Why Advocates Want to Expand the Excluded Workers Fund
Not everyone who loses their job is eligible to receive unemployment insurance benefits, but several states have been taking steps to address that. Generally, these workers are referred to as “excluded workers,” because they are typically excluded from receiving unemployment payments
What are Excluded Workers?
One of the primary examples is providing unemployment insurance (UI) benefits to undocumented workers. Proponents note that undocumented workers were disproportionately affected by the COVID-19 economic disruption, yet were often considered to be essential workers, employed in industries such as agriculture and meatpacking.
According to Essential Fairness: The Case for Unemployment Benefits for California’s Undocumented Immigrant Workers, generated by the University of California Merced Community and Labor Center, undocumented workers in California fill one in sixteen jobs and generate $3.7 billion in state and local tax revenues. Yet in the first year of the pandemic, California unemployed citizen workers were eligible for up to 20 times as much economic aid as unemployed undocumented workers, the center reported. Undocumented workers are also more likely to be in low-wage work.
Consequently, the California state assembly is considering a bill called the Excluded Workers Pilot Program, AB 2847, which would be a two-year program to provide funds to undocumented workers who lose their job or have their hours reduced during the calendar year 2023, according to LAist. “The proposal, estimated at $597 million, plus administrative costs, would allow qualifying, unemployed individuals to receive up to $300 a week for 20 weeks,” the site reported. Supporters point out that the state had a $38 billion surplus in 2021 and a $31 billion surplus in 2022.
What is the Excluded Worker Fund?
One of the first programs to provide benefits to unemployed undocumented workers was in New York State, called the Excluded Worker Fund (EWF). It took a year of civil disobedience and protests, including shutting down bridges, led by the Fund Excluded Workers (FEW) coalition, before the state provided $2.1 billion for the program, a reduction from the original request of $3.5 billion.
Recipients could apply as “Tier 1” or “Tier 2,” with different levels of funding, depending on what employment proof they had, and the Department of Labor worked with 75 community-based organizations to improve outreach for the program.
Despite concerns, the program was successful, according to the Century Foundation. Applications opened on August 1, 2021, and closed on October 8, because all the funds had been allocated. Ultimately, it served 130,000 beneficiaries, 79% of whom were from New York City and 21% from other regions of the state.
Critics of the program’s two-tier structure had predicted it would be too difficult for excluded workers to prove their work history, but as it turned out, “nearly all beneficiaries who qualified for the program – 99% of the total — were able to qualify for Tier 1 benefits of $15,600,” wrote the Century Foundation. “A very small number of people — less than 1% of the total — received Tier 2 benefits of $3,200 because they were not able to document their work history as firmly.”
How the Gig Economy Affects Unemployment Benefits
Part of the issue is that traditional unemployment insurance systems typically don’t cover the “gig economy.” “For most of U.S. history, UI has categorically excluded laborers whose work arrangements lie outside the conventional employer/employee binary — including independent contractors and other self-employed workers,” wrote Benjamin Della Rocca in the Yale Law Journal.
That’s a problem, because the gig economy is growing, and that trend was exacerbated by COVID-19, Rocca wrote. “In 2017, depending on one’s definition of ‘gig worker,’ as many as 55 million Americans worked in the gig economy (or 34% of the U.S. labor force,” he wrote. “Recent projections for 2020 data reach as high as 43% of the workforce.”
But while gig workers were able to receive temporary unemployment benefits as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020, those benefits didn’t typically extend to undocumented workers.
New York’s program was notable in that it didn’t require the undocumented workers to have W-2 employment but allowed them also to be contract or gig workers. For example, among the documents allowed to be submitted as proof of work were 1099 forms, state tax returns that showed a valid Individual Taxpayer Identification Number, or even regular direct deposits, fund transfers from a non-relative, and receipts showing commuting to a work location.
That said, there was some concern that gig workers such as street vendors, who don’t receive pay stubs, would be shut out from the program. In addition, a requirement that workers prove they worked at least 15 hours per week, for at least 6 weeks in the six-month period before they lost income, was challenging for seasonal workers, according to NextCity.
What’s Happening with New York’s Excluded Worker Fund
Because of the success of New York’s Excluded Worker Fund, FEW is now calling for a $3 billion expansion that would cover up to 170,000 workers, including all who were denied, plus those who did not apply once
the fund was closed. “Adding $3 billion to the fund would still make the EWF a small portion of the $80 billion paid out to other unemployed New Yorkers through the federal CARES Act,” wrote the Century Foundation.
Proponents are also suggesting a permanent $800 million-per-year “Excluded No More” program for New York that would provide compensation along the lines of unemployment insurance for excluded workers — not just undocumented workers but also those who are paid off the books, as well as some low-income freelance workers.
The Excluded Worker Fund also served as a useful model for how unemployment insurance systems could be designed in the future, not just in New York but nationwide. “The ability to start from scratch with this program allowed them to make improvements that prioritize addressing the barriers immigrant communities faced, and in the process learn things that can help in improving the delivery of unemployment insurance benefits as well,” the Century Foundation wrote. “Designing the EWF application with user experience, new technology, and smartphones in mind contributed to discussions about modernizing systems. The fund also sparked new interest in surveying immigrant workers, looking at their obstacles to financial institutions, and building strategies for how to get money to these communities in the future.”
Options for Excluded Workers
Inspired by the success of New York, several other states and cities implemented similar programs. In Colorado, the program is called the Left Behind Workers Fund, and it disperses payments of $1,000 to workers in Colorado who won’t receive stimulus checks or other Federal financial aid. As of December 2020, the program had distributed $9,067,000 to 9,067 people, according to the program’s website.
But many of these programs have expired or run out of money. Until states extend excluded worker programs, undocumented and gig workers are back to being ruled ineligible for unemployment benefits.
Supporters of such efforts point out that unemployment insurance for excluded workers isn’t just an issue around the pandemic, but also around natural disasters, including those caused by climate change, and that providing these benefits for undocumented workers is something that needs to be considered for the ongoing future.