California Governor Gavin Newsom, a Democrat, has vetoed a bill that aimed to provide unemployment benefits to workers who participated in strikes during collective bargaining. The legislation was introduced during a lengthy Hollywood writers’ strike, which significantly impacted the entertainment industry but ended recently after a contract agreement was reached. Despite the strike’s conclusion, Hollywood actors and Californian hotel workers continue their respective strikes, many of whom have gone without pay for months.
Had the bill been signed into law, workers on strike for at least two weeks would have been eligible to receive state unemployment benefits, which can amount to $450 per week. Typically, only workers who lose their jobs through no fault of their own qualify for these benefits.
In his statement explaining the veto, Governor Newsom, who often receives union campaign contributions, expressed his support for striking workers but cited concerns over the state’s unemployment insurance (UI) fund. He noted that the UI fund is already facing significant debt, with expectations that it will reach nearly $20 billion in debt by the end of the year.
The UI fund faced financial challenges during the COVID-19 pandemic when the state ordered business closures, resulting in increased unemployment claims. Furthermore, the fund was affected by widespread fraud, costing the state billions of dollars.
Newsom pointed out that the UI funding structure has not been updated since 1984, leaving the UI trust fund vulnerable to insolvency. Expanding eligibility for UI benefits, as proposed in the bill, could further increase California’s outstanding federal UI debt, potentially jeopardizing the state’s request for additional benefit-cost ratio exemption and causing a significant rise in employers’ taxes.
While some argue that the number of workers on strike for more than two weeks is relatively small and would not significantly impact the state’s unemployment fund, Newsom’s concerns center on the overall financial stability of the fund and its ability to manage existing debt.
The bill’s author, Democratic Senator Anthony Portantino, highlighted that only a small fraction of strikes in California over the past decade lasted more than two weeks. Meanwhile, the state’s unemployment benefits have seen an increase, with projections indicating that benefit payments may exceed tax revenues by $1.1 billion this year.
Governor Newsom closed his statement by expressing his appreciation and respect for workers fighting for their rights through collective action and committed to further improving conditions for workers in California.
