Skip to content
Data Hit

Paid Family Leave and State Disability Insurance Benefits Are Insufficient

California Benefits Are Lower Than Most Other Similar State Programs

February 2022 | By Kristin Schumacher

Download Full Data Hit

Over the span of a career, most adults need time away from work to care for a new child, a family member, or for their own health. The majority of California workers contribute to the state’s paid family leave and state disability insurance programs and are eligible for paid time off as care needs arise.

Policymakers temporarily increased payment rates for these programs in 2018 from 55% of earnings to 70% for workers with very low pay and about 60% of earnings for all other workers, including full-time workers paid the minimum wage. Yet, California’s benefits still fall short of those offered by most other similar state programs.

State policymakers must act or payment rates will revert to just 55% of earnings at the end of 2022. Low payment rates block access to paid time off — especially for workers with low wages who are disproportionately women, Black, and Latinx. Californians should never have to choose between paying the bills and caring for themselves or their family.

Support for this report was provided by the Conrad N. Hilton Foundation.

Poverty & Inequality

You may also be interested in the following resources:

Stay in the know.

Join our email list!

Introduction

The COVID-19 pandemic and economic crisis amplified long-standing racial, gender, and income inequities in California and the US and highlighted the critical need for bold investments to strengthen the safety net so that all people can meet basic needs, crisis or not. 

In particular, the pandemic accelerated a growing movement around Guaranteed Income – the idea that government should provide people with unconditional cash support to ensure that everyone has a minimum level of income to meet basic needs. This once radical concept went mainstream during the pandemic as the federal response to the crisis centered on cash-based policies, including recovery rebates, new federal unemployment benefits, and a significantly expanded federal Child Tax Credit. The success of these policies, together with emerging success stories from local Guaranteed Income pilots that started before the pandemic, helped build energy around providing unconditional cash as a permanent public policy.

Understanding what Guaranteed Income is, what values it promotes, and what it means for our existing safety net is important as policymakers and advocates look to guide the state in recovering from the pandemic and building an equitable California for its people and communities. This is the first of a two-part Q&A series on Guaranteed Income and California’s safety net; part two will focus on key questions about implementation of Guaranteed Income.

Jump to question

What is Guaranteed Income and how does it compare to Universal Basic Income and to other safety net supports?

Guaranteed Income (sometimes called basic income or guaranteed basic income) is an unconditional, often recurring cash payment provided by the government intended to help build an income floor below which no one can fall. Unlike Universal Basic Income (or UBI), which is envisioned to reach all people – even those with significant income or wealth – Guaranteed Income is intended to target communities most in need of cash. In this respect, Guaranteed Income is similar to other need-based cash supports and safety net programs, which aim to help people meet basic needs. 

Proponents of Guaranteed Income envision it as more accessible to people than existing safety net programs because it comes without the policy and administrative strings often attached to other supports, such as work requirements – though as discussed below, there are also opportunities within existing safety net programs to remove barriers and improve access. Guaranteed Income is also often envisioned to reach Californians who are blocked from existing supports due to discriminatory federal and state policies, such as people who are undocumented or people who were formerly incarcerated.

What are the origins of Guaranteed Income in the US? 

The modern concept of a guaranteed income in the US can be traced to racial and gender justice movements of the 1960s. The Black Panther Party’s platform declared that government has a responsibility to guarantee everyone a job or a minimum income. Similarly, Martin Luther King, Jr. called for a job for everyone who wants to work or a guaranteed income in his final book, Where Do We Go From Here? Chaos or Community. In addition, the National Welfare Rights Organization, which was led primarily by Black mothers, fought to change racist and sexist narratives around welfare and argued that everyone should be guaranteed a decent standard of living as a right, regardless of whether they work for pay.

What are the key ideas and values behind Guaranteed Income and providing direct cash support to people?

