Unemployment benefits

Unemployment benefits (depending on the jurisdiction also called unemployment insurance or unemployment compensation) are payments made by authorized bodies to unemployed people. In the United States, benefits are funded by a compulsory governmental insurance system, not taxes on individual citizens. Depending on the jurisdiction and the status of the person, those sums may be small, covering only basic needs, or may compensate the lost time proportionally to the previous earned salary.

Unemployment benefits are generally given only to those registering as unemployed, and often on conditions ensuring that they seek work and do not currently have a job, and are validated as being laid off and not fired for cause in most states.

Unemployment benefit is commonly referred to as "the dole"; to receive the benefit is to be "on the dole". "Dole" here is an archaic expression meaning "one's allotted portion", from the synonymous Old English word dāl.[1]


Leaflet promoting the National Insurance Act 1911.

The first modern unemployment benefit scheme was introduced in the United Kingdom with the National Insurance Act 1911, under the Liberal Party government of H. H. Asquith. The popular measures were to combat the increasing influence of the Labour Party among the country's working-class population. The Act gave the British working classes a contributory system of insurance against illness and unemployment. It only applied to wage earners, however, and their families and the unwaged had to rely on other sources of support, if any.[2] Key figures in the implementation of the Act included Robert Laurie Morant, and William Braithwaite.

By the time of its implementation, the benefit was criticized by communists, who thought such insurance would prevent workers from starting a revolution, while employers and tories saw it as a "necessary evil".[3]

The scheme was based on actuarial principles and it was funded by a fixed amount each from workers, employers, and taxpayers. It was restricted to particular industries, particularly more volatile ones like shipbuilding, and did not make provision for any dependants. After one week of unemployment, the worker was eligible for receiving 7 shillings/week for up to 15 weeks in a year. By 1913, 2.3 million were insured under the scheme for unemployment benefit.

Expansion and spread

The Unemployment Insurance Act 1920 created the dole system of payments for unemployed workers.[4] The dole system provided 39 weeks of unemployment benefits to over 11 million workers—practically the entire civilian working population except domestic service, farmworkers, railroad men, and civil servants.

Unemployment benefits were introduced in Germany in 1927, and in most European countries in the period after the Second World War with the expansion of the welfare state. Unemployment insurance in the United States originated in Wisconsin in 1932.[5] Through the Social Security Act of 1935, the federal government of the United States effectively encouraged the individual states to adopt unemployment insurance plans.