Skip to content
Fact Sheet

California Should Increase Unemployment Benefits to Help Workers Meet Basic Needs

January 2024 | By Alissa Anderson and Hannah Orbach-Mandel

A young Muslim mother and daughter walk the produce aisles of the grocery store together shopping for groceries. They are both dressed casually and the mother is wearing a Hijab. The mother is pushing a shopping cart with her daughter in it and browsing the aisles.

key takeaway

California’s unemployment benefits fall short, leaving many struggling to make ends meet when they lose work. State policymakers can raise unemployment benefits, ensuring this crucial support system adequately sustains Californians during job loss.

Unemployment benefits provide a critical safety net for many workers who lose their jobs, helping them to support their families while they seek to reenter the workforce. However, state unemployment benefits have not been raised in two decades and currently don’t provide enough money for Californians – particularly those with low incomes – to cover the cost of living. This points to the urgent need for California to increase state unemployment benefits so that workers can make ends meet when they lose work.

California’s unemployment benefits only replace up to half of a worker’s lost earnings. But many workers struggle to pay for food and rent even while working full-time. Covering the costs of living on half of their earnings is impossible. For the majority of California renters with low incomes who spend at least half of their income on rent, their entire unemployment benefit would go to rent if they don’t have other income sources. Or it might not even cover the full cost of rent, leaving them in debt, at risk of eviction, and with nothing left over to pay for other basic needs. For example, a worker who loses a full-time minimum wage job (at $16.90-per-hour in Los Angeles County) receives just $1,465 in monthly unemployment benefits, which falls $69 short of covering rent for a studio in Los Angeles.

Workers of color, including American Indian, Black, Latinx, and Pacific Islander Californians – and particularly women – are especially at risk of being unable to support their families while out of work because many have been segregated into low-paying jobs where unemployment benefits are too low to cover basic living costs. Insufficient benefits pose a particularly significant threat to the economic security of Black Californians, who consistently face twice the unemployment rate of white workers due to hiring discrimination and other barriers to work created through centuries of structural racism.

Losing a job would be less devastating if Californians could count on getting unemployment benefits that allow them to cover the costs of rent, food, and other basic needs while they search for work. State lawmakers should increase state unemployment benefits, especially for low-paid workers, and make sure that businesses uphold their responsibility to adequately fund this critical safety net for their workforce.

Poverty & Inequality

You may also be interested in the following resources:

Stay in the know.

Join our email list!

key takeaway

Despite record profits, corporations pay a tiny fraction of their California expenses in taxes — just 0.11% on average. Modest corporate tax increases could generate substantial revenue to boost income for families in poverty, fund crucial public services, and address economic inequality, especially for Californians of color.

State tax revenues make possible the public services and infrastructure that Californians rely on, like education, roads and transit, and the social safety net to help families and individuals make ends meet during times of financial instability. Corporations doing business in California benefit from the state’s resources and investments and should be expected to fairly contribute to state revenues.

Corporations Underpaying Their Fair Share

Meanwhile, corporations have been paying around half of what they did a generation ago in state taxes as a share of their California income — less than 5% in 2019 compared to 9.5% in the early 1980s — due in part to state tax rate reductions and the creation and growth of corporate tax breaks over the years. This is despite the fact that pre-tax corporate profits have been near record highs (as are after-tax profits).

In addition, the taxes these corporations pay to the state on their California profits are an incredibly small fraction of their expenses — just 0.11% on average from 2017 to 2019, according to a Budget Center analysis of Franchise Tax Board data.1Business expenses are defined in this analysis as the total deductions reported to the Franchise Tax Board for corporations filing taxes in California. Data for tax years 2020 and 2021 are excluded from this analysis because a pandemic-era temporary policy was in place for these years that limited the ability of corporations to fully utilize tax credits and to offset current-year income with prior-year losses. Therefore, corporate tax collections were higher in these years than in normal years. In other words, just over one cent of every $10 of what these businesses spent went to California corporate taxes.

