Payroll stub beats unemployment check

As lawmakers meeting in Olympia wind up the 2025 session, they face a whopping $15 billion budget deficit—a situation they must address before adjourning and going home. Unlike Congress, state legislators and Gov. Bob Ferguson cannot authorize deficit spending or borrowing to fund state government. They either raise taxes and fees; or cut costs programs and people.

Washington is primarily funded by sales, property, specialized taxes (such as unemployment, workers compensation and fuel), and gross receipt (business and occupation) taxes — a high percentage of which are paid by business.

The last thing our state needs is an added burden of higher unemployment taxes — which, in Washington, are paid solely by employers. Therefore, lawmakers ought to stop the bill allowing strikers to collect up to 26 weeks of unemployment insurance (UI) pay during strikes. Unfortunately, the state senate already passed the measure by a 28-21 vote earlier this month, and now it is up to the house to kill it even though it approved the measure last year.

If it lands on Ferguson’s desk, the governor should veto the measure just as California Gov. Gavin Newsom did in 2023 when his state faced a $20 billion shortfall between projected expenditures and revenues.

“Diverting unemployment benefits to striking workers will weaken an important safety net, embolden more labor stoppages and introduce new risks to Washington’s economy at a time we cannot afford them,” The Seattle Times (Times) editorialized.

The Times points out the consequences of such a policy if in place during last year’s seven-week walkout by Boeing’s 30,000 workers. Those striking workers would have received

a $1,079 weekly benefit. That single strike would have drained $162 million from the unemployment trust.

“Every employer in the state will pay for the cost of this benefit,” Association of Washington Business (AWB)’s Lindsey Hueer, told lawmakers, noting that Washington employers already pay some of the highest UI taxes in the country, with UI rates going up every year as the average wage increases.

“UI should be a safety net for workers who have no job to return to,” she added. “That’s not the case for striking workers.” That was the purpose for the UI system established by Congress in the 1930s.

Neil Strege of the Washington Roundtable testified that both employers and workers face economic consequences during a strike and are equally incentivized to end the labor dispute. This bill would tip the scale in workers’ favor, potentially prolonging strikes.

Strikes are not restricted to the private sector. The Times pointed out that even though it is illegal for teachers to strike, they have. Under the legislation, “school districts (i.e. taxpayers) would be on the hook for 100% of any unemployment payouts for striking workers.”

The bottom line is prolonged strikes hurt everyone — workers, employers and our communities — and cause businesses to move elsewhere or simply close shops. If a company cannot fill out its orders it allows a foreign competitor to gain a strategic advantage.

Finally, it is important to remember that UI is not the only cost employers are struggling with. Washington is a high-cost state to do business. Our tax system is based on the volume of business, not profitability, as in Oregon. Unemployment benefits and corresponding taxes on Washington employers are among the nation’s highest — in the top five. And workers comp costs are more expensive than most states.

Add them together, and Washington employers face costs that often lead to reduced work hours, layoffs, and delays in hiring.

When high UI costs stifle an employer’s ability to create jobs, no one wins. After all, a payroll stub always beats an unemployment check.

Don C. Brunell is a business analyst, writer and columnist. He retired as president of the Association of Washington Business, the state’s oldest and largest business organization, and now lives in Vancouver. He can be contacted at theBrunells@msn.com.