California Democrats advocate for providing unemployment benefits to workers who go on strike.

State’s ⁣Unemployment Fund Already $20 Billion in the Red

‍ ‌A powerful California union and Democratic lawmakers are pushing⁢ a bill to pay unemployment to striking workers, at a time when the‌ state’s unemployment insurance ⁢fund is nearly $20 billion in the red.

‍ The proposal, which ⁤will likely be introduced‌ this ⁢week, ‌could⁤ cost the state millions⁣ annually and add to the unemployment fund’s‌ already heavy ‌debt burden that is forecast to stretch through the next decade. California’s businesses would be on the hook for most​ of⁣ these costs, as they have been tasked with replenishing the bankrupt‌ unemployment coffers.

⁣ The push to pass this legislation ​is infuriating business owners, who learned this year they will ‌have to make up the unemployment fund’s $18 billion shortfall through higher payroll taxes—a deficit that resulted‍ from the state losing $32 billion in unemployment payments to fraud during the Covid-19 pandemic. Many California business owners are still recovering after the state’s pandemic shutdowns, which led to nearly 40,000 small businesses closing down in the first several months of 2020.

​ “Adding more costs to an ⁢insolvent system will extend the [payroll] tax increases already underway from Covid-19,” said⁤ Robert Moutrie, a lobbyist for the California Chamber⁣ of Commerce, which is‌ spearheading opposition to the proposal. “These tax increases ​will hit all California employers—regardless of⁤ size—serving​ as a deterrent ⁣to hiring and future ‍investment in the California economy.”

A ⁤ fiscal analysis of a 2019 version of the same proposal, which did not pass, estimated that the ‌bill ‌could cost ‌up to $6 million annually. But business groups ⁤warn that the ⁤price tag ⁢could be‌ far higher.

The high-profile strike in Hollywood, ​where more than 150,000 screenwriters and actors have been facing off against film studios⁢ for months, ​offers one example of the walk-offs California businesses would ‌have⁤ to subsidize if the proposal becomes law.

“If‍ we assume that 100,000⁤ of the more than 150,000 members on strike as part of the [Hollywood effort] ​claim benefits for just two months, we’re still looking at a drain of⁣ the fund by $150 million by our estimates,“⁤ Moutrie‍ told the Washington ‍Free Beacon. “Those costs ‌are⁤ going to add to ⁣the unemployment insurance​ fund debt and increase taxes for employers‌ all across California, even those ⁤with‍ no involvement in any ‌strikes.”

The labor-friendly Democratic ⁤supermajority will⁢ likely ‍pass the measure and leave Gov. Gavin Newsom ⁢(D.) with the final say. Newsom vetoed a previous version of the bill in⁢ 2020. Newsom said at the‌ time the bill would force the state to‌ borrow ⁤significantly from the federal government to ⁢pad the unemployment insurance fund and further pressure‌ a‌ budget “strained because of the pandemic.”

A representative for the bill’s author, ⁢Sen. Anthony Portantino, referred the Free Beacon to the prior version of the bill for details and a cost analysis. Its ‍ primary backer is one of ‍the most powerful union heads,⁢ California Labor Federation chief Lorena Gonzalez Fletcher,‍ who as a former assemblywoman authored the 2019 version of the proposal.
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