What are the objectives of the unemployment insurance program established by the Social Security Act of 1935? How is this program funded?

Question

What will be an ideal response?

Answer 1

The unemployment insurance program was established under the Social Security Act of 1935. This program has four objectives related to minimizing the hardships of unemployment.
 
1) It provides payments to offset lost income during involuntary unemployment.

2) It helps unemployed workers find new jobs.

3) The payment of unemployment insurance taxes gives employers an incentive to stabilize employment.

4) It provides workers with income during short-term layoffs in order to preserve investments in worker skills. This is because workers can afford to wait to return to their employer, rather than start over with another organization.
 
Most of the funding for unemployment insurance comes from federal and state taxes on employers. Some states charge new employers whatever rate is the average for their industry, so the amount of tax paid in those states also depends on the type of business. No state imposes the same tax rate on every employer in the state. The size of the unemployment insurance tax imposed on each employer depends on the employer's experience rating-the number of employees the company laid off in the past and the cost of providing them with unemployment benefits. Employers with a history of laying off a large share of their workforces pay higher taxes than those with few layoffs. In some states, an employer with very few layoffs may pay no state tax.