Frequently Searched

Putting unemployment insurance to work

November 5, 2014

The recent political squabble in Arizona over whether to extend unemployment benefits from 79 weeks to 99 weeks underscores a broader problem with the unemployment insurance (UI) system in the U.S. today.

The system was created in the 1930s and was designed to be centralized. The states collect unemployment insurance taxes and send the money to the federal government. Although states control the tax rates, benefit levels, and eligibility requirements, the federal government controls the money.

The federal government puts the money states collect into two buckets: one to pay for the costs of administering the UI program and another to pay out benefits. But there is never any crossover between the two buckets: if a state is able to cut administrative costs, the money can’t be redirected toward benefits.

In addition, the current structure forces states to fixate on the length of time benefits should be offered and the level of those benefits instead of new ideas that can better help the unemployed. That’s because the federal government does not let states experiment with different ways of dealing with cyclical spells of unemployment.

An idea that many states – including Arizona – could benefit from is allowing employers and workers to divert the revenue from the UI tax into a private account that the worker could access if they became unemployed. The state could still offer a basic level of time-limited benefits. But if these types of accounts were available, workers would have more incentive and tools available to prepare for the possibility of long-term spells of unemployment.

States should not be forced into a one-size-fits-all system. Instead, states should petition the federal government to decentralize the program and allow them to create more innovative unemployment insurance systems that can better serve their workers and employers.

Stephen Slivinski is senior economist for the Goldwater Institute.

Learn More:

Goldwater Institute: Policymakers should audit, not expand, the unemployment insurance program

Cato Institute: Failures of the Unemployment Insurance System

National Center for Policy Analysis: Unemployment Insurance in a Free Society

 

 

More on this issue

Donate Now

Help all Americans live freer, happier lives. Join the Goldwater Institute as we defend and strengthen freedom in all 50 states.

Donate Now

Since 1988, the Goldwater Institute has been in the liberty business — defending and promoting freedom, and achieving more than 400 victories in all 50 states. Donate today to help support our mission.

We Protect Your Rights

Our attorneys defend individual rights and protect those who cannot protect themselves.

Need Help? Submit a case.

Get Connected to Goldwater

Sign up for the latest news, event updates, and more.

Wait! Don’t close this yet!

We are grateful for your support of the Goldwater Institute’s efforts to advance and defend liberty throughout the United States. For over 36 years, we’ve been defending the rights of Americans to live their lives free from government interference.

And Goldwater is unique in that we direct our efforts to the 50 states where we introduce and advance innovative ideas that expand freedom. And we fight in courtrooms and capitals nationwide to defend individual liberty.

In 2024 alone, we scored over 50 policy and litigation victories defending liberty!

And that’s just the beginning.

Our plans for 2025 include:

  • Stopping pernicious DEI and other woke programs in America’s universities.
  • Ensuring that patients suffering from rare and terminal diseases have access to cutting-edge, lifesaving medical treatments, without having to first seek permission from the government.
  • Defending parental rights across the United States so that parents can send their kids to the school that best fits their needs, free from leftist indoctrination.
  • Eliminating government interference in the fundamental right of individuals to own property and use it as they see fit.
  • And much, much more

We seek to restore the presumption of liberty; that people are free to act without first asking permission from the government.

But we cannot do this without you. Will you join us as we fight to preserve and advance liberty throughout the country? As we seek new and innovative ways to defend freedom in all 50 states?

And there’s great news: Thanks to a generous Goldwater supporter, your donation today will be doubled!

So please, join us in fighting to advance liberty and score real wins for freedom from coast to coast!