Unemployment Compensation

Unemployment compensation officially began in 1935 with the enactment of the Social Security Act of 1935. While the U.S. Federal Department of Labor oversees all unemployment compensation, each state differs in how they provide specific benefits. Although states may exceed federally mandated benefits, none has done so significantly. Unemployment compensation is funded via the mandate of the Federal Unemployment Tax Act (FUTA) of 1939. To qualify for compensation, a person must have been employed by any number of employers for a period of time (each state differs), and earned at least $1,500 in wages in a calendar year. Workers not eligible for unemployment compensation include the following: self-employed, certain agriculture or domestic service-related jobs, services for relatives or hospital patients, most student interns and alien farm workers, seasonal camp workers, and railroad workers (who have their own unemployment plan).

Fast Facts

  • According to one survey, only 38% of unemployed workers received compensation.
  • In April 1975, 81% of unemployed workers received compensation. This record has not been equaled or surpassed.

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