Yes, when a nuclear bomb goes off in the banking industry, it is a little like a nuclear bomb going off and not comparable to the insurance industry wihtout a nuclear bomb.
It happens a lot in nature, physics, and economics.
Two things are very similar.
Set an atom bomb off next to one of them and… the two are not so similar.
Best thing to do with that information?
Pretend that means they were never similar in the first place.
(And feel real smart for doing that)
I was saying that COVID was the nuke to the Unemployment Insurance world.
I don’t think UI is ‘paygo’.
NJ currently has a balance in their off budget account of 2.7B. What makes you think that is just new payments to pay for old claims?
According to the govnement’s own numbers (of 53 states and territories):
As of Jan 1, 2025, despite multiple years of a “booming economy,” only 13 meet the gov’t standard for “solvency.” –>the other 40 did not<–
As of Jan 1, 2025, despite multiple years of a “booming economy,” only 22
states have enoughmoney in their “trust fund” to pay the unemplyment benefits associated with a standard recession. –>the other 33 did not<–
Most states and territories (28) do not index the portion of wages subject to UI taxes, they are sutck on 1983 levels of taxes paid in despite the fact that wges (and therefore payments out) have increased substantially since then
The federal gov’t has nt t, since 1983 changed the portion of wages sbject to UI taxes.
Below is a 2010 graph from GAO created, by GAO when the circa 2008 recession revealed "the problemis here we can nolonger kick teh can down the road.
Only a small handful ofstates have “fixed the problem” since then.
In general, UI “trust funds” are fudned at LESS THAN HALF their 1980 levels.
wait wait - Just because they don’t index it doesn’t mean they don’t adjust it. Rates and / or the taxable wage base are set on a yearly basis.
Something is very wrong with that chart. How can the US average of indexed and non-indexed states be lower than of its parts?
To my knowledge, the only thing “wrong” wth the chart is that it is from 2010. It was part of an effort (involving the Obama GAO) to raise awareness about the problem.
As a result:
To my knowledge the average of two numbers has to be between them. Your chart shows an average that is below the two it is summing. Something doesn’t math.
What’s the ideal taxable to total wage ratio?
To answer that responsibly, I’d have to put some thought into it.
But in a knee-jerk sort of way’d say the tax base should be either 60% of wages or 100% of wages. Basically, it should match the payout.
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Two interesting tables to follow shortly.
Red area indicates states whose “trust funds” have a reserve ratio less than 1.0
indicating the trust fund is less than 1% of total wages.
That 1% was arbitrarily chosen (by me)
This time the cut-off was chosen by the Biden DOL
The red area is an area representing states remarked to the Biden DOL as have insufficient funds to cover a prolonged 1-year period of high unemployment.
A simple solution might be —> “just raise taxes.”
A simple solution would not be —> “pretend there is no problem and UI is just like insurance.”
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both tables from page 60 here:
Note also that both Califonia and New York
(two very populous states) have —>ZERO<— in their so-called trust funds.
Zero is a very small number.
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So we have states investing the excess trust fund reserves in anticipation of needing those funds at a later date, correct? And if people quit contributing to the fund tomorrow, the fund would run out of funds rather quickly.
In that case, the fund would need to turn to someone to make payouts.
In the case of insurance we have a firm that invests excess reserves in anticipation of paying out future benefits. If people quit contributing the funds would run out rather quickly. In that case the fund would need to turn to its re-insurer to make payouts.
A ≈ B
That’s because they are still repaying the Feds.
Insurance:
Not Insurance
And as long as the net recession is a long way off and not at all coming soon they’ll be fine. 
Idk states rob UI accounts for other purposes?
States give the money to the Fed (buy federal bonds)
the Fed then spends that on guns and butter (things that do noy keep their value and cannot be resold later)
and their only “investment” is in ther own promise that future taxpayers will pay it back.
a discussion about whether their programs will be solvent in a recession is separate from a conversation about the design of those programs.
Do you believe flood insurance is “insurance” in this definition you are constructing?
State are not permitted to borrow from the trust or attempt to divert revenue it collects. While it’s nominally a state program it is highly regulated by the federal government as the fed are the lender of last resort.
(Fed government here, not the federal reserve)
That’s what I thought.
So I don’t really understand the discussion here.
UI funds are not like insurance companies. Neither are banks.
What else is there to talk about?
I am not familiar with that program. No, you are the gigantic ignoramus in the discussion. You don’t even know who is saying what in the topic you just hurl little boy attempts past insults
You wrote:
UI funds are not like insurance companies.
That’s correct. This is what I am saying. That’s the point of the conversation.
Unemployment Insurance is called insurance, but it is not insurance; it is pay-as-you-go. If any private sector actor did that, they would be jailed for fraud.
But the Kings of England and other people in government are above the law.
That’s exactly what I am saying. If you bother to read the thread (instead of just throwing insults), you would realize that is the point I’m making.
What a nice post! Thanks!
Neither are banks. That was the claim that caught my attention and dragged me into this nonesense.
It’s not quote pay as you go either. It’s a fund that they can’t touch for other purposes that they hope is large enough to handle the future needs. And usually it is. COvid was a notable exception. A lot of states have paid back the loans and are back to business as usual.
Tons of banks did WAY WORSE than this, crashed the world economy and never so much as feared for being arrested. They took in deposits, leveraged those to the hilt, lent that money to strippers buying condos in Florida, took those mortgages, turned them into instruments they could sell over and over and over again, such that, the exposure they had was dozens - hundreds? - of times the reserve they needed to cover their deposits.
And it all blew up and no one went to jail.
But that’s neither here nor there.
You’re somehow trying to use UI as proof that the government is corrupt or stupid or something…but you do you.
I’m just a gigantic ignoramus.
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