According to USA Today, this decision comes amid high-profile work stoppages in the state this year.
In a veto message, Newsom cited the state’s financial concerns, as it had already paid over $362 million in interest on a federal loan used to provide benefits during the pandemic, with an additional $302 million in interest due in September.
Newsom explained that increasing costs and incurring significant debt was not advisable at this time. He expressed his respect for workers’ collective actions and his commitment to improving labor conditions in California.
His rejection of the bill followed the conclusion of a five-month-long Hollywood writers’ strike but left other major labor groups, including Southern California hotel workers and Hollywood actors, still on strike, with many workers experiencing months of unpaid work.
The bill had garnered strong support from labor unions, including the California Labor Federation, and Democrats in the state legislature. It aimed to provide weekly benefits to workers on strike for a minimum of two weeks. Labor advocates criticized the veto, arguing that it favored corporations and was detrimental to workers’ rights.
California is facing a substantial unemployment insurance debt, with a projection of nearly $20 billion in debt by the end of 2023. The state’s unemployment benefits rely on the Unemployment Insurance Trust Fund, funded by unemployment taxes paid by employers and businesses based on employees’ wages.
This amount has remained unchanged since 1984, and the state had to borrow federal funds to provide unemployment benefits during the pandemic when many businesses closed due to social-distancing measures, resulting in a surge in unemployment. The state’s unemployment insurance trust fund is currently more than $18 billion in debt, and unemployment fraud during the pandemic may have added up to $2 billion in costs.
The bill was introduced in August during a period of strikes in various industries in California, as Democratic state lawmakers sought to support labor unions. However, Governor Newsom expressed concerns that expanding eligibility for these benefits could further increase the state’s federal unemployment insurance debt and impose higher taxes on employers.
The proposed legislation would have allowed striking workers to receive unemployment benefits after two weeks of striking, offering checks of up to $450 per week. Typically, workers are eligible for such benefits only when they lose their jobs through circumstances beyond their control.
Labor advocates argued that the bill’s impact on the state’s unemployment trust fund would be minimal, citing that out of 56 strikes in California over the past decade, only two lasted longer than two weeks, according to Democratic state Senator Anthony Portantino, the bill’s author.