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Understanding Guaranteed Income & Safety Net Support for Californians

October 2021 | By Alissa Anderson and Sara Kimberlin

A pre-teen girl wearing a hijab sits on a couch with her little sister on her lap and reads her a bedtime story. Her sister is engaged in the story.

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.

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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.

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

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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.

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

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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.

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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.

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With COVID-19 cases plummeting and vaccine distribution expanding, businesses are picking up hiring. This is bringing hope that California has turned the corner on the pandemic and is setting a path forward for an economic recovery to finally take hold. But as the state begins to emerge from the recession, lawmakers must keep in mind that their policy choices will determine whether the recovery is inclusive of all people and builds toward an economy that works for everyone. The economic crisis amplified long-standing economic and health inequities, hitting Black, Latinx, and other Californians of color, as well as women, immigrants, and workers paid low wages much harder. These inequities will not disappear as the economy recovers unless lawmakers dismantle racist, sexist, and anti-immigrant barriers to opportunity and make investments that allow all Californians to share in the state’s prosperity.

Recent job gains are promising, but a massive job shortfall remains. The state gained 120,000 jobs in March 2021, following a gain of 156,000 jobs in February 2021. This marked the strongest job growth California had seen since June 2020. Yet the state still has a massive shortfall, with 1.5 million fewer jobs in March 2021 than in February 2020, just before the pandemic recession began. This means that California is still down more jobs than the state lost during the Great Recession. Moreover, even if the last two months of strong job gains continue each month going forward, it would take 18 months — until September 2022 — to close the job shortfall, replacing the jobs lost during the recession and adding the jobs that would have been created had there not been a recession. That’s a year after pandemic-related federal unemployment benefits are slated to expire.

Low-paying industries continue to face the largest job shortfall. Although the majority of California’s private-sector job gains in March were in the state’s lowest-paying industries, these industries still had 15% fewer jobs in March 2021 than in February 2020. In contrast, moderate- and high-paying industries each had just 5% fewer jobs. In fact, some of the lowest-paying industries still had massive job shortfalls in March: 90% of the arts, entertainment, and recreation jobs that California lost were still gone, as were 61% of the accommodation and food service jobs, and 68% of the “other services” jobs, which include jobs at barber shops, hair salons, and nail salons. Rehiring in these sectors could take time, and it’s possible that not all of the jobs that were lost will come back. For example, to the extent that office workers continue to work remotely after the pandemic ends, restaurants and other businesses near office buildings or downtown hubs may see fewer customers and won’t need as many employees as they did prior to the pandemic. Similarly, if companies continue to hold remote meetings and conferences, hotels and other businesses serving business travelers may not need to rehire as many workers.

The “official” unemployment rate significantly understates California’s jobs crisis, highlighting the need to track broader measures. The unemployment rate published monthly by the US Bureau of Labor Statistics (BLS) is typically used to assess conditions for workers. However, this measure has substantially understated the pandemic jobs crisis, prompting many economists to use alternative measures of unemployment that include people who want to work, but left the labor force after losing their jobs because other jobs weren’t available or weren’t safe, or because they had to care for children schooling from home or for sick family members (see technical note). Based on one such broader measure, about 1 in 10 Californians were out of work in March 2021 (10.3%) — notably higher than California’s “official” unemployment rate of 8.3%. In fact, a total of about 2 million Californians were unemployed in March based on this expanded measure — over 400,000 more than those counted in the official measure. Like the official unemployment rate, this broader measure has fallen significantly from its peak last spring, but remains about twice as high as it was in February 2020, just before the recession began.

Black and Latinx Californians remain considerably more likely to be out of work. One year into the recession, 15.3% of Black Californians and 13% of Latinx Californians were unemployed, based on the broader measure described above. This is considerably higher than the 9.7% unemployment rate for white Californians and 8.6% rate for Asian Californians. (Due to data limitations, it is not possible to present monthly unemployment figures for other Californians of color, such as Pacific Islanders, American Indians, and people who are multi-racial, or to disaggregate the data further to show, for example, the diverse range of experiences within Asian Californians. National data, however, show high unemployment among American Indians and Pacific Islanders during the recession.) Women were also more likely to be out of work than men, and national research has suggested that at least some of this disparity reflects mothers leaving the labor force because of remote schooling or child care responsibilities during the pandemic. Immigrants — who experienced greater job losses when the pandemic first began — were less likely to be unemployed one year into the recession than Californians who are not immigrants.

Layoffs during the pandemic reduced the earnings of the majority of Black and brown Californians. More than 60% of Black and Latinx households lost earnings during the pandemic, compared to well under half of Asian and white households. (Due to data limitations, it is not possible to present monthly unemployment figures for other Californians of color, such as Pacific Islanders, American Indians, and people who are multi-racial, or to disaggregate the data further to show, for example, the diverse range of experiences within Asian Californians.)

