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Businesses that used to depend on that spending may be forced to lay off more workers, making the recession worse for everyone. Knowing that it may take a while to find a job, workers may rationally cut back on spending as much as possible. Laid-off workers can also become eligible for other safety net programs such as food stamps or Medicaid.ĭuring recessions, many people may be laid off at once. Benefits are deliberately set at half of usual wages to encourage workers to actively search and accept jobs. However, as long as they are actively searching, available, and able to work, they can usually receive UI benefits for up to 26 weeks.
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Workers are not eligible if they quit or are fired for cause. One week after a layoff, workers are eligible for unemployment insurance benefits of up to 50 percent of their previous wages, with a maximum benefit of $450 per week in California. Given California’s outdated unemployment insurance funding system, repaying this debt will be painful for employers and workers and will undercut the state’s efforts to responsibly budget. Even with the federal aid covering most of the program during the past two years, California still had UI debts of almost $20 billion at the beginning of 2022, almost half of the total borrowing by all states. During the pandemic, the federal Coronavirus Aid, Relief and Economic Security (CARES) Act pumped billions of dollars into state coffers to help fund the safety net. Unemployment insurance (UI) is the largest self-funded economic stabilization system in the nation, helping millions of workers after they are laid off. The broader the taxable wage base, the lower tax rates can be to sustainably fund the system. The current regressive tax structure imposes higher costs on low-wage workers and small businesses, slows hiring, and undercuts California's push toward responsible budgeting. Dixon and Carol Doll Conference Room 320Īfter failing to modernize the funding since 1982, California's unemployment insurance system entered the pandemic with few reserves and ended with $20 billion in debt, the highest of any state in per-capita terms.Stanford King Center on Global Development.Stanford Environmental and Energy Policy Analysis Center (SEEPAC).Stanford Center on China's Economy and Institutions (SCCEI).
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California Policy Research Initiative (CAPRI).