Unemployment Insurance--Inequities and Work Disincentives in the Current System

Enacted as a federal-state program under the Social Security Act in 1935, unemployment insurance was established to provide a temporary income to unemployed workers and to help stabilize the economy by maintaining the purchasing power of laid-off workers. About 8 million people received $9.7 billion in compensation during 1978. Normally, states pay 26 weeks of compensation, but during periods of high unemployment they pay an additional 13 weeks. Weekly compensation in most states is half of a recipient's average weekly gross wage before becoming unemployed, up to a maximum limit.