Even if state leaders increased corporate taxes to protect and strengthen public services — by raising tax rates on the most profitable corporations and/or limiting corporate tax breaks — these taxes would still represent a small fraction of total business expenses. For example, if corporations had contributed $2.5 billion more in taxes each year, their California corporate taxes would have made up 0.13% of total business expenses. If they had contributed $5 billion more, these taxes would have made up 0.16% of their expenses.

To put this in perspective, $2.5 billion in additional revenue could boost the incomes of families by more than $2,000 for every child living in poverty in the state, and $5 billion could provide more than $4,000 per impoverished child. However, it would not substantially increase the costs of doing business for profitable corporations and would be unlikely to drive companies’ decisions about how much business to do in California. This is especially true considering that corporations’ tax obligations to the state are based on how much of their sales are made in California, and California provides a considerable customer base.

Substantial Benefits for Struggling Californians

While a tax increase of either size would be manageable for wealthy corporations, the resulting revenue could be very meaningful for Californians struggling with the basic costs of living, including housing, food, child care, and health expenses. Many of these Californians have been locked out of economic security in large part due to the low wages, insufficient benefits, and few advancement opportunities provided by some of these very wealthy corporations. Californians of color have been particularly excluded from economic opportunities due to structural racism and discrimination in employment and other arenas.

Corporations Can Afford to Contribute More

Highly profitable businesses in California benefit from having healthy, well-educated workers who can afford to live near their jobs and have the necessary care and education for their children while they work. These corporations can afford to pay a small increase in state corporate taxes to support caring for and educating California’s children and youth, keeping the state’s residents healthy and housed, and ensuring they don’t fall through the cracks when faced with a crisis.

Taxes & Revenue
  • 1
    Business expenses are defined in this analysis as the total deductions reported to the Franchise Tax Board for corporations filing taxes in California. Data for tax years 2020 and 2021 are excluded from this analysis because a pandemic-era temporary policy was in place for these years that limited the ability of corporations to fully utilize tax credits and to offset current-year income with prior-year losses. Therefore, corporate tax collections were higher in these years than in normal years.

You may also be interested in the following resources:

Stay in the know.

Join our email list!

key takeaway

California businesses pay taxes on the smallest share of wages in the United States, leading to insufficient funds for unemployment benefits.

Unemployment benefits provide a critical safety net for many workers who lose their jobs, helping them to support their families while they search for new employment. Millions of Californians turned to unemployment benefits after losing work due to the economic effects of the COVID-19 pandemic. However, policymakers previously failed to require businesses to pay the true costs of unemployment benefits for their workers, leading California to borrow billions of dollars from the federal government to pay for benefits – a repeat of what happened during the Great Recession.

California is one of just four states that allow employers to pay unemployment insurance taxes on the smallest wage base permitted by federal law, despite the lessons of the last recession and the need for businesses to contribute more to support the workforce.

State unemployment benefits are financed through payroll taxes paid by employers, which generate revenues that are deposited into the state’s unemployment insurance trust fund. But California businesses don’t pay these taxes on their entire payroll — they pay based only on the first $7,000 of each employee’s annual pay. This low base limits the amount of revenue the state can generate for unemployment benefits. For example, a 4% payroll tax would raise just $280 per worker in California, compared to $2,500 per worker in Washington state, where the taxable wage base is $62,500. Even with the same payroll tax rate, Washington would generate almost nine times more revenue than California for each employee making at least $62,500.

California’s taxable wage base has been frozen at $7,000 since 1983, failing to increase with rising wages. Consequently, the state’s base amounts to just 8% of the average annual earnings for a year-round worker – the smallest share in the US. In contrast, the taxable wage bases in 13 states are at least half of average annual earnings. Most of these states paid for unemployment benefits during the pandemic without federal loans.

California’s leaders must ensure that businesses uphold their responsibility to pay the true cost of unemployment benefits for their workers by increasing the taxable wage base for employer payroll taxes. This would not only prevent future debt, but also make it possible for California to increase unemployment benefits so that workers can meet rising costs of living as they seek to reenter the workforce and provide for their families.

Poverty & Inequality

You may also be interested in the following resources:

Stay in the know.

Join our email list!

key takeaway

Young children in California faced a significant increase in poverty between 2021 and 2022, reversing the historic drop in child poverty from 2019-2021.

