Striking Workers Will Get Unemployment Benefits—If Newsom Signs Bill Now on His Desk

BY FELICIA MELLO, CalMatters

The weekend. The eight-hour workday. Paid family leave. Those fruits of labor victories are part of everyday life in California. Now the state’s hot labor summer may have helped inspire another precedent-setting measure, if Gov. Gavin Newsom signs a bill on his desk that would allow striking workers to receive unemployment benefits.

How many workers would get help, and can the state afford to pay each of them as much as the $450 maximum per week? The answers, researchers and advocates say, likely depend on whether California’s recent wave of labor activism continues, and what action lawmakers take to shore up the state’s debt-ridden unemployment insurance system.

Considering more than 1.7 million Californians have filed initial jobless claims [in 2023], some supporters describe the potential unemployment benefits to strikers as a drop in the bucket.

Senate Bill 799 would provide unemployment benefits to workers who have been on strike for at least two weeks. Legislators passed it Sept. 14, just before Hollywood writers and studios headed back to the negotiating table four months into a strike that has paralyzed the industry, and as thousands of Los Angeles hotel workers continue their union’s rolling labor stoppages in a push for higher wages.

Now more than 68,000 Kaiser Permanente workers in California are threatening a strike if they don’t reach an agreement with the hospital chain by Sept. 30. And on Friday the United Auto Workers expanded its walkout against major automakers to parts distribution centers in 20 states, including California.

So far unions representing more than 180,000 workers have staged California strikes this year that lasted at least two weeks, according to Cornell University’s Labor Action Tracker. That includes about 160,000 members of the Screen Actors Guild-American Federation of Television and Radio Artists who walked off the job in July, and 11,500 Writers Guild of America members, who went on strike May 2 but reached a tentative deal Sunday with the major Hollywood studios.

Considering more than 1.7 million Californians have filed initial jobless claims during the same period, some supporters describe the potential unemployment benefits to strikers as a drop in the bucket.

“I think we’ll continue to see labor activism until we right-size the economy for workers,” said Lorena Gonzalez Fletcher, head of the California Labor Federation, which backs the bill. “But you have to remember that long strikes are usually only sustained by people who have unions, and that is still relatively low density in California and everywhere in the private sector.”

A Cost-Benefit Analysis

Labor leaders argue that unemployment benefits for strikers would level a playing field tilted toward employers, preventing companies from simply waiting out a strike until workers, unable to pay their bills, become desperate.

The Chamber of Commerce estimates California would have paid out an extra $215 million over the last 12 months if the proposed law were in effect. But an Assembly Appropriations Committee analysis put the cost far lower, in the “low millions to tens of millions” per year.

Employers, who fund unemployment benefits through payroll taxes, say the bill would force them to pay for strikes and that California’s overburdened unemployment insurance system can’t afford to take on new responsibilities.   

A strike is “a game where you plan and prepare and tell the employer we can hold out longer than you,” said Robert Moutrie, policy advocate for the California Chamber of Commerce. “We view that strategic technique as profoundly different than being unemployed.”

The chamber estimates California would have paid out an extra $215 million over the last 12 months if the proposed law were in effect. But an Assembly Appropriations Committee analysis put the cost far lower, in the “low millions to tens of millions” per year.

California’s unemployment benefits average $367 per week, typically replacing less than a third of unemployed workers’ wages. If 68,000 Kaiser Permanente workers were on strike in a given week, for example, and all collected the average benefit, the state would pony up $25 million. But strike action waxes and wanes, and nationally, only about a quarter of unemployed workers actually apply for benefits.

One key question: Will knowing they can draw on unemployment benefits embolden more workers to strike? It might, said Kurt Petersen, co-president of UNITE HERE Local 11, which represents striking hotel workers.

“For workers who are at the lower end of pay scale, who are one paycheck away from economic disaster, knowing that there would be unemployment as a supplement would give workers more confidence that they can strike and strike for a longer period of time,” he said. 

Still, he said, his union’s members would be facing off against large hotel companies that can sustain a loss at one property and make it up at others. “Will it make it a little more of a fair fight? Yes. Do employers have enormous advantages in negotiations with workers? Yes … The CEO never has to worry about paying the rent.”

Lessening the Risks for Workers

Going on strike is always risky for workers, because they can be permanently replaced, said Michele Evermore, a senior fellow at the left-leaning think tank the Century Foundation who studies unemployment. “They don’t have to just deal with the uncertainty of unemployment, but they also have to go out on strike lines,” she said. “It’s not a lazy person’s sport.”

Other economists said the proposed law could create a ripple effect: Companies that know their workers are more likely to strike could make more generous offers to avoid that possibility, leading to earlier contract settlements.

“There are multiple indirect effects here and it’s hard to know how big the indirect effects will be,” said Mark Duggan, director of the Stanford Institute for Economic Policy Research.

