REPORT: Following Pandemic, Momentum Builds for Long-Term Unemployment Programs that Cover Immigrants, Other ‘Excluded Workers’
States nationwide increasingly look to establish annual UI programs for excluded workers, heeding lessons from 12 states and D.C. that established temporary UI COVID programs
For Immediate Release: Wednesday, September 7, 2022
Contact: Alex Edwards, [email protected], 810-986-0880
David Dyssegaard Kallick, [email protected], 646-284-1240
(New York, NY) — A report out today from The Century Foundation and the Immigration Research Initiative takes an in-depth look at the rise of and growing momentum behind unemployment insurance (UI) programs that cover “excluded workers,” including immigrants who lack work authorization and others who are typically sidelined from receiving benefits, such as domestic workers and the self-employed.
Across the nation, states are increasingly looking to establish such programs on a long-term basis, building on the successful one-time experiences of 12 states and D.C.—and other localities and philanthropic efforts—which provided temporary cash support to excluded workers during the pandemic. In May, Colorado became the first state to create a forward-looking program, the annual Benefit Recovery Fund, which allows immigrants who lack work authorization—yet whose wages are subject to unemployment taxes—to collect benefits if they lose their jobs. The California legislature just passed a similar bill on August 26 (it awaits Governor Newsom’s signature). and New York has a significant campaign underway with proposed legislation.
“Immigrants and other excluded workers are an indispensable part of our economy—helping keep our food chain vibrant and our relatives cared for, among so many other critical roles. Yet when tough times hit, these workers are left to fend for themselves, without access to unemployment aid,” said David Dyssegaard Kallick, Director of Immigration Research Initiative and a co-author of the report. “This shouldn’t be the case, and the pandemic showed it doesn’t have to be. States should build on the temporary programs put into place during COVID-19, and design long-term programs that truly value the contributions of immigrants and other excluded workers to our economy and our communities.”
During the pandemic, sweeping job losses brought into sharp focus the enormous value of UI benefits while also highlighting the pressing need to improve UI systems and make them more inclusive. States that piloted programs to administer UI benefits to excluded workers demonstrated that what until recently seemed hard to imagine can, in fact, be done. These new systems function separately from, but side by side with, traditional UI programs. They provide a well-earned benefit to workers who have been systematically discriminated against, such as the 7 to 8 million working-age immigrants without work authorization who make up roughly 5 percent of the overall labor force.
The report begins by 1) making the case for why unemployment insurance for excluded workers is so important—both for families’ well-being and the country’s overall economic health. It then 2) provides an overview of one-time, temporary pandemic programs and discusses the ongoing efforts in three states—Colorado, California, and New York—to enact ongoing state-level excluded worker UI programs. Finally, the authors 3) take a deep dive into key program design considerations, offering guidance to states seeking to develop such programs. Design questions include: who should be eligible; how to document work history, identity, and residency; how to ensure privacy protections and anti-retaliation protections; as well as questions surrounding program implementation, outreach, public delivery, benefit levels, duration and frequency of benefits, and funding mechanisms, among others.
“When workers lose their jobs, unemployment insurance serves as an essential lifeboat, helping families keep food on the table and a roof over their heads as they look for work. It’s unconscionable that undocumented immigrants and other excluded workers are shut out from accessing this emergency aid, especially since their wages are often already subject to UI taxes,” said Andrew Stettner, The Century Foundation’s Director of Workforce Policy and a co-author of the report. “States like Colorado, New York, and California are taking meaningful steps to address this needless, discriminatory exclusion and establish forward-looking programs. Others should follow suit.”
Overview of UI Excluded Worker Efforts in CO, CA, and NY
Colorado was the first state to put in place a long-term, annually recurring excluded worker UI program. The Benefit Recovery Fund—which currently has $15 million and is capped at $30 million—is estimated to cover 2,500 immigrant workers ineligible for traditional UI only because of their lack of work authorization, each year. To qualify, workers must show—just as people applying for traditional UI do—that they lost a job through no fault of their own, that they had earned enough during the period before they lost their job, and that they were paid in a way that is documented in W-2 forms. This would cover a significant number of unauthorized workers—likely more than half.
During the pandemic, Colorado, like many states, exhausted its existing UI fund and borrowed money from the federal government to make payments to unemployed Coloradans, resulting in just over $1 billion in debt. Business leaders and community groups joined together in support of a broad unemployment insurance improvement bill that included the Benefit Recovery Fund, with advocates arguing that if the state stepped in with public funds to pay down the debt, there should be a benefit not just to employers but also to workers. In the end, the state agreed to use $600 million of American Rescue Plan Act (ARPA) funds to pay down their unemployment insurance debt of $1 billion, alongside making unemployment compensation available to excluded workers.
