At least in California, the employer cannot "deny" a claim. They can protest it, but it is totally up to UI insurance whether to pay. Employees can leave existing jobs of their own accord.
I had one employee leave and move to another state because she had family there. She applied for, and received unemployment insurance, charged to my account, despite my attending the hearing and protesting her job was still available to her.
Since the state run, "State Fund" "company" all but monopolizes the unemployment insurance industry, their influence over the policies is strong.
I've seen plenty of people denied UI benefits for various reasons.
There is no way to know if an employer would pay a worker more if they did not have to pay unemployment tax. Instead of paying the employee more they might decide to hire another employee or plow the money back into the business or take a Vegas vacation.
You're taken an ilogical assumption that employers don't make sense. Whether or not an employer pays into a fund for an employer, or pays the employee directly, it counts as the cost of the employee to the employer. The vast majority of employers will follow economic law and hire at their optimal level using this point....if you look at one single employer, then yes, you could try to make the assumptions that you're making and say that the employer could be stupid. You can't make that assumption for all of America, however.
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