The Unemployment Insurance System’s Lofty Intentions, Turned Troubles

When the Social Security Act of 1935 was enacted, a variety of provisions were put in place to keep the economy stable in times of hardship. One of those provisions was Unemployment Insurance (UI), of which one of the intentions was to reward employers with lower unemployment tax rates by minimizing workforce turnover. However, since that time, the UI system has grown to be more of a detriment to employers and the economy, becoming ever more complex and costly. It seems that since 1935, the lofty intentions for the Unemployment Insurance System have turned into troubles that are weighing down today’s economy and the everyday business owner. Among the most glaring troubles with the UI system is its lack of payment accuracy. It has been reported by the United States Department of Labor, using the Benefit Accuracy Measurement (BAM), that in one financial quarter, an estimated $3.9 billion is improperly distributed to UI recipients. This number can indicate claims that were either overpaid, underpaid, or improperly denied. According to the data presented for 2016’s fourth quarter, an estimated $2.1 billion was overpaid, out of a total of $33.2 billion in payments. Regardless of the UI system’s intention, that is a lot of money overpaid, and an even greater amount paid in general. Fortunately, there are methods that employers may undertake to counteract these inaccuracies, such as the software offered by Us4U. They offer solutions that help you manage, track, and most importantly audit your UI claims and charges in addition to maintaining the lowest tax rate possible. However, to some extent the level of impact does depend on geography....