While striking, these job and income inequities are not new for Black and brown Californians; they are rooted in our nation’s history of structural racism. Even before the current jobs crisis, Black and American Indian Californians were about twice as likely to be unemployed as white Californians, and Latinx women were about one-and-one-half times as likely to be unemployed as white women. In addition, Californians of color — particularly women and those who are American Indian, Black, Latinx or Pacific Islander — earned considerably less than white men before the pandemic, even when working full-time, year-round. (See the employment and earnings component of the Women’s Well-Being Index for more information.) These inequities are the product of past and present racist policies and practices, including housing segregation, the underfunding of predominantly Black and brown public schools, mass incarceration, and employment discrimination — all of which make it difficult for many people of color to access good jobs and be paid fair wages.

Policymakers Must Create an Inclusive Recovery that Builds Toward a More Equitable Economy

There is growing optimism that a recovery from the economic crisis is finally underway for California. But the employment and income inequities that widened during the recession for Black and brown Californians, women, immigrants, and workers paid low wages will likely not disappear on their own as the state’s economy improves. To avoid returning to the deeply inequitable economy that predated the pandemic, state and federal lawmakers must make policy choices that foster an inclusive recovery and lay the foundation for a more equitable economy – one that ensures that Black, Latinx, and other Californians of color, women, immigrants, and Californians with low incomes share in the state’s economic gains and vast wealth.

To do this, federal policymakers must first not cut off too soon the economic supports, such as enhanced federal unemployment benefits, that are helping families meet basic needs during the crisis. Doing so would harm Black and Latinx Californians and others who continue to be hit hard by the pandemic and recession. In addition, state policymakers should provide much more financial support to undocumented Californians and their families, who have been excluded from nearly all economic relief during the pandemic.

Beyond responding to the immediate crisis, policymakers must better prepare for the next recession, for example by reforming the unemployment insurance system to ensure that workers receive the support they need when they lose work. Lawmakers also must prioritize equity in all policies and institutions so that all people can thrive. Some California current efforts that would help include:

  • Establishing an independent body to address systemic and institutional racism in order to ensure that the state plays a more active role in dismantling racial inequities that hold back Californians of color.

Lawmakers must also invest in better publicly accessible data because economic and health equity cannot be achieved if information on inequities affecting the lives of Californians is not collected. Major federal data, including monthly unemployment figures, do not allow for sufficient disaggregation for racialized communities or for intersectional analyses. In fact, the experiences of LGBTQ+ people are almost entirely absent from federal surveys. This renders the experiences of many communities invisible, making it difficult to show with data where policy change is needed or can be targeted to better serve Californians, especially LGBTQ+ Californians and many Californians of color.

Policies that address the economic and health needs of communities and dismantle structural racism, sexism, and other forms of discrimination can help California emerge from the pandemic recession to a more equitable economy where all Californians share in the state’s prosperity.

Technical Note

The “official” unemployment rate reported each month by the Bureau of Labor Statistics (BLS) is widely understood to have underreported the extent of joblessness during the pandemic. Consequently, many economists, including those at the Federal Reserve Board and the President’s Council of Economic Advisors, have published adjusted unemployment rates that are likely more accurate than the official BLS measure.

This report presents unemployment rates with two adjustments that should result in a more accurate measure of joblessness. Specifically, these unemployment rates:

  • Include people who were likely unemployed, but misclassified as employed. The BLS believes that during the COVID-19 recession a large number of workers who reported being employed, but absent from work, were in fact on temporary layoff and should have been counted as unemployed. Each month since March 2020, the BLS has estimated how many workers may have been misclassified in this way and reported what the national unemployment rate would have been had these workers been counted as unemployed. This report follows the BLS methodology for identifying potentially misclassified workers, which is described here, and adds these workers to the number of unemployed to calculate adjusted unemployment rates.
  • Include people who were not counted in the labor force because they did not look for work recently, but who want a job. To be officially counted as unemployed, workers must have made specific efforts to find employment in the past four weeks. If they did not, then they are counted as not in the labor force even if they want to work. This means that they are not included in the unemployment rate. However, many workers who lost their jobs during the COVID-19 recession did not search for work even if they wanted a job, particularly at the beginning of the recession when state-mandated business closures meant that there were far fewer jobs available. Moreover, California temporarily waived the requirement that unemployed workers search for jobs each week in order to receive unemployment benefits, recognizing that whole sectors of the economy had to be shut down in order to protect the public’s health. This analysis adds to the number of unemployed people who did not look for work in the past four weeks as long as they reported wanting a job, being available for work, and having looked for employment in the past year. This is a more conservative adjustment than the one made by the Federal Reserve Board, which counts all people who dropped out of the labor force since February 2020 as unemployed.
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