Unemployment insurance is a form of social insurance, administered by Michigan's Unemployment Insurance Agency (UIA). It is designed to provide unemployment benefits to help workers replace some of their lost wages after they have become unemployed through no fault of their own, such as by a layoff.

The benefits allow workers enough time to look for a job reasonably similar to the one they had. It also helps an employer by keeping experienced workers in the area and available to return to the employer when times get better. Finally, it helps the entire community during an economic downturn, because unemployment benefits are spent locally to buy food, clothing, and other necessities of life that local merchants sell.

Unemployment insurance is like fire insurance you carry on your building, or health insurance you carry on yourself, your family, and your employees. Insurance is a fact of business life. It protects against the uncertainties of the future. Unemployment insurance works the same way, except that it is not optional, and the "premiums" you pay are in the form of a tax.