New York’s Subsidy for Striking Unions

by Ken Girardin |  | Wall Street Journal

Unemployment insurance programs are meant to help people who become jobless through no fault of their own. Nearly every state has disallowed benefits to employees who are on strike. Even New York, the most union-friendly state, pays unemployment benefits to strikers only in rare instances when they have been out of work for at least eight weeks.

That could soon change. In New Jersey, Gov. Phil Murphy last August signed a bill making union strikers eligible for unemployment benefits after only 30 days. The measure was largely symbolic, as more than 80% of major strikes last year ended before hitting the one-month mark.

But on May 1, New York’s state Senate voted to let strikers get benefits one week after walking off the job—essentially putting them on equal footing with those who are laid off.

If Gov. Andrew Cuomo signs this bill, he’ll effectively be using New York’s unemployment-insurance program to subsidize union strikes, upending the balance of power between workers and management.

Employers, who fund the unemployment-insurance program through premiums would pick up the cost, which is only likely to go up. In New York City alone, hospital nurses, school bus drivers and preschool teachers have all teetered on the brink of striking in the past two months, and subsidizing an activity tends to produce more of it.

And that subsidy itself would get bigger in the next few years. 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.

For now, the effort to tap unemployment insurance as a union strike fund is confined to New York. But the worst ideas hatched in Albany rarely remain there.

© 2019 Wall Street Journal

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