Stephanie Ferguson Melhorn
Senior Director, Workforce & International Labor Policy, U.S. Chamber of Commerce
Published
July 16, 2025
Connecticut Governor Ned Lamont just sent a clear message to employers and lawmakers across the country: unemployment insurance (UI) is not a strike fund. Governor Lamont vetoed legislation that would have allowed workers on strike to collect UI benefits after 14 days, rightfully citing the damage it would do to the state’s business climate and economic competitiveness.
It’s a move that should give other states pause as they consider similar proposals. Here’s what employers need to know.
UI Was Never Meant to Fund Labor Disputes
Unemployment Insurance exists to support workers who are jobless through no fault of their own. But to encourage returning to work and ensure the program maintains financial integrity, claimants must meet certain requirements to remain eligible for monetary benefits. Namely, claimants must be able and available to work and actively seeking employment. Workers on strike don’t meet this standard. Striking workers are not seeking work; they’re withholding it. That’s a choice, not a layoff.
Despite this, several states are working to expand UI eligibility to striking workers. This expansion does not improve unemployment out comes for those who are laid off but rather subsidizes labor unions with employer-funded dollars. Such changes stand to shift the fundamental purpose and beneficiaries of the UI program.
Employers Will Foot the Bill
UI is funded through employer-paid payroll taxes. These rates are influenced by an employer’s history of layoffs, the solvency of the state’s trust fund, and other factors. When states borrow from the federal government to cover UI claims, as California did during the pandemic, employers face higher taxes to repay the debt.
Adding striking workers to the list of eligible claimants would only deepen these financial strains. Governor Gavin Newsom recognized the risk to the state’s already fragile when he vetoed California’s SB 799 in 2023
Oregon recently passed a law allowing striking workers to collect UI after two weeks for a maximum of 10 weeks. But even with the 10-week cap, the long-term impact on trust fund solvency and employer experience ratings is uncertain.
Not Every State Is Buying In
California and Connecticut’s vetoes reflect a basic understanding that UI is not designed to support workers who are actively refusing to work. Instead, union strike funds serve to ensure members have resources to support themselves during labor disputes, even if those strike funds can’t replace all of a worker’s income.
Shifting that burden to employers through the UI system is duplicative and unsustainable and at odds with the purposes of the National Labor Relations Act.
The Bottom Line
Efforts to extend UI to striking workers may be politically popular among union leaders, but they’re economically reckless. They violate federal eligibility standards, strain already fragile trust funds, and increase costs for employers, many of whom are still recovering from the economic shocks of the past few years.
UI is a safety net for the unemployed, not a tool to tilt the scales in labor negotiations. Lawmakers should focus on strengthening the program’s integrity, not undermining it.
About the author
Stephanie Ferguson Melhorn
Stephanie Ferguson Melhorn is the Senior Director of Workforce & International Labor Policy. Her work on the labor shortage has been cited in the Wall Street Journal, Washington Post, and Associated Press.
