Who primarily funds Unemployment Insurance programs?

Unemployment Insurance programs are primarily funded by employers through taxes. This funding structure is designed to provide financial assistance to workers who lose their jobs through no fault of their own. Employers pay federal and often state unemployment taxes, which are collected to fund these benefits. The contributions are typically calculated based on the employer's payroll and are used to build a reserve from which unemployment benefits can be paid out.

While employees might see related deductions in their pay, those typically go toward other benefits like Social Security or Medicare rather than directly funding unemployment insurance. Additionally, state governments manage the programs and may also contribute to their funding, but the core funding mechanism revolves around the taxes levied on employers. Federal grants can sometimes support unemployment programs during economic downturns, but the primary funding is sourced from employer taxes.