For Mayra Macias, the question is less abstract. A cashier and barista at Whittier College in Southern California, Macias went on strike with her coworkers earlier this year, asking for a pension. Bon Appetit Management Company, the food service contractor that employs her, already offered workers a 401k plan, but Macias—who after 18 years on the job was earning about $18 per hour—said she and most of her coworkers couldn’t afford to contribute to it.

The strike lasted 28 days. At times, Macias said, she wanted to give up. She borrowed money from her sister to pay her phone bill and from her daughter to pay her car insurance.

“At about two weeks your mind starts messing with you, making you feel like this isn’t working,” she said. “Regardless of that negativity that’s always there, you gotta get up each day and do it again.

“Your feet hurt, they’re swollen, you’re not eating properly,” she added. “And your bills keep coming in. They don’t know you’re on strike.”

Having unemployment benefits, “would’ve mentally eased my anxiety and my stress of knowing I can hold on one more day and it’s going to be ok,” Macias said. “I’m going to be able to survive. And I don’t need to go to my family for help.”

Other states paying benefits to strikers

New York and New Jersey provide unemployment benefits to striking workers. An average of about 3,000 striking workers per year received such benefits in New York over the last decade, according to the state’s labor department. Three years ago New York reduced the threshold for strikers to qualify for benefits from seven weeks out of work to two weeks; since then the state has paid less than $2 million in unemployment to strikers, compared to $21 billion in regular unemployment benefits, a department spokesperson said.

The state’s unemployment insurance fund currently owes the federal government $18 billion, after the pandemic led to widespread delays in issuing checks to frustrated applicants and an estimated $32 billion in fraud.

Lawmakers in Massachusetts and Connecticut also have floated proposals to extend the unemployment safety net to strikers. 

Some employers argue California’s unemployment system is already too generous. Employer groups have lined up against the California bill, and a think tank affiliated with the Chamber of Commerce released a study finding that California has among the least restrictive eligibility requirements for unemployment benefits in the nation, along with relatively low penalties for fraudulent unemployment claims.

The state’s unemployment insurance fund currently owes the federal government $18 billion, after the pandemic led to widespread delays in issuing checks to frustrated applicants and an estimated $32 billion in fraud.

Unemployment taxes are experience-rated, which means businesses that lay off more workers pay more. But California’s federal debt imposes an additional charge that’s spread evenly among all employers, which makes them—and some lawmakers—wary about increasing it.

“I cannot support a bill that will add debt to employers who are completely uninvolved in the strikes,” said Senate Minority Leader Brian Jones, a San Diego Republican, during a floor debate on the bill.

Much of the system’s debt stems from California’s decision to impose unemployment taxes on just $7,000 of workers’ annual income, experts say—the lowest among states, tied with Florida, Arkansas and Tennessee. (Washington, the state with the highest rate, assesses unemployment tax on the first $67,000.)

Progressive economists are quick to point out that unemployment benefits would help not just individual strikers but the broader economy. With thousands of writers and actors out of work, “that’s a lot of people who might not be going to coffee shops, and you could see them shuttering their doors,” said Alix Gould-Werth, director of family economic security policy at the Washington Center for Equitable Growth. Unemployment checks could prevent some of that hardship, she said.

Unemployment Benefits’ Role

The federal government designed the unemployment insurance system to help keep wages from declining overall, said Evermore of The Century Foundation. Allowing workers to engage in collective action supports that goal, she said.

“This is one of those issues where states have to decide. If they want to be a low road state with low wages and bad infrastructure they can do that,” she said. “You have to decide, do we actually want a high quality of living in the state and not just cheap labor and happy wealthy people in gated communities?”

Sen. Anthony Portantino, the Burbank Democrat who authored the proposal, has said he sees it as an opportunity to discuss ways the state could shore up the unemployment fund.

Duggan, the Stanford professor, pointed out that other states—red and blue—have set the amount of wages subject to unemployment taxes to rise as overall incomes do. Connecticut recently did that after its fund weakened due to a flood of pandemic-related claims.

“It’s just good government—if you’re going to run a program like this, it shouldn’t live beyond its means,” said Duggan.

Newsom recently told Politico he was “cautious” about expanding unemployment benefits given the fund’s debt. A spokesperson for his office declined to say Friday whether he would sign the bill. The governor has until Oct. 14 to make a decision.

Macias said she hopes he’ll sign.

For the 61-year-old, going on strike was worth it: Bon Appetit agreed to put 90 cents per hour worked toward a pension fund.

“There’s a peace of mind that I know when I’m old and frail and I can no longer work for these big companies, I will have something come through my mail besides Social Security and that’ll be my union pension,” she said.

The article titled “After hot labor summer, will Gavin Newsom sign bill giving unemployment benefits to striking workers?” appeared first on CalMatters.org.

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