Unemployment Insurance: The Hidden Barrier Keeping Young Men Out of the Workforce

When a worker is laid off or fired, they’re generally eligible for unemployment insurance, designed to help them financially while they search for a new job. After applying and being approved, unemployed workers receive weekly checks that provide partial wage replacement. This system is crucial for economic stability, as it helps individuals meet their basic needs during periods of unemployment.

However, the way we fund UI is quite complex. Employers pay a tax into a pool that funds unemployment insurance, but instead of a flat tax, the rate can increase based on the employer’s “experience rating” — essentially a measure of how many layoffs the employer has had in the past. The more layoffs, the higher the tax rate.

This system, while intended to discourage unnecessary layoffs, has some unintended consequences. Employers become hesitant to hire workers they perceive as risky, fearing that future layoffs will increase their UI tax rate. Unfortunately, young men are often seen as part of this “risky” group due to stereotypes about their reliability and stability.