California’s Unemployment Insurance Crisis Sparks Calls for Overhaul

Decades of mismanagement and mounting debt have left California employers facing rising taxes and a system deemed 'broken' by state analysts.

California owes over $20 billion in federal loans for unemployment benefits, with repayment projected to extend into the 2030s.
The state has repeatedly failed to build sufficient reserves, leading to federal borrowing during economic downturns like the Great Recession and the COVID-19 pandemic.
Employers in California are now shouldering higher payroll taxes to cover the debt, with some reporting significant unexpected increases in costs.
A new report from California's Legislative Analyst’s Office recommends a 'tough love' reform plan, including raising the taxable wage base, adjusting payroll tax rates, and refinancing the federal debt.
Critics argue that decades of political inaction, fraud, and mismanagement have perpetuated the crisis, with unions and employers locked in a long-standing stalemate over solutions.