State Can Afford Better Jobless Benefits

Gov. George Deukmejian’s veto last week of an increase in benefits for the unemployed provided another significant explanation of why California’s business and agricultural interests are giving him millions of dollars for his campaign for reelection against Los Angeles Mayor Tom Bradley.

The California Chamber of Commerce and other business groups, along with agribusiness, asked for the veto. Deukmejian unhesitatingly agreed, for the second year in a row.

The governor said he will not approve any benefit increase for the unemployed until the Legislature accepts proposals made by business to offset the cost of the increase by tightening eligibility rules in order to keep down the amount that employers pay to finance jobless benefits

The idea is that if enough unemployed are disqualified from receiving benefits under stricter eligibility rules, then those still qualified can get a raise.

This means, in effect, that the governor and his allies want some of the jobless to pay, by losing their benefits, for any increase given to others. If the jobless don’t pay for the hike, then employers would have to.

Not only has Deukmejian consistently backed the business community with actions like his two vetoes of legislative action to boost jobless benefits, but he is strongly opposing the reconfirmation by the voters of state Supreme Court Chief Justice Rose Elizabeth Bird and two other justices who, in case after case, have ruled against the governor’s business allies. His own appointees are not likely to be so pro-worker.

Thus, it isn’t because of the governor’s charisma that business interests have given him $6.2 million so far in this campaign, compared to $1.8 million for Bradley.

Growers are also enthusiastically working for his reelection. Four years ago, agribusiness gave Deukmejian $281,395; so far this year, the industry has given him $668,000--small wonder, since his appointees have made the state’s farm labor agency clearly pro-grower.

And growers, like business interests, applauded his veto of jobless benefit increases since they want him to hold out until the Legislature takes benefits away from about 75,000 workers who are employed mostly part time and seasonally in agriculture, construction, canning, hotels and restaurants.

The governor argued that increasing maximum jobless benefits to $186 a week from the present $166 must be accompanied by “reforms” in the requirements that workers must meet to be eligible to get the benefits.

Employers and Deukmejian argue that even though less than half of California’s 860,000 unemployed draw any jobless benefits, too many receive benefits who should not be getting them because they are not “attached closely enough” to the work force.

Now, to be eligible for benefits, workers must earn $1,200 anytime during a 12-month period, be looking for work, be ready to accept a job and meet certain other criteria.

One of several employer proposals to tighten eligibility rules would require workers to be employed in at least parts of two out of four quarters and earn a minimum of $1,700.

Increasing benefits without tightening eligibility criteria would mean that employers would have to pay about $70 million a year more to the state’s unemployment insurance fund, the governor said in his veto message.

But Deukmejian did not point out that the fund now has a huge reserve--about $3.5 billion--and that it is increasing by $56 million this year and a predicted $138 million in 1987.

Nor did he indicate that employers are now paying the lowest jobless tax possible under the law.

In other words, the anticipated $70-million increase in jobless benefit costs would barely make a dent in the reserve. Theoretically, it would take between 50 and 75 years to exhaust the reserve even with the proposed benefit increase, with no increase in employer costs.

But if the fund does go down because of a jump in the unemployment rate, the system provides that employer payments automatically move up a notch. Barring an unexpected, major jump in unemployment, though, the increase would still leave them close to the lowest possible rate they can pay under the law.

The governor also failed to mention that under the new federal tax law, jobless benefits will be taxable income, thus reducing the amount that unemployed workers will actually receive.

Nor did Deukmejian note that California ranks behind 33 other states in maximum weekly benefits. And only two states pay jobless benefits that amount to a smaller percentage of the average weekly wage than California, which has an average of $406.

The proportion of the nation’s jobless who are eligible to draw benefits is close to an all-time low, partly because of rules imposed by the Reagan Administration and partly because of the states’ increasingly strict eligibility rules.

The governor’s veto of a jobless benefit hike may be understandable in view of his agreement with business interests and his political ties with them.

But it was unfortunate for the unemployed and unnecessary, in view of the size of the unemployment insurance fund reserve, the relatively small cost of an increase and the fact that the unemployed have been given no increase for four years.

Winery Workers’ Woes

Nearly 2,200 Northern California winery workers probably had no choice but to return to their jobs on Monday after admitting that they had been badly defeated by nine companies in a bitter seven-week strike.

The industry’s “victory” may not be as complete as it seems if the workers’ anger over their defeat causes any significant reduction in productivity. But each new defeat of a union encourages more companies, even prosperous ones, to demand contract concessions from their workers.

The wineries forced the workers to take a cut of $1 an hour in wages and benefits by issuing a believable threat to permanently fire everyone who stayed on strike.

Two weeks ago, angry strikers voted overwhelmingly to reject the companies’ demands. One worker commented bitterly that “when we accept an offer like that, then they (management) really think you’re a joke.”

Union leaders said the industry certainly had not proven any need for a cut in wages and benefits, and apparently the wineries did not even make a serious effort to show such a need.

Nevertheless, in a second vote last week on the same management proposal to cut wages and benefits, the workers approved it by 66% after the industry issued its ultimatum: work or be permanently fired.

There seemed to be no alternative for the strikers. If they had continued the strike, in all probability they would have lost their jobs. The industry may be more prosperous when the new contract expires in three years, and management may be less determined then to continue its contract-slashing spree, especially if the workers can regain their militancy.

But this time it was a humiliating defeat for the union. Not only did the workers accept the same contract they rejected two weeks ago, but industry officials seemed to be mocking at times.

For instance, management said the Winery Workers Union threat to boycott was so frightening to the companies--because it meant “all-out war”--that they had to counter with the ultimatum to fire strikers.

The idea that management was genuinely frightened by the boycott threat is dubious since a lengthy boycott of E. & J. Gallo Winery by Cesar Chavez’s United Farm Workers apparently had no serious effect on Gallo, according to a spokesman for the world’s largest winery. Fortune magazine recently estimated that Gallo earns at least $50 million a year on sales of about $1 billion.

Productivity usually drops in companies whose workers have been infuriated by management tactics. Perhaps management is prepared for a possible worker rebellion in the wineries, but if it is a serious one, the $1-an-hour saving in payroll costs may not be enough to compensate for losses in productivity. As of now, though, the wineries don’t seem worried.