Three key ideas included in the concept of Guaranteed Income have a strong basis in equity values that guide how a society can enable people to live and thrive in their communities. Research evidence also backs up the effectiveness of these approaches for supporting people in meeting their basic needs:

1. Recognizing that basic economic security should be guaranteed regardless of work status: All people should have access to the support they need to meet their basic needs. This core value should hold firm regardless of whether an adult has a job or not and whether a child’s parent or guardian is working for pay or not. Work requirements have a long racist history in the US, directly contributing to racial inequities in who struggles to meet basic needs. Yet many public supports in the US require that individuals or families show that they have earned income or have completed work requirements in order to be eligible for support. The share of public support that is only available to people who are working has increased in recent years, blocking access for many individuals and families at the highest risk of experiencing homelessness, hunger, and other hardships. 

Research shows that most California households with low incomes are already working anyway – they simply do not earn enough to get by because of low wages combined with unaffordable costs for housing, child care, and other necessities. Research on welfare-to-work programs also has found that work requirements were not linked to meaningful improvements in stable employment or reductions in poverty for program participants. Providing basic needs support without excluding people who are not working for pay is a more effective and more equitable policy approach.  

2. Providing unrestricted cash support: In terms of values, unrestricted cash support respects the dignity and autonomy of recipients by allowing people to choose for themselves the best way to spend their resources. Also, when support is provided as unrestricted cash, families and individuals have the flexibility to address whichever needs are most pressing. In this way, cash can be more effective and efficient than providing support in the form of in-kind benefits (like food or clothing) that may or may not address a family’s most urgent current needs. 

Studies have demonstrated that unrestricted cash support for households with low incomes is linked to better physical health, mental health, and school achievement, and increases in children’s employment and earnings in adulthood. Emerging research specifically from recent Guaranteed Income pilot projects has also shown promising results. 

3. Minimizing red tape and burdensome requirements for participants: Simplifying and streamlining access to supports is important to ensure that complicated paperwork and burdensome participation requirements do not block individuals and families from receiving the support they need. 

Research in California and nationally documents that people who are eligible for support often fall through the cracks simply because of bureaucratic processes that are difficult to navigate. In fact, burdensome administrative processes have often been intentionally deployed to block eligible people from accessing public support – particularly Black and brown people. Removing these barriers is important to make public support systems more equitable.

more in this series

See the Budget Center’s part two Q&A: Implementing Guaranteed Income Through Cash and a Strong Safety Net

Are there opportunities to improve existing safety net programs and public supports in ways that align with promising features of Guaranteed Income?

Existing public safety net programs are critical to helping millions of Californians make ends meet. Safety net programs that help people meet their needs for health care, food, housing, child care, and other basic needs provide support to more than 1 in 3 Californians every year, and research shows that California’s poverty rate (under the California Poverty Measure) would be more than one and a half times as high without these important public supports. 

There are many policy and administrative opportunities to apply key ideas from Guaranteed Income to improve these existing public supports – particularly in terms of streamlining access and removing burdensome or inequitable participation requirements. For example, in the early stages of the COVID-19 pandemic temporary changes were adopted for supports such as CalWORKs (or TANF), CalFresh (or SNAP), and Medi-Cal (or Medicaid) that reduced required paperwork and office visits and removed work requirements in order to facilitate access to needed assistance. Maintaining and building on these types of changes would make existing supports more equitable and would align with Guaranteed Income values and practices. Proactively coordinating eligibility and application processes across the systems that administer different supports would also streamline access to needed resources. Some of these changes can be made by state and local policymakers, while others would require action by federal policymakers.

Where has Guaranteed Income been tried in California and the US? 

Guaranteed Income has not yet been implemented at scale as an ongoing federal, state, or local policy, but dozens of smaller-scale pilots are underway in California and the US, typically spearheaded by mayors or other local leaders. (See maps compiled by Mayors for a Guaranteed Income and the Stanford Basic Income Lab.) Two of the most well-known recently completed pilots include the Magnolia Mother’s Trust in Jackson, Mississippi, and the Stockton Economic Empowerment Demonstration (SEED), in Stockton, California.

At the state level, California recently became the first state to provide state funds to support local Guaranteed Income pilots. In 2017, Hawaii was the first state to explore Guaranteed Income as a possible state policy through a “basic economic security working group,” and Alaska has had a Universal Basic Income-like policy in place since 1982 – the Alaska Permanent Fund, which pays annual dividends to every state resident based on state oil revenues.

