Posted on March 10th, 2025
California’s Broken Unemployment System: Why Business Owners Are Paying the Price
California’s unemployment fund isn’t just struggling—it’s drowning in $20 billion of debt. And guess who’s getting stuck with the bill? You, the business owner.
How Did We Get Here?
During the pandemic, California’s Employment Development Department (EDD) paid out billions in fraudulent unemployment claims. Instead of addressing the mismanagement, lawmakers are now trying to cover the debt by increasing payroll taxes on employers.
The Massive Tax Hike
Currently, employers are taxed on the first $7,000 of an employee’s wages to fund unemployment insurance. But now, there’s a proposal to increase that amount to $46,800 per employee. That’s nearly a sevenfold increase in unemployment taxes—directly hitting California businesses.
Why Should Business Owners Pay for Government Failures?
Employers didn’t create this crisis. Yet, instead of cutting wasteful spending or holding the EDD accountable, the state is passing the burden onto businesses that are already struggling with high taxes, regulations, and inflation.
What Can Employers Do?
- Stay informed: Keep track of proposed legislation that could impact your payroll costs.
- Voice your concerns: Contact representatives and make it clear that small businesses cannot afford to bail out government mismanagement.
- Plan ahead: If these changes go through, payroll costs will skyrocket. Consider consulting with a financial expert to prepare for potential increases.
Final Thoughts
California’s leaders made the mess, but instead of fixing it, they’re making business owners pay. If you’re tired of being treated like an unlimited ATM, pay attention to who’s voting for these tax hikes—and remember that come election time.
Stay productive, stay informed, and protect your business.
