Extending unemployment insurance to striking workers would cost little and encourage fair negotiations

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This piece was originally published by the Economic Policy Institute's Working Economics Blog. The Power at Work Blog has republished it with permission.

Unions and collective action have long served as a vehicle for ensuring prosperity for working families and creating a more equal economy. Despite these critical functions, workers engaged in collective action, like strikes, have historically been barred from accessing safety net programs like unemployment insurance (UI). In a welcome development, state lawmakers are beginning to rethink this convention, recognizing the dual roles of UI in stabilizing the economy and unions in securing broad-based economic growth.

A growing number of states are proposing legislation to extend unemployment insurance to striking workers

In just the past two years, lawmakers in nine states have introduced legislation aimed at granting or enhancing striking workers’ access to UI. As shown in Table 1, New York and New Jersey are currently the only two states where striking workers can apply for UI benefits following a 14-day waiting period. This month, New York legislators proposed a further reduction to seven days.  

However, not all legislative efforts have been successful. The Connecticut Senate rejected a bill that would have permitted striking workers to access UI after 14 days, while California Governor Gavin Newsom vetoed a similar bill that passed in the state legislature. Presently, Massachusetts and Pennsylvania legislators are considering laws with 30-day waiting periods, Illinois and Ohio are considering bills with 14-day waiting periods, and Washington is considering a bill with a seven-day waiting period.

TABLE 1

Collective action—such as going on strike—is one of the most effective means to counter the inherent power imbalance between workers and employers. But the decision to strike is fraught with risk. U.S. labor law offers limited protections to striking workers and excludes many occupations from the right to strike at all. When workers do strike, their paychecks stop and employers can cut benefits—including health coverage for their entire families. In some cases, striking workers can be permanently replaced and lose their job altogether. As such, the decision to walk off the job is typically a measure of last resort, exercised only after workers have exhausted all other avenues of negotiation.

Extending UI to striking workers is good economics and consistent with the program’s goals

The U.S. unemployment insurance system was established following the Great Depression, amid a period of widespread joblessness. It is intended to offer a financial lifeline to jobless workers, supporting them through times of economic turmoil, or until they find work that provides adequate pay and aligns with their skills and circumstances. In this way, a strong UI system provides workers enough cushion to navigate hardships and find the right job, not just the first job available.

UI is also a critical support for macroeconomic health. UI dollars help keep local economies running during periods of widespread unemployment and economic turmoil. And by allowing workers to find the jobs best suited for their skills, it helps maximize the long-run productivity of the workforce.

Making striking workers eligible for UI is, therefore, both good economics and consistent with the program’s mandate. It would mitigate some of the immediate economic risk to workers and their families, keep dollars flowing to communities where a strike is taking place, and ensure striking workers can negotiate a fair contract with their employer.

Some might be concerned that workers would be more inclined to strike if they could rely on unemployment insurance. This fear is unfounded. First, there is no U.S. state where workers can afford basic necessities with current UI benefit levels (a fact that speaks to the need for long-overdue reforms to the UI system). But even with a more robust unemployment insurance system, allowing striking workers to collect benefits might actually lead to fewer strikes. If employers knew that workers could collect UI when involved in prolonged labor disputes, it would incentivize more earnest negotiations. It would help prevent scenarios where employers use their typically much larger economic resources to outlast workers while either refusing to bargain in good faith or presenting a “final offer” they know workers are likely to reject, a strategy that currently undermines the effectiveness of collective bargaining. Making UI available to striking workers is one step lawmakers can take to help level the playing field and ensure a fairer negotiation process.

Extending UI to striking workers would provide meaningful benefits with little-to-no impact on state UI systems

In several states, proposals to extend unemployment insurance to striking workers have faced opposition, primarily over concerns about the potential financial burden on state UI funds. However, analysis of strike and UI claims data shows there is no basis for such concerns. Table 2 compares strike participants with UI claimants from January 2022 to November 2023. In a typical month, the average number of striking workers eligible for UI under proposed legislation is significantly lower than the number of workers who file UI claims caused by typical turnover in the labor market. When comparing with the average monthly ongoing UI claims—a more reliable measure of approved and paid claims—striking workers would comprise only between 0% and 1.2% of all monthly claims in each state.