“The pandemic highlighted how important unemployment insurance is. But it also revealed flaws that hamper the system’s ability to shore up the economy in a crisis,” said Kathy White, executive director of the Colorado Fiscal Institute. “Unfairly excluding immigrants and other workers was the biggest flaw, and I’m so proud of Colorado for leading the way by making sure our program does more to reach Colorado families, businesses, and our economy.”
During the pandemic, California established a $125 million disaster UI relief fund for immigrants, which delivered aid to roughly 150,000 beneficiaries, at a maximum payment of $500 (or $1,000 per household). Now, advocates are waging a spirited campaign to create an excluded UI program similar to that in Colorado. Under the proposed legislation, immigrants who would qualify for unemployment insurance but for their lack of work authorization would be covered by a separate state-financed fund. California’s Excluded Workers Pilot Program is proposed as a one-year program, to lay the groundwork for a recurring, annual program.
On August 26, the California legislature passed a bill authorizing this new program into law, a bill which awaits Governor Newsom’s signature and would require funding to operate. The program’s $690 million budget proposal (which will be considered again next year) would benefit more than 144,000 individuals and would be largely based on the state’s UI system, but with key differences to ease administrative burdens. It includes language directly informed by experiences with one-time excluded worker funds about the kinds of documents that workers can use to show their work history. Funding for the program would come from the state’s general fund.
“The COVID-19 pandemic is not the first emergency that California has faced, and we know it will not be the last,” said Kim Ouillette, Legal Aid at Work, and member of the Safety Net for All Coalition. “In order to build a resilient economy that works for everyone, it is imperative that California provide unemployment benefits for all workers, including undocumented immigrants. States like New York and Colorado have shown that these programs can be successfully implemented, and we are calling on Governor Newsom to recognize the contributions of these essential workers and ensure that they too are protected in their time of need.”
The Fund Excluded Workers (FEW) coalition in New York draws from legislation passed in 2021 that established New York’s Excluded Workers Fund. That emergency pandemic fund, totaling $2.1 billion, was the largest in the nation. It provided recipients with benefits roughly equivalent to what other workers who were unemployed for a year received in traditional unemployment insurance, $15,600, and reached an estimated 130,000 New Yorkers.
The campaign is now taking a more expansive approach, pushing for a new excluded worker program that covers a distinct subset of workers who in 2021 could receive Pandemic Unemployment (PUA) funds. The bill, Excluded No More, would cover three groups of workers: 1) undocumented excluded workers; 2) certain cash economy workers, such as day laborers, domestic workers, and others paid in cash or non-payroll check; and 3) truly self-employed workers, such as street vendors and platform economy workers. The legislation also includes funding for a navigator program to do outreach and help workers in applying for the excluded worker program. Financing for the program is proposed to come from general funds, not from a per-worker tax on employers.
“The Fund Excluded Worker Campaign fought against the inhuman exclusion of undocumented workers and their families from COVID relief and won $2.1 billion for workers in NY,” said Nadia Marin-Molina, Co-Executive Director, National Day Laborer Organizing Network (NDLON) and member of the steering committee of the Fund Excluded Worker campaign. “Now we are exposing the fundamental injustice of a system that takes in hundreds of millions of dollars in contributions from undocumented and other excluded workers, without allowing them to receive a penny when they lose their jobs. We are proud to be part of a growing national movement, where day laborers, farmworkers, street vendors, and domestic workers are joining with so many others to show how new models for unemployment protections can make all workers stronger.”
The Century Foundation (TCF) is a progressive, independent think tank that conducts research, develops solutions, and drives policy change to make people’s lives better. We pursue economic, racial, and gender equity in education, health care, and work, and promote U.S. foreign policy that fosters international cooperation, peace, and security. TCF is based in New York, with an office in Washington, D.C. Follow the organization on Twitter at @TCFdotorg and learn more at www.tcf.org.
Immigration Research Initiative is a nonprofit, nonpartisan think tank on immigrant integration, looking at issues of economic, social, and cultural inclusion of immigrants in the United States. IRI is attentive to how immigrants fare in the United States and to how the receiving communities fare as they change, with particular attention to the implications for race, gender, and income equity. Follow IRI on twitter at @immresearchIRI and on the web at www.immresearch.org.