Happy Birthday, Unemployment Insurance!
Unemployment insurance provides a lifeline of income for people who lose their jobs. It has become an essential component of the “safety net” in the U.S., and it all started during the Great Depression.
It was at the lowest point of the Depression, in 1932, that the great state of Wisconsin decided to help some of the desperate unemployed, and enacted unemployment insurance.
In 1932, Wisconsin cut its first unemployment check, for $15.
According to data from the U.S. Census Bureau, it wasn’t long before other states copied Wisconsin’s model. By 1937, all states had adopted unemployment insurance programs.
By 2012, Census said, states and local governments took in over $80 billion from the payroll tax to fund unemployment insurance. But they spent nearly $96 billion in such assistance.
States have $256 billion in combined insurance trust funds, but an aggregate deficit of $18 billion for covering unemployment.
The 2008 recession, and the slow economy that followed, really taxed the ability of the system to function.
Americans will likely continue to support the concept of unemployment insurance, though. We all pay into it when we’re working, and draw the benefits when we’re unfortunate enough to be laid off. It’s something that most of us can agree on.
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