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Jun 5, 2025  |  
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NextImg:Gavin Newsom’s unemployment failure - Washington Examiner

Not content with wasting billions of taxpayer dollars on a high-speed train to nowhere and homeless programs that only make the problem worse, Gov. Gavin Newsom (D-CA) has also presided over the bankruptcy of the state’s unemployment insurance program — a problem that will now require higher taxes on employers, which will only make the state’s unemployment rate, already the nation’s highest, even worse.

The underlying problem with California’s unemployment insurance system is that it simply promises more in benefits than it collects in taxes from employers. Californians applying for unemployment benefits receive $385 a week on average, which is higher than the average national benefit. But because the state is so expensive, that payment only represents about 28% of the average Californian wage, a percentage that is below the national average. Once on unemployment, Californians typically spend weeks longer on the program than do recipients in other states.

When COVID-19 hit, most states found their existing unemployment systems overwhelmed with new claims, but the federal government then stepped in with low-interest rate loans to keep them solvent. Most states later used grants from the American Rescue Plan to pay these federal government loans back.

But Newsom chose a different path. Instead of being fiscally responsible by using the money from the American Rescue Plan to pay off debt, Newsom used that money to give stimulus checks to Californians. Not only did these stimulus checks make inflation in California worse, but they also left a gaping hole in the state’s budget.

The original interest rate on the loan from the federal government to California had a historically low 1.6% interest rate. The federal government is now charging 2.6%, and that is expected to rise even further, as is the state’s unemployment insurance deficit (which now stands at $21 billion).

Experts say California must now raise its unemployment insurance tax from the current 1.2% on the first $7,000 of wages to more than 3.5%. Combining both state and federal unemployment levies, California employers now have to pay about $500 more in unemployment insurance taxes per employee per year.

CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER

These higher taxes on employment will make California an even more expensive place to do business, driving the state’s already country-high unemployment rate of 5.3% even higher.

But at least Newsom got those stimulus checks out just before his recall election!

Heckuva job, Gavin!