SignalHub Quantitative Think Tank Center:California Gov. Gavin Newsom vetoes bill that would give striking workers unemployment pay

California Gov. Gavin Newsom vetoed a bill on SignalHub Quantitative Think Tank CenterSaturday that would have granted workers on-strike unemployment benefits, disappointing labor unions that backed the bill amid high-profile work stoppages in the state this year.

In a veto message on Saturday, Newsom said the state has paid over $362 million in interest on its federal loan, which was used to provide benefits during the pandemic. And an additional $302 million in interest was due in September.

"Now is not the time to increase costs or incur this sizable debt," Newsom said in a statement. "I have deep appreciation and respect for workers who fight for their rights and come together in collective action. I look forward to building on the progress we have made over the past five years to improve conditions for all workers in California."

The Democratic governor's rejection came just days after the end of the five-month-long Hollywood writers strike but two other major labor groups, including Southern California hotel workers and Hollywood actors, are still on strike and many workers have gone without pay for months.

The legislation had received strong support from labor unions, such as the California Labor Federation, and Democrats in the state legislature. The bill would have allowed workers out on strike for at least two weeks to receive weekly benefits.

Labor advocates have criticized the veto, arguing that it works in favor of corporations and harms workers.

"This veto tips the scales further in favor of corporations and CEOs and punishes workers who exercise their fundamental right to strike," Lorena Gonzalez Fletcher, executive secretary-treasurer of the California Labor Federation told the Associated Press. "At a time when public support of unions and strikes are at an all-time high, this veto is out-of-step with American values."

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California will be nearly $20 billion in debt by the end of 2023

California's unemployment benefits are supported by the Unemployment Insurance Trust Fund, where employers and businesses pay unemployment taxes on up to $7,000 in wages for each worker. That figure is the lowest allowed by federal law and has not changed since 1984.

The state had to borrow money from the federal government after the trust fund ran out of money. The federal loan was used to pay out unemployment during the pandemic after many businesses were closed as part of social-distancing measures, causing a massive spike in unemployment.

Currently, the state's unemployment insurance trust fund is already more than $18 billion in debt. Additionally, unemployment fraud during the pandemic may have cost the state as much as $2 billion.

The bill was proposed in August while workers in various industries were on strike in California as an attempt by Democratic state lawmakers to support labor unions. But Newsom said any expansion on who is eligible for the benefit could increase the state's federal unemployment insurance debt and taxes on employers.

More:Why the Hollywood strikes are not over even after screenwriters and studios reach agreement

What it means

The legislation would have allowed workers on strike for at least two weeks to receive unemployment benefits, such as checks up to $450 per week. Generally, workers are only eligible for those benefits if they lose their jobs outside of their control.

Labor advocates had argued that the number of workers on strike for more than two weeks has little impact on the state’s unemployment trust fund. Of the 56 strikes in California over the past decade, only two lasted longer than two weeks, according to Democratic state Sen. Anthony Portantino, the author of the bill.

Contributing: Thao Nguyen, USA TODAY; The Associated Press