published : 2023-10-01

Gov. Newsom Vetoes Bill Allowing Striking Workers to Receive Unemployment Benefits

State's unemployment fund projected to reach $20 billion in debt by end of the year

A photo of California Gov. Gavin Newsom speaking at a press conference

California Gov. Gavin Newsom, a Democrat, vetoed a bill on Saturday that would have permitted workers who left their jobs to strike during labor negotiations to receive unemployment benefits.

The legislation was introduced amid a five-month-long strike by Hollywood writers, which caused significant setbacks to the entertainment industry.

While the writers' strike concluded last week with a contract agreement, Hollywood actors and California hotel workers continue their respective labor strikes, often going months without pay.

Under the proposed bill, workers on strike for at least two weeks would have been eligible to receive unemployment checks from the state, with payments reaching up to $450 per week.

However, Gov. Newsom justified his veto by expressing concern over the state's strained unemployment benefits fund, which is projected to accumulate almost $20 billion in debt by year-end.

A picture of Hollywood writers protesting during the strike, holding signs advocating for fair labor practices

Newsom acknowledged his support for workers involved in labor strikes but emphasized the need to address the mounting debt that the state's unemployment fund is facing.

The fund has been burdened by existing debt of over $18 billion due to the increased unemployment caused by the COVID-19 pandemic and significant levels of fraudulent activities.

Newsom highlighted the antiquated financing structure of the state's unemployment insurance, dating back to 1984, and the resulting vulnerability of the UI Trust Fund to insolvency.

Expanding eligibility for unemployment benefits was deemed risky by Newsom, as it could further exacerbate California's outstanding federal UI debt, potentially leading to higher taxes for employers.

The state is also responsible for significant interest payments on the federal UI loan, with approximately $362.7 million already paid and an additional $302 million due this month.

An image of California hotel workers gathered outside a hotel, demanding better working conditions

Labor unions argued that the number of workers on strike for over two weeks is relatively low, negating significant impact on the state's unemployment fund if they were eligible for benefits.

The bill's sponsor, Democratic state Sen. Anthony Portantino, pointed out that only two out of the 56 strikes in California over the last decade have lasted longer than two weeks.

California's Legislative Analyst’s Office has predicted that benefit payments will surpass tax collections by $1.1 billion this year, further straining the state's resources.

Gov. Newsom expressed his appreciation for workers who fight for their rights and engage in collective action, promising to continue efforts to improve working conditions in California.