All young children go through critical developmental stages impacting their lifelong health and well-being. However, young children in poverty face greater barriers to receiving the nutrition, learning materials, safe housing, and other resources integral for successful development. Moreover, Black and Latinx families in California have been more likely to struggle to meet basic needs. This highlights racial inequities in young children’s access to necessities.1Limitations with sample size prevented the analysis in this publication from disaggregating by racial/ethnic identity. Lawmakers should invest in better publicly accessible data so that analyses (such as this one) can reliably disaggregate data by racial/ethnic identity to better understand inequities. Understanding trends in poverty for young children in California is therefore important for assessing the strength of federal and state anti-poverty policies and shaping policies that will help California’s youngest children to thrive.

How has poverty among young children changed over recent years?

Using the supplemental poverty measure, the following chart shows poverty levels from 2019 to 2022 for Californians across key age groups:

  • Ages 0-12: Includes children who are eligible for early learning and care programs through the California Department of Social Services.
  • Ages 0-5: Includes children who are eligible for early learning and care programs through the California Department of Education, Head Start, and Early Head Start. 
  • Ages 0-3: The ages before a child is eligible to enroll in transitional kindergarten. 
  • All Californians: Reflects Californians of any age, for the purposes of comparing poverty among young children.

Poverty trends for all Californians show a decrease in poverty from 2019 to 2021 and an increase from 2021 to 2022 as pandemic-era policies ended. Focusing specifically on young children, the chart shows that poverty among young children increased at a higher rate, as compared with all Californians. Specifically, between 2021 and 2022, poverty rose by 49% for all Californians, but it rose by 143% for children 0-3, 166% for children 0-5, and 121% for children 0-12. This uptick in poverty marks a reversal of the historic drop in child poverty from 2019-2021, reflecting how federal policy decisions to end key pandemic-era supports, such as the enhanced child tax credit, have negatively impacted California’s youngest children.

What can policymakers do to lift young children out of poverty?

The dramatic and troubling trends in poverty for young children hold key implications for California and federal policymakers. While recent California policy reforms targeting young children with low incomes, such as family fee reform, will support their well-being and health, more is needed.

Young children in California deserve to live in a state that affords them the opportunity to grow and thrive without experiencing poverty. Federal and state policymakers have several tools to draw on to ensure that poverty for young children, particularly young children of color, decreases.

Poverty & Inequality
  • 1
    Limitations with sample size prevented the analysis in this publication from disaggregating by racial/ethnic identity. Lawmakers should invest in better publicly accessible data so that analyses (such as this one) can reliably disaggregate data by racial/ethnic identity to better understand inequities.

You may also be interested in the following resources:

Stay in the know.

Join our email list!

Read this publication in English.

El paquete del presupuesto de 2023-24 incluye varios avances de políticas clave para el aprendizaje y el cuidado infantil. Estos avances ayudarán a expandir el acceso a los programas de aprendizaje y cuidado infantil en California y aumentará temporariamente las tasas de pago de los proveedores de estos servicios. La reforma de tarifas familiares es uno de estos pasos significativos. Específicamente, el presupuesto de 2023-24 incluye $78.4 millones de dólares para la reforma permanente de las tarifas familiares a partir del 1 de octubre de 2023. De acuerdoa la nueva estructura de tarifas familiares: 

  • Las familias con ingresos inferiores al 75% del ingreso medio estatal ya no pagarán tarifa alguna por el cuidado infantil subsidiado;
  • Las familias con ingresos equivalentes al 75% del ingreso promedio estatal o más pagarán tarifas máximas equivalentes al 1% de sus ingresos mensuales; y
  • Se eliminarán las tarifas familiares que se deben de antes del 1 de octubre de 2023. 1Los costos de eliminar el pago de las tarifas familiares atrasados se abordaron en dos proyectos de ley, el proyecto de ley de la asamblea legislativa 100 y el proyecto de ley de la asamblea legislativa 110, y por lo tanto no forman parte de los fondos adjudicados por el presupuesto de 2023-24 para la reforma de tarifas familiares.

