Mismanaged governmentCalifornia’s unemployment insurance system in crisis
California’s recent political history is studded with episodes of short-sighted, irresponsible governance.
We’re experiencing one example now — a decades-long neglect of the state’s water infrastructure that leaves us ill-prepared to deal with both drought and periodic deluges.
Among the many other examples, albeit less spectacular ones, has been a chronic crisis in unemployment insurance, the program that’s supposed to cushion the devastating effects on workers who lose their jobs and their families during the state’s periodic recessions.
It’s a two-headed crisis. Not only is the program itself under-financed, unable to meet the demand for benefits during even a mild economic downturn, but the
Unemployment insurance and EDD worked fairly well until politicians tinkered with the system a couple of decades ago.
That left the state
To repay the debt, federal officials hiked payroll taxes on employers for the next decade. However,
Once again, too, the state borrowed from the federal government, this time twice as much, nearly
Not only was the state once again deeply in debt to Uncle Sam, but EDD’s management of benefits, both those from the state program and later a separate set of benefits from the federal government, became a managerial nightmare.
Qualified applicants were left waiting for benefits, often for months, and given the runaround by EDD case workers, while the agency paid out as much as
It also left
Last year, with the state apparently enjoying a nearly
Never mind.
The big surplus has now morphed into a multi-billion-dollar deficit and the 2023-24 budget that Newsom proposed last month eliminates both payments. Meanwhile, the unemployment fund is barely able to make routine benefit payments even without recession.
Payroll taxes generate about
This is a serious issue, one that not only involves immense amounts of money but affects the lives of employers, especially small businesses, and workers who are laid off, such as the thousands of
We’ve had stark evidence in the last two decades that the system isn’t working as it should. It falls on Newsom and the Legislature to fix it.
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