Employment Situation - Unemployment Insurance

January 27, 2009

December 2008 Employment Situation // Unemployment Compensation Extension Act of 2008 // 
State Unemployment Rates and Trust Fund Balances // Trust Fund Loans //  NCSL Contacts

The unemployment system is a financial partnership between the federal and state governments.  It was intended to be counter-cyclical, i.e. to accumulate and hold significant funds during good economic times, pay out benefits during bad economic times and simultaneously stimulate a stagnant economy.

The federal government levies an unemployment tax, under the Federal Unemployment Tax Act (FUTA), primarily to finance administrative costs of the system, fund loans to states and cover extended benefits.

State governments levy payroll taxes on employers to pay for unemployment insurance benefits. These taxes are deposited into the federal Unemployment Trust Fund.  Each state has its own account within the Trust Fund. 

December Employment Situation

The national unemployment rate for December is 7.2%, which is a .4 percent increase from November.  At the end of each calendar year, the Bureau of Labor Statistics (BLS) updates the labor force's seasonal adjustment factors based on the Current Population Survey.  As a result the seasonally adjusted data for January 2004-November 2008 were subject to revision.  The revisions resulted in a .1 change in unemployment rates for June 2008 - November 2008.  To learn more about the revised data please visit the BLS website: http://www.bls.gov/cps/cpsrs2009.pdf.

For December 2008, BLS reports that nonfarm payroll employment fell sharply (-524,000), and the number of unemployed persons increased by 632,000 to 11.1 million. Since the start of the recession in December 2007, the number of unemployed has grown by 3.6 million and the unemployment rate has risen by 2.3 percentage points.   The Bureau also reports that job losses continue to be large and widespread across all major industry sectors, and healthcare continued to add jobs. 

 U.S. Department of Labor, Bureau of Labor Statistics Press Release

 Unemployment Compensation Extension Act of 2008

On November 21, 2008, President Bush signed into law the Unemployment Compensation Extension Act of 2008 (Public Law No. 110-449).  This law amends the Supplemental Appropriations Act to provide for emergency unemployment compensation for up to seven weeks for workers who have exhausted their benefits nationwide. The law would also provide an additional 13 weeks of benefits to workers in states with high unemployment rates, defined as 6% or higher.  Currently, 26 states plus the District of Columbia have such rates.

In June 2008, the President signed the first unemployment compensation extension (HR 2642) into law.  That law extended benefits nationwide by up to 13 weeks to workers who have exhausted their benefits.  There were no provisions for states with high unemployment rates.  Both extensions would expire in March 2009.

State Unemployment Rate and Trust Fund Balances    Download PDF Version

Previous Charts:  November 2008 // October 2008

Trust Fund Loans

The Federal Unemployment Account (FUA) provides a loan fund for state unemployment programs in distress to ensure a continued flow of benefits. According to the U.S. Department of Labor, the balance of outstanding loans from the FUA are as follows:

 NCSL Contacts

Based on information from the Bureau of the Public Debt and U.S. Department of Labor