Un informe anterior copublicado con Voces de Padres hizo hincapié en el programa de tarifas propuesto por Voces de Padres y cuánto hubieran pagado las familias con el programa de tarifas aprobado antes del presupuesto estatal de 2023-24 (llamado “programa original”) y cuánto hubieran ahorrado con el programa de tarifas propuesto por Voces de Padres. Desde que se hizo ese análisis, el Departamento de Servicios Sociales de California (CDSS, por sus siglas en inglés) ha confirmado el nuevo programa de tarifas familiares para 2023-24 (llamado “programa nuevo”). Se incluyeron la mayoría de los principios propuestos por Voces de Padres en el nuevo programa, a excepción de dos diferencias clave: 1) el CDSS no eliminó las tarifas de las familias de tiempo parcial; 2) el nuevo programa no incorpora la escala de precios variable (basada en los ingresos) propuesta por Voces de Padres.  

De acuerdo con el nuevo programa, las familias que ganan entre el 75% y el 85% del ingreso promedio estatal pagarán una tarifa máxima del 1% de sus ingresos mensuales. El porcentaje exacto difiere según el tamaño de la familia. La tabla a continuación muestra qué porcentaje de los ingresos de la familia se gastaba en con el  programa original y lo compara con cuánto se gastará con el nuevo programa para las familias al 75% del ingreso promedio estatal, por tamaño de familia.

Con el nuevo programa de tarifas familiares, en algunos casos, las familias recuperarán aproximadamente el 10% de sus ingresos anuales. La gráfica a continuación muestra la cantidad de dinero que hubiera pagado en tarifas una familia de dos personas con el programa original y cuánto pagará con el nuevo programa. La tabla correspondiente muestra cuánto ahorrará una familia de dos con el nuevo programa de tarifas familiares.

Los miles de dólares ahorrados por año por muchas familias de toda California las ayudará a pagar sus necesidades básicas tales como los alimentos, el alquiler, y los servicios públicos. En vista del dramático aumento de la pobreza en toda California causada por el vencimiento de la asistencia federal temporaria promulgada para abordar los efectos económicos de la pandemia, la reforma de las tarifas familiares ofrece un cambio de política muy necesario para proporcionar a las familias, y en especial las familias de color de bajos ingresos, los recursos que necesitan para prosperar. 

Child Care & Preschool

Foto de encabezado por Allison Shelley para EDUimages.

  • 1
    Los costos de eliminar el pago de las tarifas familiares atrasados se abordaron en dos proyectos de ley, el proyecto de ley de la asamblea legislativa 100 y el proyecto de ley de la asamblea legislativa 110, y por lo tanto no forman parte de los fondos adjudicados por el presupuesto de 2023-24 para la reforma de tarifas familiares.

You may also be interested in the following resources:

Stay in the know.

Join our email list!

key takeaway

California’s 2023-24 budget includes $78.4 million for permanent family fee reform, eliminating fees for families below 75% of the state median income and capping fees at 1% for other families.

Lea esta publicación en español.

The 2023-24 enacted state budget package included several key policy advances for early learning and care. These advances will help to expand access to early learning programs in California and temporarily boost rates for providers. Family fee reform represents one of these significant steps forward. Specifically, the 2023-24 budget includes $78.4 million for permanent family fee reform beginning October 1, 2023. Under the new family fee structure: 

  • Families below 75% of the state median income (SMI) will no longer pay a fee for subsidized child care;
  • Families at or above 75% of the SMI will have fees capped at 1% of their monthly income; and
  • Family fees owed before October 1, 2023 will be waived. 1Costs for waiving past due family fees were addressed in two early action bills — Assembly Bill 100 and Assembly Bill 110 — and are therefore not a part of the 2023-24 enacted budget allocation for family fee reform.

An earlier report co-published with Parent Voices highlighted Parent Voices’ proposed fee schedule and how much families would have paid under the family fee schedule approved prior to the enacted state budget (referred to as the “original schedule”) and how much they would have saved with Parent Voices’ proposed fee schedule. Since this analysis, the California Department of Social Services (CDSS) has confirmed the new family fee schedule for 2023-24 (referred to as the “new schedule”). Most principles proposed by Parent Voices were included in the new schedule, with the exception of two key differences: 1) CDSS did not eliminate part-time family fees; 2) the new schedule does not incorporate the sliding scale (based on income) proposed by Parent Voices.  

