California Governor Vetoes Bill To Give Unemployment Pay To Striking Workers

In a decision with far-reaching implications for labor unions and workers on strike, California Governor Gavin Newsom vetoed a bill on Saturday that aimed to provide unemployment pay to striking workers. The bill, inspired by high-profile work stoppages in Hollywood and the hotel industry, sought to offer financial support to employees participating in strikes. Governor Newsom, known for his support of workers and strong ties to labor unions, cited financial concerns as the primary reason for vetoing the bill. He pointed out that the state's unemployment benefits fund was already deeply in debt, projected to reach nearly $20 billion in debt by the year's end. In the wake of the COVID-19 pandemic, which led to widespread business closures and a surge in unemployment, California's unemployment benefits fund had to borrow from the federal government, exacerbating its financial woes. Additionally, the state grappled with significant fraud cases that cost billions of dollars. Labor unions argued that providing unemployment benefits during strikes was not only beneficial for workers but also for the broader economy. Such benefits would allow striking workers to continue spending money, supporting local businesses, and sustaining economic activity. Sarah Flocks, legislative and strategic campaign director for the California Labor Federation, emphasized the positive impact on small businesses, stating that the money from unemployment benefits would flow into various sectors, including corner stores, restaurants, caterers, nail salons, and more. The vetoed bill would have permitted workers engaged in strikes lasting at least two weeks to receive unemployment checks from the state, potentially amounting to $450 per week. Typically, unemployment benefits are reserved for workers who lose their jobs through no fault of their own. Although labor unions argued that the impact on the state's unemployment trust fund would be minimal due to the rarity of strikes lasting over two weeks, Governor Newsom's concerns over mounting debt and financial stability took precedence. The vetoed legislation aimed to provide support to striking hotel workers and Hollywood actors and writers who have been on strike for a significant part of the year. The decision has left many workers without pay for extended periods. In addition to the debt issue, the Newsom administration highlighted a broader problem—insufficient revenue collection to cover all owed benefits. While unemployment benefits have increased, the tax businesses pay per worker remains fixed at a rate established in 1984, which is the lowest allowed under federal law. This situation, combined with rising benefit payments, has created a significant financial challenge for California's unemployment benefits system, a problem that comes amid a period of job growth in the state.