Actually, UI isn't deducted from your paycheck, the employer pays it directly to the state. Their premiums are based on number of employees, the company's layoff history, how much the employee's make, etc. Privatizing UI could be rather nasty... do you really want to read about that as a benefit when you're looking at a company? Company A offers a higher salary but lower UI, Company B vice versa... I think it's intended to be something you can absolutely count on, and which company's don't have the chance to opt out of. (There's an analogy to Social Security in there but I ain't gonna touch it.)
the fucked up thing is that you have to pay taxes on it. So Company A pay State X in UI premiums. You get layed off, State pays you half your salary per month or so. Then you pay Fed the regular tax on that as income. The whole point of UI is that your out of a job and broke, you'd think you wouldn't ahve to pay taxes on top of it all. So it's just the Fed taking $$ from businesses under the guise of helping citizens.