Under the new schedule, families earning between 75% and 85% of SMI will pay no more than 1% of their monthly income in fees. The exact percentage differs slightly based on family size. The table below shows how much of a family’s income was spent on family fees under the original schedule compared to how much will be spent under the new schedule for families at 75% SMI, by household size.

With the new family fee schedule, in some cases, families will recoup nearly 10% of their annual income. The chart below shows the amount of money a two-person family would have paid in fees with the original schedule and how much they will pay with the new schedule. The corresponding table shows how much a family of two will save with the new family fee schedule.

The thousands of dollars saved annually by many families across California will support them with paying for basic needs such as food, rent, and utilities. Given the dramatic increase in poverty across California, as a result of the expiration of temporary federal aid enacted to address the economic effects of the pandemic, family fee reform is a much-needed policy change to provide families, particularly families of color with low incomes, with the resources they need to thrive. 

Child Care & Preschool

Banner photo by Allison Shelley for EDUimages.

  • 1
    Costs for waiving past due family fees were addressed in two early action bills — Assembly Bill 100 and Assembly Bill 110 — and are therefore not a part of the 2023-24 enacted budget allocation for family fee reform.

You may also be interested in the following resources:

Stay in the know.

Join our email list!

key takeaway

More than 6 in 10 households in California earning less than $35,000 had difficulty paying for basic expenses from March to mid-July of 2023.

All Californians should be able to put food on the table, keep themselves and their families safely housed, and thrive in their communities. However, high costs of living, inflation, and the end of pandemic-era supports, such as CalFresh emergency food benefits and the expanded federal Child Tax Credit, put a strain on the ability of Californians to make ends meet.

“More than 6 in 10 California households earning less than $35,000 had trouble paying for basic expenses in 2023.”

Not everyone bears these challenges equally. Californians with the lowest incomes are hit the hardest when basic costs go up. More than 6 in 10 households in California earning less than $35,000 had difficulty paying for basic expenses such as food, housing, and medical costs from March to mid-July of this year.

A bar chart showing the share of households reporting difficulty paying for basic expenses where Californians with low incomes were the most likely to struggle to pay for basic expenses from March to July of 2023.

Black, Latinx, and other Californians of color were more likely to struggle paying for basic expenses. Past racist policies and ongoing discrimination have made Californians of color more likely to have low incomes. For example, more than half (54%) of Black Californians reported facing difficulty paying for essential needs like food and housing. Additionally, LGBTQ+ individuals in the state disproportionately struggle to afford basic expenses.

A bar chart showing the share of households reporting difficulty paying for basic expenses where Black, Latinx, and other Californians of color were most likely to struggle paying for basic expenses.

Many California households with children are also struggling to pay for basic expenses. This is even more pronounced in households with low incomes. Overall, almost half of all California households with children (46%) struggled to pay for basic expenses between March and mid-July, compared to 35% of households without children. Among households with incomes under $35,000, over half (59%) of those without kids struggled paying for basic necessities. And while that share is very high, it’s even higher for households with low incomes and children — 71%, or 12 percentage points higher.

A bar chart showing the share of households reporting difficulty paying for basic expenses where households with children, especially those with low incomes, were more likely to struggle paying for basic expenses.

Millions of Californians are struggling to make ends meet every day. This is especially true for those with low incomes, Black, Latinx, and other Californians of color, and households with children. Pandemic-era supports that helped families and individuals pay for basic needs in recent years have expired. However, inflation and the high cost of living relative to workers’ earnings continue to strain families’ budgets. This points to the urgent need for policymakers to further invest in resources to ensure that all Californians can thrive. This includes affordable housing, affordable health care, and a strong safety net. In a state as wealthy as California, policymakers have the tools to build communities where all can share in our state’s prosperity.

Poverty & Inequality

You may also be interested in the following resources:

Stay in the know.

Join our email list!

Key Takeaway

Over 50% of eligible students do not participate in SNAP, and the complexity of the rules is a major contributor.

