The Original Purpose of Unemployment Insurance
The unemployment insurance program was established under the Social Security Act of 1935 during the Great Depression. Its purpose was straightforward: provide temporary wage replacement to workers who become unemployed through no fault of their own while they search for new employment. The system was never designed to replace wages indefinitely. It was never intended to become a general income support program. Nor was it created to finance either side of a labor dispute, whether striking workers or employers.
From the beginning, eligibility was tied to labor market attachment. Workers generally had to demonstrate they were:
- Unemployed
- Able to work
- Available for work
- Actively seeking work
These principles were designed to ensure that benefits were paid to individuals who remained connected to the labor market and were making genuine efforts to return to employment.
For nearly ninety years, those concepts have served as the foundation of unemployment insurance administration.
What the U.S. Department of Labor Said in January 2026
The debate over strike benefits took on greater significance when the U.S. Department of Labor’s Employment and Training Administration issued guidance to state workforce agencies on January 8, 2026.
In a letter to state administrators and unemployment insurance directors, Michelle Beebe, Administrator of the ETA Office of Unemployment Insurance, addressed the growing number of states considering or adopting laws allowing benefits for striking workers. The Department’s position is noteworthy because it does not say states are prohibited from paying benefits to striking workers. In fact, the guidance acknowledges longstanding federal precedent, including New York’s historical approach to providing benefits after an extended waiting period. However, the guidance also makes something else abundantly clear.
States may not exempt striking workers from the federal requirement that claimants be able to work, available for work, and actively seeking work. The Department specifically stated that state agencies must continue evaluating those requirements on a week-by-week basis. The guidance further states that agencies must determine whether claimants are genuinely seeking employment and whether activities such as picketing have effectively removed them from the labor market.
Most significantly, the Department explicitly stated that state laws providing blanket work-search exemptions for striking workers would violate federal unemployment compensation requirements. For those of us who have spent decades administering unemployment insurance programs, this guidance highlights the central tension in the current debate.
The Administrative Reality Facing State Workforce Agencies
The question is no longer whether states can pass laws allowing benefits to striking workers. The real question is how state agencies can administer those laws while simultaneously enforcing federal eligibility standards. Consider the practical challenge.
A claimant participating in a strike may be spending hours each week walking a picket line, attending union meetings, participating in strike activities, and publicly advocating for a return to work under improved contract terms. At the same time, federal guidance requires the agency to determine whether that individual is actively seeking other employment and is immediately available to accept suitable work.
Those are not simple determinations.
Every unemployment professional understands that availability and work-search issues are among the most fact-intensive questions in the claims process. Adding labor disputes to the equation creates additional complexity for already strained workforce agencies. The issue becomes even more challenging when thousands of workers are involved in a single strike.
Why Labor Dispute Disqualifications Historically Existed
Historically, most states included labor dispute disqualifications in their unemployment insurance statutes. Those provisions were not necessarily anti-union. They were intended to preserve neutrality. Collective bargaining has traditionally involved economic pressure on both sides. Employers absorb operational losses and lost production. Workers sacrifice wages and benefits while pursuing contract objectives.
Unemployment insurance remained outside that process. The reasoning was simple. UI was intended to provide support to unemployed individuals seeking work—not to finance economic activity associated with labor disputes. Whether one agrees with that philosophy or not, it explains why labor dispute disqualifications existed in most state laws for decades.
The Emerging State Trend for Striking Workers
That historical framework is beginning to change.
According to the Congressional Research Service, New York and New Jersey currently permit certain striking workers to receive unemployment benefits after waiting periods. Washington and Oregon enacted legislation in 2025 expanding benefits for workers involved in labor disputes beginning in 2026. Several additional states have considered similar legislation in recent years.
Supporters argue that workers exercising legally protected collective bargaining rights should not face severe financial hardship. They contend that unemployment benefits help stabilize families, reduce economic disruption, and create a more balanced bargaining environment. These arguments deserve serious consideration. However, they also raise broader questions regarding the future direction of unemployment insurance.
Congress Is Now Debating the Future Direction of Unemployment Insurance
Perhaps the clearest indication that this issue has become a national policy debate is the activity occurring in Congress. The Congressional Research Service recently identified several competing legislative proposals that would move federal policy in dramatically different directions.
The SHIELD Act (H.R. 4424) would reinforce the traditional approach by prohibiting unemployment benefits for individuals participating in labor disputes, financially supporting strikes, or maintaining a direct interest in a labor dispute.
