Commentary: Another reminder that there’s no free lunch
It’s doubtful whether more than a relative handful of Californians have heard of the Unemployment Insurance Fund. It is, however, one of state government’s largest activities – and a case study in political mismanagement. Currently, California employers pay about $6 billion in payroll taxes into the UIF each year. And currently, the state Employment Development Department annually pays almost that much to jobless workers. Superficially, that would appear to be a sustainable equation, but in reality, it’s not. During periods of high payrolls and low unemployment, such as this one, the UIF should be building reserves that could cope with an economic downturn, when claims for jobless benefits increase. That’s the way it used to work – until political expediency and recession undid it.