All Californians should have the opportunity to pursue higher education without sacrificing their basic needs. However, food insecurity among college students is an ongoing problem. For example, a 2019 survey of California community college students revealed that over half had trouble paying for their meals.

Over 50% of Eligible College Students Don’t Participate in SNAP

While there are safety net programs in place, such as the Supplemental Nutrition Assistance Program (SNAP) — or CalFresh, as it is known in California — to help people put food on the table, people who are enrolled in college at least half-time face significantly more complex rules to qualify.

A recent government report estimated that over 50% of eligible students did not participate in SNAP. The report pointed to the complexity of student-specific eligibility rules as a likely contributor to low enrollment rates. To qualify, students enrolled at least half-time must meet the regular income eligibility criteria and also meet one of eight additional requirements.1Under SNAP/CalFresh, people are considered students if they are enrolled in an institution of higher education at least half-time, are between the ages of 18 and 49, and are deemed mentally and physically fit. Students who are enrolled less than half-time are not classified as “students” under CalFresh. These students only have to meet the regular income eligibility criteria to receive benefits. Four of these requirements are geared toward parents or caretakers. The other four require that students:

  • Be in their final semester.
  • Work at least 20 hours a week.
  • Participate in work study, or enroll in an employment training program.

If they do not meet these requirements, they cannot receive CalFresh regardless of their income or needs.

A stacked bar chart showing the community college enrollment by age in the fall of 2022 where nearly three-quarters of students enrolled at least half-time are under the age of 25.

CalFresh Requirements Need to Be Simplified for College Students

Given the increasingly high costs of attending college, students with low incomes face a significant disadvantage and a higher likelihood of experiencing food insecurity. In fact, within the California Community Colleges (CCC) system, which serves high percentages of people of color and people with low incomes, over half of all students are enrolled at least half-time. Therefore, these students would need to meet the burdensome requirements to access CalFresh. Nearly three-quarters of these students are under the age of 25, which makes them less likely to meet requirements geared toward parents and families. This suggests that most students in need of food assistance would have to take on jobs on top of their heavy course loads. This could significantly impact their ability to meet their educational goals.

Under federal COVID-19 relief policies, additional exemption criteria were granted to allow more students to receive CalFresh. The expansion allowed students eligible for federal or state work study, regardless of whether they participated, or those with $0 in expected family contributions to qualify for CalFresh if they met the regular income requirements. As a result, student applications for CalFresh more than quadrupled in 2021.2Aaron Kunst, Andrew Cheyne, Becky Silva, and Ruben E. Canedo, CalFresh for College Students: Equitable and Just Access (California Association of Food Banks, March 2022), 4, https://www.cafoodbanks.org/wp-content/uploads/2022/03/College-CalFresh-WhitePaper-final-March2022.pdf. However, these federal exemptions ended in June 2023. Students who qualified for CalFresh via these exemptions will no longer be eligible at their renewal date.

Policymakers Can Ensure College Students Have Better Access to Food Assistance

College students should have the same opportunity as any other Californian to access CalFresh. Policymakers have a responsibility to support college students in meeting their educational goals to ensure a skilled workforce in California.

Federal policymakers can help reduce student hunger by:

  • Reinstating COVID-19 expansions to SNAP.
  • Completely removing the additional red tape that students face to put students on equal footing with everyone else.

In the meantime, state policymakers can continue to support students by investing in administrative support and ensuring that the program is accessible to all eligible students.

Support for this report was provided by the Hilton Foundation.

Safety Net
  • 1
    Under SNAP/CalFresh, people are considered students if they are enrolled in an institution of higher education at least half-time, are between the ages of 18 and 49, and are deemed mentally and physically fit. Students who are enrolled less than half-time are not classified as “students” under CalFresh. These students only have to meet the regular income eligibility criteria to receive benefits.
  • 2
    Aaron Kunst, Andrew Cheyne, Becky Silva, and Ruben E. Canedo, CalFresh for College Students: Equitable and Just Access (California Association of Food Banks, March 2022), 4, https://www.cafoodbanks.org/wp-content/uploads/2022/03/College-CalFresh-WhitePaper-final-March2022.pdf.

You may also be interested in the following resources:

Stay in the know.

Join our email list!