Four Reasons Why Paying Unemployment Benefits to Striking Workers is a Bad Idea

If insanity is doing the same thing over and over and expecting different results, Pennsylvania House Democrats are long overdue for a mental health check.

In what’s becoming an annual tradition, Pennsylvania House Democrats want to pay unemployment compensation to striking workers. House Bill (HB) 145 passed the state House, with all Democratic members and four Republicans voting in favor.

HB 145 should sound familiar because it mirrors similar legislation from last year: HB 1481.

State Rep. Rick Krajewski, the Philadelphia lawmaker sponsoring the bill, hopes it sticks this time:

I plan on reintroducing former House Bill 1481 which would amend Section 402 of the Unemployment Compensation Law to remove existing language that currently prohibits employees from collecting UC benefits if their unemployment is due to a stoppage of work that is a result of a labor dispute. Additionally, when these work stoppages do occur, unemployed persons will not be deemed to have “voluntarily left work.”

But Krajewski is deeply misguided by reviving this corpse of a bill. In fact, here are five reasons why Pennsylvanians should send HB 145 back to where it came from.

#1: It overburdens employers.

Employers subsidize unemployment insurance through state and federal payroll taxes. These funds are designated for situations involving involuntary losses in employment.

Employers shouldn’t have to pay for employees’ choice to strike. In every other circumstance, employees who leave their jobs voluntarily do not qualify for unemployment benefits. Striking is a voluntary act, wherein workers consciously choose to forfeit their labor as a negotiating tactic in labor disputes. Paying these employees not to work negates the fundamental principle of unemployment insurance.

Moreover, such legislation disproportionately harms smaller businesses. Larger corporations can easily absorb the double cost of paying unemployment while also losing productivity during a strike. The same cannot be said about small mom-and-pop shops with tighter margins.

#2: It prolongs costly labor disputes.

Paying unemployment benefits to striking workers institutes bad incentives. With HB 145, unions and striking workers are less likely to resolve disputes promptly.

Plus, unemployment insurance isn’t a bottomless public fund. According to its fiscal note, HB 145 would drain about an additional $6 million from the fund annually. The fiscal note also posited that “the proposed law change may lead to more strikes.”

The increased frequency and duration of such strikes could deplete the fund, resulting in higher taxes on individuals and businesses.

Moreover, such a program is duplicative. Many unions have strike funds that allow them to compensate striking workers. Allowing striking workers to receive unemployment compensation double-dips into existing limited public funds.

After all, what are those union dues for in the first place? 

#3: It’s too radical and unpopular.

Most of the United States does not offer unemployment insurance to striking workers. Only New York, New Jersey, and Washington do so.

But even in New York, striking workers must pay back the benefits upon the strike’s end. HB 145 offers no such restriction.

The proposal has proven to be even too radical for progressive stalwarts. California Gov. Gavin Newsom vetoed a similar proposal when it arrived at his desk. “Now is not the time to increase costs or incur this sizable debt,” Newsom wrote in his veto memo.

California isn’t the only Democrat-leaning state to reject this radical proposal. Connecticut, Delaware, Illinois, Maryland, Hawaii, Oregon, and Rhode Island—all considered safe blue states—have all considered and rejected similar measures within their own state legislatures.

Small business owners have also expressed their overwhelming opposition to this proposal. One poll found that nine out of ten business owners do not support paying unemployment compensation to striking workers.

#4: It’s completely tone-deaf during two government impasses.

Pennsylvania is more than three months overdue with its state budget. The current monthslong impasse has already caused disruptions to localities and entities reliant upon funding from Harrisburg.

To make matters worse, the recent shutdown of the federal government has now left the Keystone State vulnerable on both the state and federal levels.

Amid these two budget stalemates, lawmakers seem more interested in placating special interests—namely, organized labor. Favoring their donors over their constituents isn’t a great look most of the time, but it certainly isn’t when larger problems remain unsolved.

The likelihood of HB 145 becoming law seems slim given the partisan composition of the Pennsylvania Senate. Regardless, that won’t deter Pennsylvania Democrats from repeating this folly next year, either.