The big questions now: Will Congress keep writing bigger checks to keep unemployment money flowing? And even if they do, how much will California have to pay back as state and local government agencies face their own pandemic-induced budget uncertainty?Ĭalifornia has a low unemployment tax rate for businesses, usually maxing out around $400 per worker per year.
Though California just paid off its unemployment tab from the Great Recession in 2018, it planned to borrow at least another $21 billion from the feds during the pandemic. States can also borrow from the federal government to fill gaps in unemployment funding.
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To help fill the void, the federal government stepped in with an alphabet soup of new emergency programs: the self-employed worker program Pandemic Unemployment Assistance (PUA) benefit extension program Pandemic Emergency Unemployment Compensation (PEUC) plus the temporary $600-a-week supplemental payment program known in California as Pandemic Additional Compensation (PAC) and others. But by October, the state’s employment agency said in a financial forecast that the fund was poised to plummet to a $48.3 billion deficit by the end of 2021. At the beginning of last year, that trust fund had about $3 billion in it. In ordinary times, California pays jobless claims with money from an Unemployment Insurance Trust Fund that collects taxes from employers. “California has not had sufficient security measures in place to prevent this level of fraud, and criminals took advantage of the situation.”īut what, exactly, went wrong? And what does all the talk about fraud have to do with ordinary people stuck waiting for unemployment money? Most importantly, what are the prospects for getting workers help as the pandemic drags on? Here’s a guide to what happened and what might come next for the state’s unemployment program. Department of Labor, during a January press conference. “There is no sugarcoating the reality,” said California Labor Secretary Julie Su, President Joe Biden’s nominee for deputy secretary of the U.S.
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From days-long waits on hold to months of missing payments, California’s Employment Development Department and its private contractors have come under fire for a wide range of problems while paying out $122 billion in unemployment benefits since last March.Īt the center of the mess is a panic over how to handle up to $31 billion in suspected unemployment fraud, which has cut off benefits to legitimate unemployment claimants, jeopardized taxpayer funds and fueled stark law enforcement warnings about organized crime.
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