At the opposite end of the spectrum is the Empowering Striking Workers Act of 2025 (H.R. 5206/S. 2731). This legislation would require states to consider certain workers involved in labor disputes as unemployed after specified triggering events, including fourteen days after a strike begins.
A third proposal—the Unemployment Insurance Modernization and Recession Readiness Act (S. 2312/H.R. 4439)—would limit circumstances under which states could deny benefits due to strikes, lockouts, or employer labor law violations.
The significance of these bills extends beyond their chances of passage. Collectively, they demonstrate that policymakers are questioning whether labor-dispute unemployment should be treated differently from unemployment caused by layoffs, plant closings, reductions in force, or economic downturns. That debate could shape unemployment insurance policy for decades.
Could Strike Benefits Change Bargaining Dynamics?
One of the most common concerns expressed by employer groups and some policymakers is that unemployment benefits could alter the economics of collective bargaining. Historically, financial pressure has encouraged both sides to seek resolution. Employers face lost production, reduced revenue, and operational disruption. Workers face lost wages.
When unemployment benefits become available, critics argue that one side of that equation changes. Supporters respond that unemployment benefits are generally modest and unlikely to determine bargaining outcomes. The truth is that the relationship between benefits and strike duration remains difficult to measure.
However, the concern is not unreasonable. If public benefits reduce the financial burden associated with a strike, policymakers should at least examine whether they influence bargaining behavior, settlement timing, or strike duration. Several employer organizations have argued that states should closely monitor these outcomes as more strike-benefit laws take effect.
Trust Fund Solvency, Employer Charges, and Tax Rates
As someone who has spent decades helping employers understand unemployment costs, I believe this is where the discussion becomes most important. Unemployment benefits are not free.
Every benefit payment ultimately affects one or more of the following:
- Employer experience ratings
- Benefit charge statements
- State trust fund balances
- Solvency assessments
- Future unemployment tax rates
Some advocates argue that strike-related benefits represent a relatively small percentage of overall unemployment expenditures. That may be true today. But unemployment insurance professionals understand that program expansions rarely exist in isolation. Every expansion establishes precedent. Every precedent creates pressure for future changes.
At a minimum, additional benefit payments create additional trust fund obligations. States with healthy trust funds may absorb those costs more easily. States with existing trust fund debt or solvency concerns face a different reality. That concern has already been cited by governors and employer organizations opposing similar legislation.
What This Means for TPAs and Employers
Third-party administrators, employers and employer representatives should be paying close attention.
These laws create new questions regarding:
- Benefit charging responsibility
- Non-charging provisions
- Trust fund financing
- Protest strategies
- Appeals activity
- Work-search verification
- Availability determinations
- Future tax rate impacts
Employers should also recognize that many of these issues will ultimately be resolved through agency interpretation, administrative rulings, and court decisions. The legislation itself may only be the beginning.
What Employers Should Be Watching
The debate over strike benefits is still evolving.
Employers should closely monitor:
- State legislative activity
- Federal conformity guidance
- USDOL enforcement actions
- Congressional proposals
- Trust fund solvency reports
- Administrative rulemaking
- Agency interpretation of work-search requirements
- Strike duration studies and labor dispute data
After forty years in the unemployment insurance industry, I have learned that every eligibility expansion creates consequences that extend far beyond the original policy objective. The question facing policymakers is not whether striking workers experience financial hardship. They clearly do.
The question is whether unemployment insurance—originally designed to support workers who are unemployed, available for work, and actively seeking work—should be transformed into a mechanism that supports participants in labor disputes. How policymakers answer that question may determine the future direction of unemployment insurance for years to come.
Wayne Rottger is an accomplished professional with over 30 years of experience in the unemployment management and consulting industry. His expertise spans claims administration, client onboarding and management, customer success, tax account auditing and modeling, and consulting on complex corporate structure changes. Wayne’s ability to guide clients through the intricacies of unemployment tax statutes and regulations has been instrumental in helping them make critical decisions.
In 2020, Wayne joined Experian Employer Solutions as the Vice President of Unemployment Tax. His deep understanding of the industry led to the creation of his current role as Product Intelligence Manager, in which he monitors and reports on state and federal legislative changes, conducts informative webinars related to unemployment claims and tax, and provides thought leadership for various HR and Payroll Associations across the country. Prior to Experian, Wayne worked with other third-party agents, including Equifax Workforce Solutions and TALX Corporation to name a few.
Wayne’s strength lies in presenting complex, industry-specific intel in an understandable manner. He has successfully assisted clients across various industries, providing clarity and insights. Wayne holds a Bachelor of Science Degree in Public Relations from the University of Central Missouri.
