Prior to the other day I knew very little about unemployment insurance (UI) in California. It was basically something to help those individuals who had lost their jobs. How much was it and for how long? Not a clue. From where did this “insurance” money come? Again, not a clue.
Here is what I learned about unemployment insurance in California:
At present, payroll taxes are charged at 3.5 percent of an employee’s first $7,000 in wages. On average, employers contribute $5 billion to $6 billion annually to the state’s unemployment insurance (UI) fund. When an eligible person becomes jobless, the state pays 50 percent of his or her wages, up to $450 per week, for up to 26 weeks (for a potential total of $11,700).
But there is a big problem.
From The Epoch Times:
California’s unemployment insurance program is facing financial challenges, burdened by shortfalls and a multibillion-dollar federal loan, according to a recent report by the state Legislative Analyst’s Office.
“Both our office and the administration expect these annual shortfalls to continue for the foreseeable future. Under our projections, deficits would average around $2 billion per year for the next five years,” the report states.
“This outlook is unprecedented: although the state has, in the past, failed to build robust reserves during periods of economic growth, it has never before run persistent deficits during one of these periods. The state’s unemployment insurance financing system is broken.”
During the pandemic, California took a loan of roughly $20 billion from the federal government to pay for unemployment benefits. The state never paid back this amount.
The anticipated $2 billion per year shortfalls will add to the $20 billion outstanding loan and complicate the financial situation, the report noted. The interest on the loan is expected to total $1 billion annually.
On average, employers contribute $5 billion to $6 billion annually to the state’s unemployment insurance (UI) fund.
The report recommended raising the wage threshold to $46,800. (At the present 3.5% that amounts to an extra $1393 per employee that the employer must pay.) if a company employs 100 employees, that’s almost an extra $140,000 that must be paid to the state of California. How many more companies will be driven out of the state?
To make the situation even worse the state of California’s UI system was also plagued by fraudulent claims during the pandemic. Out of the several state agencies that received pandemic funds, California’s Employment Development Department (EDD) was granted the highest amount. (The EDD estimates that roughly $20 billion was siphoned off by international and domestic criminals via fraudulent unemployment claims filed under stolen identities.)
A key reason for such large-scale fraud was that the EDD failed to block addresses that were used to file numerous claims. In addition, a measure that prevented payments from going to people with unconfirmed identities was removed by the agency amid pressure to get the aid out quickly during the pandemic.
In addition, the dunderheads in Sacramento now want to give illegals the equivalent of unemployment insurance.
SB 227, titled “Unemployment: Excluded Workers Program,” requires the EDD to develop a plan to provide cash assistance to people who are “ineligible for unemployment insurance due to their immigration status.”
State Sen. Brian Jones, a San Diego Republican, warned against the measure in a September Instagram post.
“It’s insulting that California Democrats are even considering expanding unemployment benefits to illegal immigrants,” he wrote. “Under the Newsom administration, the unemployment insurance fund is already broke with a $20 billion deficit. We cannot afford to expand benefits to those here illegally.”
Well, here you have it … despite the fact that the unemployment insurance fund is $20 billion in arrears, the Dems in Sacramento want to give similar benefits to illegals! To call them “dunderheads,” is being polite.
12/12/24