What do recent changes to the federal Child Tax Credit show us about opportunities to expand unconditional cash support to families, similar to Guaranteed Income?

Recent changes to the federal Child Tax Credit show how policymakers can modify existing safety net programs to make them more like Guaranteed Income. The American Rescue Plan Act, signed into law in March 2021, made the Child Tax Credit fully available to families with the lowest incomes – without any work requirements. This change is expected to extend the credit to 27 million more children, essentially establishing a Guaranteed Income for families with children in the US, helping to ensure that all children can grow up with support to meet their basic needs, whether or not their parents or guardians are working for pay. Although this change was put into place for just one year, advocates are working to make it permanent and to ensure that the credit is permanently extended to immigrant children who were excluded during the Trump Administration, so that all families with children can count on having a guaranteed income each year to meet their basic needs.

Health & Safety Net
Poverty & Inequality

You may also be interested in the following resources:

Stay in the know.

Join our email list!

The pandemic isn’t over, even if support for California families is ending.

By

While many Californians hoped to put the pandemic behind us by now, COVID-19 is still with us. And we know COVID-19-related hardships have put immense health and economic stress on families, especially low-income households and Californians of color. Yet, Californians are losing key housing, sick leave, and economic supports that have been a lifeline. September 30th … Continued

Workers need paid time off during a pandemic to abide by public health guidelines, stop the spread of illness, and care for family members. California’s temporary COVID-19 supplemental paid sick leave – approved by the state Legislature – is an important public health tool that provides workers with up to 80 hours of paid time off to care for their health or family members’ health.1 Unfortunately, COVID-19 supplemental paid sick leave ends September 30, 2021, even though community transmission of the virus remains high in many counties across the state. Policymakers can take urgent action to renew COVID supplemental sick leave to support California workers and families, keep communities healthy and safe, and ensure local economies can continue to recover from the pandemic.

Under the state’s standard paid sick days law, many workers in California have access to just 24 hours of paid time off per year. Three days of paid time off does not provide enough time for workers to adhere to current state and federal pandemic guidelines without fear of losing wages or even their jobs. Moreover, California’s standard paid sick time does not allow enough time for working parents to take time off from work when unvaccinated children are sent home from school or child care after a COVID-19 exposure or when they are experiencing virus symptoms. COVID-19 supplemental paid sick leave has been vital for workers who become sick, need to get the vaccine, or when children have to remain home from school or child care due to pandemic-related disruptions in child care.

Overall, more than 1 in 5 adults in California lived in households with children that experienced a disruption in child care due to the pandemic (22%) this past spring and early summer. Californians of color were far more likely to experience disruptions in care, with 25% of adults of color living in households with children who were unable to attend child care due to the pandemic, as compared to 16% of white Californians. Women and Californians with low incomes were also more likely to live in households experiencing pandemic-related disruptions in child care compared to other California households with children.

Even with COVID-19 supplemental paid sick leave, 26% of adults in households with a disruption in care took unpaid time off to care for children who were unable to attend child care. Similarly, 18% of adults in households with children either left their job or were fired from their job because of a disruption in care.

Without COVID-19 supplemental paid sick leave, California will lose an important tool to promote public health and safeguard workers’ economic security. State policymakers should maintain the state’s COVID-19 supplemental paid sick leave for the duration of the pandemic, with workers’ bank of paid time off replenishing on October 1, 2021. This is especially critical for workers with low wages and part-time workers – disproportionately women and Californians of color – who are far less likely to have employer-provided leave benefits that assist with families’ health, economic, and emotional well-being. Workers must be able to stay home when they are ill, getting vaccines, or experiencing COVID-19-related disruptions in child care. After the pandemic, policymakers should require employers to provide additional paid sick days for workers – beyond 24 hours – to maintain the health of the state’s workforce and economy. Caring for Californians cannot stop now and must continue to promote public health and foster workers’ economic security.

Covid-19
Poverty & Inequality

1 COVID-19 supplemental paid sick leave is only available to workers in organizations with more than 25 employees.

You may also be interested in the following resources:

Stay in the know.

Join our email list!

