California Governor Gavin Newsom has vetoed a bill that would have allowed workers on strike to receive unemployment checks. The bill was inspired by recent high-profile strikes in the Hollywood and hotel industries. Governor Newsom cited the state’s nearly $20 billion debt in the fund used to pay unemployment benefits as the reason for his veto. The fund is already more than $18 billion in debt due to the pandemic-related spike in unemployment and rampant fraud. Labor unions argued that providing unemployment benefits to striking workers would benefit the economy by allowing them to continue spending money and supporting local businesses.
The vetoed bill aimed to support Southern California hotel workers and Hollywood actors and writers who have been on strike for several months. The writers’ strike ended in September, but the other two strikes are ongoing, leaving many workers without pay. While labor unions insisted that the number of workers on strike for more than two weeks is minimal and would not significantly impact the state’s unemployment trust fund, the Newsom administration claimed that the fund is already struggling to collect enough money to cover all benefit payments owed. The fund relies on a tax paid by businesses on each worker’s wages, but the tax threshold has remained unchanged since 1984, resulting in insufficient revenue.
Despite the veto, lawmakers have the option to attempt to pass the bill, although it is rare for a governor’s veto to be overruled in California. The Newsom administration anticipates that benefit payments will exceed tax collections by $1.1 billion this year, marking the first time this has occurred during a period of job growth. The vetoed bill has sparked debate about the balance between supporting striking workers and the state’s financial burden.