University of California Institute for Labor and Employment

California’s state budget crisis and soft economy have conditioned its labor relations climate. Roughly half of union workers are in the public sector and so are affected by fiscal distress. Neither employers nor economic forecasters expect a robust economic recovery in the state in the near term. A number of union-supported bills were enacted under Governor Gray Davis, including a new paid family leave program, a hike in unemployment insurance benefits, and a mandated mediation process for union-represented farm workers. Nevertheless, state social programs have come under stress. The California Compensation Insurance Fund, which provides workers’ compensation insurance for employers unable to buy it elsewhere, is having financial problems. Lack of job-based health insurance for many low-wage workers has revived legislative interest in alternative proposals for universal coverage. Because of the budget squeeze, threats of layoffs and demands for pay freezes have marked labor relations in government. Job security has been an issue in the private sector, notably in the longshore lockout during the fall of 2002. Health care has been a focus of union organizing and labor disputes, especially involving nurses, against a backdrop of downward pressure on public health program spending and widespread employer concerns about escalating premiums. Until there is a clear-cut improvement in economic conditions, in both public and private sectors, labor relations will continue to reflect an environment of limited resources.