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Unemployment extension - How does this affect EMPLOYERS?


Just curious, but let's say a company laid off 10 employees in 2008. In the past, they had to pay out for 6 months only. Now, with each extension, they are paying more and more out. Two years later, they are still paying. Wouldn't that hurt the company's bottom line and keep them from being able to hire anyone new?

I know how it affects the unemployed, but how about the employer? Anyone have an answer?

 
mancosmomma

Asked by mancosmomma at 2:55 PM on Jul. 20, 2010 in Politics & Current Events

Level 19 (7,315 Credits)
This question is closed.
Answers (12)
  • Since unemployment is considered "insurance", does it affect the rates the employers pay? (the extensions, I mean)

    That's up to the states. The thing is, these extensions aren't normal. It's basically disaster response. That's normally how you'd see it used - if there was a giant hurricane and thousands of people in Florida were put out of work to the point their u/e fund was low, the government would step in and subsidize it. Now with that said, there is no reason for them to NOT use stimulus money to subsidize these funds. Especially considering the money is already there and not being used for anything else. What's making this a mess is they refuse to do that, and instead want to funnel new money to it (that we don't have - not that we "have" the stimulus but it's at least already accounted for).

    Realistically, these extensions should not have a long term impact on the insurance rate or subsidies, it's temporary.
    NotPanicking

    Answer by NotPanicking at 3:36 PM on Jul. 20, 2010

  • the employers aren't the ones paying unemployment benefits.

    It does come from employers. Every month, employers pay a set amount of unemployment, it's just like any other business tax, though it's considered an "insurance" payment. That goes into a fund, and when people file unemployment, they are paid from that fund. When that fund is insolvent, that is when the fed government comes in and subsidizes it. The fund is managed by the state, so they may transfer other funds into it first, as well. These extensions are not on the backs of the employers in a sense that it will cost them more. But it's not like your unemployment check comes directly from your former boss.
    NotPanicking

    Answer by NotPanicking at 3:12 PM on Jul. 20, 2010

  • Nothing about the extention affects employers. It works just like regular insurance, only a small percentage of those paying in claim a benefit. Tax payers don't foot the bill...the insurance fund does.
    --------
    I don't see how the taxpayers AREN'T footing the bill! The employer pays into a fund which pays the first 6 months. After that, each extension is "paid for" by the federal gov't, which only spends money that they get from the tax-payer, or that they borrow from another country. Borrowed money must be paid back. So, it is tax-payer money either way for all these extensions, right?
    29again

    Answer by 29again at 4:14 PM on Jul. 20, 2010

  • It is going to sabotage small businesses! They will not be able to afford this! This administration wants everyone dependent on the Government! I wonder when people will understand this!
    thundernlight

    Answer by thundernlight at 3:13 PM on Jul. 20, 2010

  • "If they laid off 10 employees, why would they be looking to hire more?"

    In two years, things could change. (You would hope) They could have more demand for their products, or have started a new line. Maybe they laid off their shipping department and want to hire more local salespeople.
    mancosmomma

    Comment by mancosmomma (original poster) at 3:22 PM on Jul. 20, 2010

  • NP, so the extensions are paid by the government once the fund has run out? Which means it comes from the working taxpayer, eventually. I wasn't sure how they were continuing to pay benefits.

    Since unemployment is considered "insurance", does it affect the rates the employers pay? (the extensions, I mean)
    mancosmomma

    Comment by mancosmomma (original poster) at 3:29 PM on Jul. 20, 2010

  • Nothing about the extention affects employers. It works just like regular insurance, only a small percentage of those paying in claim a benefit. Tax payers don't foot the bill...the insurance fund does.
    UpSheRises

    Answer by UpSheRises at 3:37 PM on Jul. 20, 2010

  • That's how I see it, 29.
    mancosmomma

    Comment by mancosmomma (original poster) at 4:39 PM on Jul. 20, 2010

  • I am an employer with 3 businesses. I have never had an employee on unemployment. One of the businesses I just bought had one 3 years ago. The employee was part-time and quit, she collected 1 check before the board threw her out for quitting. But, the business was still penalized for it. This one thing put the business in the "high risk" pool. Since all my businesses are under one tax id # they ALL get penalized at the higher rate..almost 4% for the rest of the "punishment" period, which is the rest of this year. The 4% adds up fast when the wage is a living one.
    yourspecialkid

    Answer by yourspecialkid at 4:43 PM on Jul. 20, 2010

  • These extensions aren't all coming from the employer first off. Secondly I think you are greatly misunderstanding how this is going to work. There is a statue of limitation just like every thing else.
    hot-mama86

    Answer by hot-mama86 at 7:39 PM on Jul. 20, 2010