Introduction

Millions of California workers turned to unemployment insurance benefits over the last 18 months after suddenly losing their jobs – a reality that can hit workers, families, and communities, pandemic or not. In trying times, everyone should have the opportunity to buy food, pay rent, and care for their families as they look for new, stable employment. State and federal unemployment insurance benefits are the lifeline that help families keep their homes and put food on the table.

But with federal unemployment benefits expiring soon, and families seeing a drop in support, California policymakers must develop a plan to finance an increase in state unemployment benefits. This will allow workers – particularly those paid low wages and struggling to find gainful employment that allows them to afford the cost of living in California – to support their families any time they lose a job, not just when the federal government steps in to help.

Understanding the role of unemployment benefits in workers’ lives, how benefits are financed, and the true costs of covering benefits is key as policymakers look to guide the state in recovering from the pandemic and building an equitable California.

Why are unemployment benefits important for Californians?

Losing a job is devastating for working Californians and their families. Suddenly losing a primary source of income and not knowing how long it will take to find new work to restore income affects the health and social well-being of families and their community. That’s why it’s important for policymakers and businesses to share responsibility in making sure that workers have a strong safety net to turn to when layoffs or a recession hit, including access to unemployment benefits that help workers pay for rent, food, and other basic needs while they search for new employment.

State unemployment benefits – supplemented with temporary federal unemployment benefits – have been helping millions of Californians pay for basic needs while they cannot work as COVID still moves through homes and communities. Without the combination of state and federal benefits, many workers would not be able to put food on the table or keep their homes. 

How much support do unemployment benefits provide Californians?

California’s unemployment benefits are a lifeline when someone suddenly loses a job, but the benefits on their own don’t provide enough money for most workers to support their families while they search for new jobs. The state’s benefits replace only about half of a worker’s lost earnings, up to a maximum of $450 per week – the equivalent of living off of $23,400 per year.

For many California workers, it’s not possible to afford the cost of living on half of their income, and economic barriers only further stack up for workers paid low wages. Workers in low-wage jobs typically have a hard time making ends meet even when working full-time and are blocked from opportunities to build savings to turn to in times of crisis. For example, the majority of California renters with low incomes who spend at least half of their income on rent would have to spend their entire unemployment benefit on rent alone if they had no other income, leaving nothing at the end of the month for food or other basic needs.

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.

How much support are unemployment benefits providing Californians during the pandemic, and what will happen on September 6 when federal unemployment support ends?

The average Californian has been getting just $319 per week from state unemployment benefits during the pandemic, which amounts to annual earnings of $16,588 – well below what’s needed to support a family no matter where they live in the state. However, recognizing that state unemployment benefits don’t provide enough money to cover basic living costs, the federal government supplemented workers’ state benefits throughout most of the pandemic with an additional $300 to $600 per week. Together, these benefits fully replaced the earnings many workers had lost, helping keep food on the table and preventing evictions for families as they endured months of unemployment. State and federal unemployment benefits also supported businesses and the economy by making sure that millions of people who had lost work could keep spending money and supporting businesses in their communities.

On Labor Day – September 6, 2021 – these additional federal unemployment benefits will expire, and Californians who remain out of work due to the pandemic – as well as those who lose work in the future – will have to get by on state unemployment benefits alone. This will make it harder – if not impossible – for many Californians to meet basic needs, particularly Black Californians, who persistently face high rates of unemployment due to hiring discrimination and other barriers to work created through centuries of structural racism.

Who pays for unemployment benefits in California?

California businesses finance unemployment benefits for their workers, and businesses play a critical role in determining how much support this vital safety net provides to Californians. Specifically, California’s unemployment benefits are financed through payroll taxes paid by employers, which generate revenues that are deposited into the state’s unemployment insurance fund. Revenues accumulate in this fund and are available to pay unemployment benefits whenever workers lose their jobs through no fault of their own. How much an employer pays into the fund each year is determined by applying a payroll tax rate based on schedules in state law to a portion of each employee’s annual pay – called the “taxable wage base.”

