California labor tries again to get unemployment pay for striking workers. Can state afford it?

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California labor unions are once again fighting to secure unemployment pay for striking workers after Gov. Gavin Newsom vetoed their effort last year.

But there is a looming question hanging over Senate Bill 1116 from Burbank Sen. Anthony Portantino: How will the state cover additional workers as its unemployment insurance fund remains mired in debt?

The Democrat’s bill would pay workers on strike for at least two weeks. It’s a repeat of his previous measure, which Newsom declined to sign because California’s unemployment insurance financing structure is in need of revisions and its trust fund owes more than $20 billion to the federal government for loans used to pay claims.

That situation has not changed. The state Employment Development Department is still trying to get the trust fund back in shape after its payments exploded during the 2020-2021 COVID-19 pandemic. The state borrowed heavily from the federal government during the pandemic so it could pay claims.

Portantino and California Labor Federation head Lorena Gonzalez Fletcher on Wednesday touted their bill ahead of a Senate Labor, Public Employment and Retirement Committee hearing. Members did advance SB 1116, which now moves on to the Senate Appropriations Committee.

Bill opponents, including the California Chamber of Commerce, argued in a committee analysis the bill would “effectively require employers to subsidize striking workers, even if those workers or labor strikes had nothing to do with the employer, even if that employer is not presently (or has never) experienced any strikes.”

How much will the bill cost?

There is no cost estimate currently associated with SB 1116. An Assembly Appropriations Committee analysis of Portantino’s previous bill said the additional eligible workers would likely have drawn down the unemployment trust fund by an amount “in the low millions to tens of millions of dollars.”

California last year saw large numbers of workers go on strike, including a simultaneous work stoppage by the Writers Guild of America and the Screen Actors Guild that significantly impacted the Los Angeles-area film industry.

Even so, Gonzalez Fletcher called for an Appropriations analysis that shows how many striking workers actually walked off the job long enough to qualify for benefits.

“I guarantee you, it will be lower than the pretty low cost we got out of Assembly Appropriations last year,” she said.

Last year’s Appropriations analysis cited data from the U.S. Bureau of Labor Statistics tracking strikes involving at least 1,000 workers. The data showed there were at least 56 strikes in California from 2012 to 2022, and only two lasted more than two weeks. However, at the time of the report, there were two ongoing strikes that had exceeded two weeks.

Gonzalez Fletcher insisted paying those on strike is a “smart economic decision” for the state, as it would push employers to negotiate. Ending strikes sooner would ultimately alleviate unemployment insurance costs, Gonzalez Fletcher said, because workers who are not on strike but lose their jobs as a result of the stoppage do receive state payments.

They would be able to resume their jobs more quickly, she said, ending the need for more unemployment checks.

When asked how the bill will address Newsom’s concerns with the unemployment insurance trust, Portantino and Gonzalez Fletcher did not have specific answers but acknowledged the need for reform.

“Oftentimes, things get signed as you work out the economic activity behind it,” Portantino said. “So we’re hoping those conversations and the reforms happen, as well. This is not an isolated effort. This is a broader effort to protect workers and protect the fund.”

Gonzalez Fletcher said the unemployment insurance issues will not be resolved until “the governor really has the political will to tell businesses that they need to pay more.”