CA Labor: Why isn't State gov't paying us to strike?

The Associated Press breaks down a puzzling new development in California's Labor saga: Local unions are now demanding they receive State unemployment benefits while on strike. However, CA's post-“surplus” budget has little, if no, wiggle room for the amenity.

The bill, introduced this week, would make California just the third state to do this, joining New York and New Jersey. But unlike most states, California currently doesn’t have enough money to pay the benefits owed to unemployed workers. Business groups who oppose the bill argue making more people eligible for those checks will only make the problem worse....

States usually run out of money to pay unemployment benefits during periods of high unemployment, like a recession or the coronavirus pandemic when governments forced many businesses to close. But this year, despite three years of record job growth, California estimates benefit payments will exceed tax collections by $1.1 billion. It’s the first time this has happened during a period of job growth, according to the nonpartisan Legislative Analyst’s Office.

While businesses only pay unemployment taxes on the first $7,000 of their workers’ wages, employee paychecks have been increasing. Today, the average full-time California worker in the private sector makes about $67,000 per year, according to Alissa Anderson, senior policy fellow at the California Budget and Policy Center.

“Businesses are paying a payroll tax on a smaller and smaller share of workers’ earnings over time and it’s not sustainable,” she said. “You can’t finance a program that way.”

Meanwhile, California still owes the federal government more than $18 billion, which is money that was borrowed to pay unemployment benefits during the pandemic. The state will likely spend the next 10 years paying off that debt, plus interest.

Most other states used some of the billions of dollars in federal coronavirus aid to pay off their debts. But to the consternation of business owners, California did not — and instead spent it on things like rebates for taxpayers. This year, businesses began paying an extra $21 per employee to begin paying off that federal loan. But even with that increase, it’s still not enough to cover the amount of benefits that California is paying to unemployed workers.

That’s one reason why business groups say the state can’t afford to make more people eligible for unemployment benefits.

“We are hopeful that the legislators will understand you don’t add things to the credit card when you are deeply in debt,” said Rob Moutrie, policy advocate for the California Chamber of Commerce.

This article originally appeared in the Associated Press. Read the whole thing here.

Follow Opportunity Now on Twitter @svopportunity

Opp Now enthusiastically welcomes smart, thoughtful, fair-minded, well-written comments from our readers. But be advised: we have zero interest in posting rants, ad hominems, poorly-argued screeds, transparently partisan yack, or the hateful name-calling often seen on other local websites. So if you've got a great idea that will add to the conversation, please send it in. If you're trolling or shilling for a candidate or initiative, forget it.