While every other state used federal stimulus money to pay down its unemployment insurance debt, California spent it elsewhere — and now employers are eating the bill. California businesses will pay a 5.2% payroll tax, nearly nine times the rate in debt-free states, according to the California Business Roundtable.
Said State Senate Minority Leader Brian Jones: "Businesses that survived shutdowns, kept employees on payroll, and held their communities together will pay for Gavin Newsom's failures." California's Employment Development Department also paid out an estimated $20 billion in fraudulent unemployment claims during the pandemic — money gone, debt real, nobody held accountable.
Small businesses — 99.8% of all California businesses, supporting 7.6 million jobs — are first in line for the hit. Rob Lapsley of the California Business Roundtable warned the per-employee penalty could eventually top $400 if the debt isn't resolved. The tab got run up in the boardroom of state government. Main Street is being handed the check.