But even this is an overestimate, because not everyone eligible for UI applies for benefits. Historically, unemployment insurance has been underutilized, and this problem has only worsened in recent years. One study on disparities in UI recipiency revealed that union members and individuals in states with historically higher recipiency rates tended to be better informed about UI eligibility, and thus were more likely to apply if they lost their job. Yet despite the tendency to be better informed, only 55% of unemployed union members who were eligible for UI actually filed for benefits compared with 38% of non-union members. Thus, it would be wrong to assume that all eligible striking workers would utilize UI. 

TABLE 2

Further, lawmakers should consider shortening the waiting periods required for striking workers to access UI. Figure A shows that the vast majority of strikes are short-lived, with 86% of strikes ending within 14 days and 92% ending within 30 days, according to data from the Cornell ILR School. This timeframe is critical because it often falls before the eligibility waiting period for UI benefits in many proposed state bills. This trend suggests the likelihood of striking workers meeting the criteria to file for UI is relatively low, especially in states with lengthy waiting periods. And while fewer workers accessing UI means smaller costs to state and employer UI funds, it also means many workers and their families might not be able to access this valuable lifeline when they need it most.

FIGURE A

Table 3 presents a detailed cost analysis of proposed legislative changes for striking workers’ access to unemployment insurance, finding that the financial impact of extending UI to striking workers is negligible in the broader context of state UI expenditures. I consider four scenarios, each based on different assumptions.

First, to estimate the weekly cost of UI for striking workers, I calculate the product of the number of potentially eligible striking workers in each state, the typical state UI recipiency rate, and the average weekly UI benefit. Then, I factor in the average duration of strikes that meet or exceed the proposed eligibility waiting period, assuming this represents the average strike length.

Next, based on research suggesting union members are more likely to apply for UI, I hypothesize a 20-percentage-point higher application rate among unionized workers compared with their non-union counterparts. I then estimate an unlikely scenario where 100% of eligible striking workers apply for and receive UI benefits.

Finally, I consider a scenario where 100% of eligible striking workers apply for UI and strikes last an additional four weeks beyond the average. In each scenario, the projected monthly UI payments to striking workers are minuscule compared with the average monthly benefits paid to workers across each state.

TABLE 3

State lawmakers can bolster collective action by extending UI to striking workers

In the past few years, the importance of collective bargaining has commanded the national spotlight as workers seek to improve working conditions and reverse decades of stagnating wages and growing income inequality. After threatening a nationwide strike, UPS workers secured heat safety measures like air conditioning in delivery vehicles, additional paid holidays, limitations on workplace surveillance, and more. In October 2023, United Auto Workers (UAW) ended their 46-day strike after securing 25% wage increases, improved benefits, union coverage expanded to non-union EV plants, and the right to strike over plant closures. During the initial waves of COVID-19, workers in various industries—from meat processing plants (Georgia, Nebraska, North Carolina) to retail giants like Amazon—used strikes to secure hazard pay and improved safety measures.

With the role of unions in promoting workers’ rights and economic equality becoming increasingly salient, it is no surprise to see growing numbers of union election petitions and a renewed surge in strike activity. However, under existing weak and outdated labor laws, workers attempting to unionize or negotiate a fair contract still face significant power imbalances and obstacles. Expanding unemployment insurance to striking workers can help rebalance this equation. In fact, a 2020 survey revealed that workers who had high confidence in their ability to access UI felt more empowered to join or form unions and were less fearful to engage in collective action to address health and safety concerns.

Thus, expanding UI to striking workers could provide them with the critical leverage they need to improve their working conditions. Lawmakers should seize this opportunity to encourage fairer negotiations between employers and employees, while ensuring workers can act collectively when needed.

The author thanks Johnnie Kallas and the Cornell ILR School for sharing data that comprise the Labor Action Tracker.

This post is a part of the Power at Work Blog's "Partners in Power" series, which features articles republished in partnership with other labor publications. Click here to read more Partners in Power pieces on the Power At Work Blog.

APPENDIX TABLE A

APPENDIX TABLE B

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