California’s unemployment insurance fund is $20 billion in debt, putting the state in a terrible position in case of a recession.
The deep debt — incurred during the COVID-19 pandemic as millions of people lost their jobs and the state borrowed money from the federal government for unemployment benefits — is on Gov. Gavin Newsom’s mind.
He cited it as a factor in his recent veto of a bill that would have allowed striking workers to be eligible for unemployment benefits, mentioning that the state is paying hundreds of millions of dollars of interest on the debt.
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The state should take action to address the problems with the fund, said Jenna Gerry, senior staff attorney for the National Employment Law Project who covers unemployment insurance issues in California.
“People need to understand the historic nature of this, and that something needs to be done now,” Gerry said, adding that fixing the system is also an equity issue in a high-cost state. The state’s unemployment benefit has been at a maximum $450 a week since 2005. “Who can live on that in California?” Gerry asked. Gerry added that the state needs to fix the unemployment fund’s solvency issues before it can raise the benefit limit.
Bill Sokol, who teaches labor law at San Francisco State University, said the system to fund unemployment insurance hasn’t changed all these years because the business lobby is strong. Sokol also said labor is fighting for more pressing issues that affect employed workers, not unemployed ones.
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Read the full article at calmatters.org.
