California:
Companies’ Miserly Pay for Unemployment Insurance

Oct 2, 2023

Unemployed workers in California who qualify for unemployment benefits receive $40 to $450 per week for six months. Considering the extremely high cost of living in California, including rents and utility costs that are much higher than the national average, these benefits are a pittance.

This is because California’s Employment Development Department (EDD) trust fund, from which the unemployment benefits are paid, is extremely underfunded. California limits the tax that employers pay to fund these benefits to the first $7,000 in wages of a worker per calendar year. Some companies pay the tax on even less than $7,000. As a result, the companies pay toward EDD funds much less than $36 per worker each month.

And this miserly company contribution to the unemployment fund has not changed since 1982. For more than forty years, the unemployment insurance wage base remained unchanged at the limit of $7,000 while companies raked out billions and billions of dollars from their workers’ labor, enriching their owners at unimaginable levels.

But because this meager unemployment benefit is still higher than the companies’ miserly contribution to the unemployment fund, the California unemployment trust fund is expected to generate a budget deficit of a few billion dollars each year, which may encourage EDD to further reduce unemployment benefits.

So, simply put, the State of California keeps a benefit that’s very vital for unemployed workers very low. But this scheme works for the businesses; they pay a very minimal tax.