Newsom Vetoes Bill Allowing Workers to Collect Unemployment Pay While Striking

The News

Gov. Gavin Newsom of California vetoed legislation on Saturday that would have allowed workers to collect unemployment pay while on strike, disappointing union leaders who had hoped to capitalize on a wave of high-profile walkouts during the state’s “hot labor summer” this year.

Why It Matters: The bill would have given unionized workers more power in dealing with employers.

Labor unions hold more sway in California than in most other states, with an electorate dominated by Democrats and a large roster of liberal officeholders who rely on union support. But California, with its high costs of living, is an expensive place to go on strike without income.

Employers are often able to simply wait out a labor action, knowing that the lost income alone will force unionized workers back to the bargaining table. Hollywood writers repeatedly expressed this concern during their recent strike, which lasted nearly five months before a tentative contract agreement was announced Sept. 24.

This bill, backed by the California Labor Federation and an assortment of unions while opposed by the state Chamber of Commerce and various business associations, would have given workers more leverage in contract negotiations by making it less costly to strike.

Background: Business owners equated approving the bill with raising taxes.

Unemployment benefits in California are funded by a payroll tax on businesses, but the tax is so low and generates so little revenue that the state had to borrow $20 million from the federal government to provide benefits during the pandemic.

In a veto message, Mr. Newsom said that $302 million in interest is due on the federal loan in September alone. “Now is not the time to increase costs or incur this sizable debt,” he said.

Business owners argued that broadening eligibility would have been tantamount to raising their taxes, and reiterated that the pot of money used to pay jobless benefits has for years verged on insolvency.

The legislation was last minute: This summer, as hundreds of thousands of California workers in industries from show business to tourism participated in labor actions, the California Labor Federation and pro-labor Democrats seized on the momentum to introduce it, long past the point when California’s legislative session typically enters its homestretch.

Both of these concerns marked the legislation as a long shot. The governor is a Democrat, but he is also a popular politician who occasionally likes to remind labor leaders who’s boss and a potential presidential contender who occasionally likes to remind voters that he also owns a business.

What’s Next: The legislative session is over, and organized labor came away with other gains.

This veto marked a loss for the state labor federation and its head, Lorena Gonzalez, who proposed a similar measure when she was a Democratic state legislator in 2019. But it came in the context of some wins for workers as well.

On Thursday, for instance, Mr. Newsom signed a bill to give the state’s 500,000 or so fast food workers a raise to $20 an hour, with a new fast food council to set industry labor standards, including on wages and workplace conditions, starting next year.