OKPOLICY.ORG
Unemployment insurance became a lifeline to many Oklahomans during the pandemic. In a period of widespread job loss, the transfer payments that this program provided working people with the means to feed their families and pay the bills while they looked for employment. However, immigrants without work authorization were shut out from both federal and state unemployment insurance, despite the fact that they’ve paid millions into the program. In order to support everyday workers, Oklahoma needs to create an excluded workers fund — similar to existing unemployment insurance — specifically for people typically left out of the unemployment system.
Unemployment insurance for excluded workers is important
The pandemic highlighted the need for strong support systems that help struggling workers while they get back on their feet. However, immigrants without work authorization were left entirely out of this program despite making mandatory payroll deductions that funded unemployment programs. For a group that disproportionately works in essential industries like agriculture, food services, and the health sector, leaving workers in such an important segment of our economy without a safety net is both a disservice to hardworking individuals and creates significant hardships in our communities. During the last decade, an average of 53,000 undocumented immigrants were employed in Oklahoma’s labor force. These employees have paid more than $74 million in state and federal contributions to unemployment insurance trust funds, but they were not even eligible to apply because of federal restrictions that shut out workers without work authorization.
Excluding immigrants without work authorization from unemployment insurance negatively affects families, and it also hurts the economy as a whole. Unemployment insurance acts as an economic stabilizer. The program’s payments to unemployed workers help bolster local economies and sustain consumer demand during economic downturns by providing a continuing stream of dollars for families to spend. Additionally, research that looks back at temporary extensions of unemployment insurance over the last three decades suggests that unemployment insurance likely increases the labor force participation rate. Unemployment insurance also provides workers with more bargaining power when it comes to accepting or rejecting job offers instead of being forced to take the first offer that comes their way, even if it doesn’t match their skills or maximize their economic productivity. This helps all workers across the board because it incentivizes employers to create higher productivity and better paying jobs.
Building a foundation for working families
Excluding undocumented workers from unemployment insurance is an unfair practice that hurts all workers. However, in response to the fallout from the pandemic, a number of states have stepped up to create funds to support undocumented workers and address issues in traditional unemployment systems. Legislation to create excluded worker funds have been introduced in places like New York and California, but the first state to create a permanent excluded worker fund was Colorado, which shares a border with Oklahoma.
Financed through a pre-existing assessment on the traditional unemployment insurance payroll tax, which workers without authorization already pay into, Colorado was able to create a program in June 2022 that worked much like the traditional unemployment insurance. Applicants have to meet the same requirements as in traditional unemployment insurance. However, since it is entirely state-funded and not subject to the typical federal regulations, traditionally excluded workers can qualify for this program that covers an estimated 2,500 immigrant workers, likely more than half of unauthorized workers in Colorado. Colorado’s excluded workers fund is currently valued at $15 million with a cap at $30 million. By creating such a fund, Colorado is eliminating some of the barriers people without work authorization may face when trying to get back into the labor market. Colorado understands that their undocumented residents are a vital part of their workforce. Ensuring economic relief reaches this important population is a critical part both of the state’s economic recovery and its long-term economic health.
Oklahoma can develop its own unemployment insurance program for excluded workers
In order to provide Oklahoma workers with the tools they need to get back to work, our state should develop an excluded workers fund as well. Immigrants are vital to a healthy, growing economy, regardless of work authorization. Investing in a robust unemployment insurance program to support these individuals is sound economic policy that will support Oklahomans and their families during difficult times.
To create such a program, Oklahoma first needs to identify which workers it wants to make eligible for this program. It can follow Colorado’s model and expand it only to workers without authorization who would otherwise qualify for the program, or it can go more expansive and include cash economy workers and truly self-employed workers who face high barriers to accessing traditional unemployment insurance. The state also needs to consider possible sources for funding. Similar to Colorado, Oklahoma can tap into an existing mechanism for collecting revenue via the traditional unemployment payroll tax, a move that is logical since workers without authorization already pay millions into this fund. The state can also use general funds to fund this program, particularly if it wants to expand access to more workers. In either case, since the state would be using solely state funds, it has the right to include workers who, at the federal level, would not qualify for aid.
Oklahoma has already seen the positive impact that these types of programs can have. We don’t have to look outside our state to see a similarly successful program. During the pandemic, the city of Tulsa created the Tulsa Immigrant Relief Fund, which provided cash relief to more than 1,500 working families who went on to use this support primarily for utilities, rent, and medical expenses. Expanding the program statewide would show respect for our workers. About 53,000 hardworking Oklahoma immigrants stand to gain from an excluded workers fund — but all of us would benefit. Immigrants who work in our health care industries, agriculture, food and service, and other essential industries have paid millions into a program they are barred from accessing. We need to invest in our labor force and workers to ensure that Oklahoma can weather future economic downturns.
We need to recognize the hard work of undocumented immigrants
Immigrants without work authorization represent our construction workers, our restaurant cooks, our farmworkers, and our factory workers. They have paid more than $75 million in state and local taxes and just as much to unemployment insurance trust funds. A statewide excluded worker’s fund would give more workers the support they need to take care of their family while they look for a job. Doing so would poise Oklahoma to be among the leading states moving to value both the labor and the people who provide it.
