Labor strikes UI gold

by Ken Girardin |  | NY Torch

Governor Andrew Cuomo and legislative leaders have reached a deal allowing striking workers to collect unemployment insurance benefits after three weeks, a big gift to private-sector labor unions that would further discourage companies from hiring and investing here.

Most state unemployment insurance (UI) systems–including those in many labor-friendly states such as California and Illinois—don’t let strikers collect unemployment, on the basis that their loss of work is, at least initially, voluntary. New York’s policy, on the other hand, has been to let strikers get benefits in those rare cases when work stoppages have lasted more than eight weeks (at which point both labor and management may share responsibility).

Last spring, the Legislature passed a bill (S4573/A6592), sponsored by Senator Tim Kennedy (D-Buffalo) and Assemblyman Sean Ryan (D-Buffalo) that would have allowed strikers to collect UI after just a week of voluntary unemployment—treating them the same as workers who involuntarily become jobless. But that bill apparently was too extreme even for Cuomo, who left it unsigned.

A just-filed compromise measure (S7310), also known as a chapter amendment, has emerged from three-way negotiations between the governor and the Legislature. It’s an indication Cuomo will sign the original Kennedy-Ryan bill some time before the February 7 deadline and that Cuomo will immediately modify it by signing the chapter amendment, which will have been passed by the Legislature. This process, which is often used to fix errors or make specific or technical changes, spares Cuomo from having to veto the more generous original.

The new version would let New York strikers get UI benefits after three weeks—the standard one-week delay plus an additional two-week waiting period. New York thus would grant UI benefits to strikers up to nine days sooner than New Jersey, which in 2018 became the only other state giving UI benefits to strikers (after 30 days). In other union famously labor-friendly states —including California, Illinois, Washington, Ohio, Hawaii and Pennsylvania—strikers are not eligible for any UI benefits.

Granting UI benefits after three weeks will reduce the perceived financial risk of striking, and increase the danger of work stoppages. Besides driving up UI premiums, the policy risks discouraging businesses from investing in labor-intensive (or strike-prone) facilities, such as manufacturing plants represented by the United Autoworkers. The UAW last year struck for 40 days—and UAW’s hundreds of strikers in New York would have collected benefits for almost half those days under this bill.

The UAW, to be sure, had to pay strike benefits from its own coffers to idled members. But as explained in this Wall Street Journal op-ed last year:

New York is already increasing unemployment benefits, scrapping its $450-a-week cap in favor of a formula set to rise each year until 2026, when recipients will get up to 50% of the state’s average weekly wage, which is currently about $1,401.

All this would save unions a big chunk of money. Many unions provide members with strike benefits to make up for lost wages, and the costs can be high. During 2016, which saw the union mount a six-week strike against Verizon, the Communications Workers of America paid members $28 million from its $400 million dedicated strike fund. U.S. labor unions have paid out more than $149 million in strike benefits in just the past three years, federal records show.

Letting strikers collect unemployment benefits would relieve unions of much of those costs, freeing money up for other purposes—such as campaign contributions.

Rolling the dice

The move, apparently pushed by Western New York labor unions, is likely to face federal litigation by employers, whose premiums fund the UI system.

Private-sector labor matters are generally the province of the federal government, and the U.S. Supreme Court in 1979 turned back a challenge to New York’s practice by the New York Telephone Company. But Justice Lewis Powell was joined by two other members of the court in his dissent, warning:

The Court’s decision substantially alters, in the State of New York, the balance of advantage between management and labor prescribed by the National Labor Relations Act (NLRA). It sustains a New York law that requires the employer, after a specified time, to pay striking employees as much as 50% of their normal wages. In so holding, the Court substantially rewrites the principles of preemption that have been developed to protect the free collective bargaining which is the essence of federal labor law.

Governor Cuomo in 2018 accused the Court of mounting “a direct attack on organized labor” in its decision in Janus v. AFSCME. It’s curious that the governor would believe such a potentially disruptive gift to labor as this bill will fare well with those same jurists.



- Ken Girardin is the Policy Analyst at the Empire Center for Public Policy.