers (more on this in a bit). The amount of money a person is given for unemployment is calculated based on what they were paid at their previous job. Generally, approved candidates will recieve a check or direct deposit weekly while their benefits are active. In some states, unemployment insurance may be delivered every two or three weeks.

Unemployment Eligibility

Wondering if you are eligible for unemployment benefits? Unemployment eligibility varies by state, but there a few criteria that are the same across the board.

For one, the reason you have become unemployed is not your fault. Whether you and several others at your company experienced a layoff, or your company went bankrupt and had to close its doors, the situation was out of your control. If you file for unemployment after being fired from your job, even if you believe it was unjustified, you will not be able to obtain unemployment benefits.

Secondly, to be eligibile for unemployment, you must have worked a certain number hours, as well as earned a certain amount of money. If you were laid off from a company making six figures, the chances of you being eligible for unemployment are much lower than someone who made minimum wage. This criteria varies by state. To read about your state’s unemployment requirements and benefits, check out this tool from CareerOneStop, Unemployment Benefits Finder.

In addition to the requirements above, eligible candidates must clearly show their ability to perform a job, as well as their effort put towards searching for a job. The Unemployment Insurance program is by no means a “get out of jail free” card; approved candidates will have to work hard at finding another job in order to maintain your benefits.

If you were self-employed or a contractor for a company, you will not be eligible for unemployment.

How Unemployment Benefits Are Calculated

The amount of money a person gets for their unemployment benefits is based on what they earned at their previous job. There is a specific calculation each state uses to come up with the weekly allowance given to people on unemployment. Generally, the amount is a percentage of what was earned before the person lost their job.

If you are a spouse or a parent, this may affect how much you are given each week.

How To File For Unemployment

If you are eligible, filing for unemployment is quite simple. You will need to file a claim with the Labor Department in the state you were employed. To do so, type your state of residence + “file for unemployment” in a search engine. Select the result that takes you to the Department of Workforce Development (DWD), sometimes this is referred to as something different in different states, like the Department of Labor. In most cases, you will be able to create an account and file your claim right on the website. You will need to provide basic information, like your name, address, social security number, driver’s license information, date of birth, and phone number. You will also need to disclose the name, address, and contact information for your employer, as well as your start and end date and why you are no longer working for the company.

In some states, the unemployment claim form might ask you about things like previous income and information about dependents. If it does not, expect to disclose this information at some point in the process. You should have proof of your income (a paystub or direct deposit information will do). The Department of Labor will verify your reason for unemployment with your previous employer.

Unemployment Vouchers

In many states, you are required to send in an electronic voucher to the Department of Workforce Development each week, even before you are approved for the Unemployment Insurance program. You can find the voucher on the DWD website. Once you have been approved to receive unemployment benefits, you will be paid on a weekly basis. However, you must continue to submit vouchers once per week in order to stay enrolled in the program and continue to receive benefits.

Some states use an online filing system to collect vouchers, but the process may vary.

After you have filed for unemployment, expect to wait a few weeks before hearing a final decision. You should be mailed a statement that tells you what you are elibigle for beforehand, so you know what to expect if you end up getting approved.

How Long Does Unemployment Last?

In most areas of the United States, the Unemployment Insurance program lasts up to 26 weeks. However, some states offer a different maximum number of weeks. The following states do not have the standard maximum of 26 weeks:

  • Montana – 28 weeks
  • Arkansas, Michigan, South Carolina – 20 weeks
  • Missouri – 13 weeks
  • Idaho – 21 weeks
  • Kansas – 16 weeks
  • Florida, North Carolina – 12 weeks
  • Georgia – 14 weeks

Keep in mind, these values are subject to change along with employment policies and are not guaranteed to those who qualify for unemployment. They are the maximum number of weeks candidates may be eligible for in each state. The states not listed above have a maximum of 26 weeks that can be given to people in the program.

Stats from the Center on Budget and Policy Priorities.

Where Does The Money From Unemployment Come From?

As discussed briefly at the beginning of this article, the funds for unemployment benefits come from the U.S. Department of Labor’s Unemployment Insurance program. However, the department collects some funds from payroll taxes paid by employers. However, the department collects funds from payroll taxes paid by employers. Since each state has different tax brackets and laws, the amount of money employers have to pay in payroll taxes varies.

So essentially, there is a price to pay as an employer if you decide to follow through with laying off employees are closing down your business and therefore causing workers to be out of a job. The system is set up this way to protect workers’ from unfairly being dismissed from their job, as well as to protect and support those who have lost work at no fault of their own. If an employer has a history of unemployment claims, they often have to pay more in taxes – similar to having to pay more on your car insurance after you get in an accident.

To learn more about the topic of unemployment, check out this guide on How To Check For Unemployment Eligibility.

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