Each state determines its payroll tax rates and taxable wage base. In California, employers pay payroll taxes based only on the first $7,000 of each employee’s annual pay. That’s the lowest “taxable wage base” allowed under federal law, and just five states have bases this low. California’s base has been frozen at just $7,000 since 1983, and has never been increased to keep up with inflation or rising wages. Consequently, businesses currently pay payroll taxes on just 12% of the average California worker’s earnings – the smallest share in the nation. This severely limits the amount of revenue California can generate for unemployment benefits.

California’s low taxable wage base essentially amounts to a tax break for the state’s businesses. It means that for decades, California employers – particularly large, profitable corporations – haven’t been required to cover the true cost of state unemployment benefits, leading to chronic underfunding of the state’s unemployment fund. This is why California had to borrow billions of dollars from the federal government to pay for unemployment benefits during the pandemic – a repeat of what happened during the Great Recession. It also makes it virtually impossible for state policymakers to increase unemployment benefits so that they cover working families’ basic living costs.

How can state lawmakers ensure that businesses share in the responsibility for supporting their workers during layoffs?

Over the next decade, state policymakers do not need to take any action to ensure that businesses share in the responsibility for paying down the unemployment fund debt – other than avoiding a shift in responsibility for the debt to the state. Under federal law, California businesses will automatically and very gradually pay off the principal of the federal loans the state took out to pay for unemployment benefits during the pandemic through small increases in the federal payroll tax rate. (California will have to pay the interest on these loans.) Since the debt resulted from decades of businesses not paying the true costs of unemployment benefits before the pandemic, businesses will now be required to pay more in the years to come to make up for insufficient contributions.

Longer-term, California’s leaders should permanently modernize the state’s unemployment insurance system to 1) ensure that businesses pay the true costs of benefits for their workers – avoiding debt – and 2) make it possible to increase benefits so that workers can meet basic needs and provide for their families during layoffs or recessions. This can be achieved by substantially increasing the taxable wage base for employer payroll taxes so that it applies to a much larger portion of workers’ earnings and adjusting that base annually to keep up with rising wages.

Covid-19
Poverty & Inequality

You may also be interested in the following resources:

Stay in the know.

Join our email list!

You may also be interested in the following resources:

Stay in the know.

Join our email list!

You may also be interested in the following resources:

Stay in the know.

Join our email list!

All California children, parents, workers, and community members should have the support they need to meet their basic needs for food, shelter, and other necessities. Yet Californians who are undocumented immigrants, or who have undocumented family members, are blocked from full access to the supports that other Californians can turn to when struggling to meet basic needs. State and federal policies uphold exclusionary practices against undocumented Californians despite them being deeply embedded in our communities and economy. This exclusion, rooted in racism and xenophobia, is one reason why undocumented Californians and their family members are more likely to live in poverty. Even before the COVID-19 pandemic, California children in families that include undocumented immigrants were an estimated three to four times more likely to be growing up in families struggling to meet their basic needs than children in non-immigrant families.

One basic support that fails to include undocumented Californians is the federal Supplemental Nutrition Assistance Program (SNAP), known as CalFresh in California. CalFresh is a key resource to help families put food on the table. Californians who are undocumented are completely blocked from access to CalFresh, and mixed-status families are only eligible for reduced benefits due to federal rules.

State policymakers can correct this inequity by including undocumented children and adults in state-funded basic nutrition assistance through the California Food Assistance Program (CFAP). CFAP provides benefits identical to CalFresh for some non-undocumented immigrant Californians who are excluded from CalFresh by federal rules. The choice by state policymakers to extend CFAP benefits to undocumented Californians would ensure that policies with xenophobic and racist roots do not block Californians from the support they need to avoid hunger.

Policymakers can make other choices, as well, to reduce policy-driven inequities in basic economic security based on immigration status, including extending access to comprehensive  health coverage through Medi-Cal regardless of immigration status, and providing much larger Golden State Stimulus payments to mixed-status and undocumented families who were blocked from federal COVID-19 stimulus and unemployment insurance benefits. These choices would provide support for undocumented Californians, who are valued community members, and help ensure all Californians are able to meet their basic needs.

Poverty & Inequality

You may also be interested in the following resources:

Stay in the know.

Join our email list!