May 19, 2020, by Tamarine Cornelius
Undocumented immigrants have played a part in depositing over a hundred million dollars in Wisconsin’s Unemployment Insurance trust fund over the past decade, yet the federal government excludes them from collecting unemployment benefits paid for from the fund. This exclusion is part of a larger pattern in which workers who are undocumented are shut out of receiving most forms of assistance available during the economic crisis, even if they have paid into the system that provides the support.
Unemployment Insurance in Wisconsin is supported by trust funds that are financed by a tax that employers pay to the state, and a smaller tax that they pay to the federal government. Both taxes are paid on a per-employee basis.
Over the past decade, the work of undocumented workers in Wisconsin has resulted in contributions of $124 million to the trust funds: $112 million to the state trust fund, and $12 million to the federal version. These amounts represent contributions made on behalf of a share of the 55,000 undocumented workers in Wisconsin. Nationally, the work of undocumented immigrants generated $13 billion for state and federal unemployment trust funds between 2010 and 2019. These figures are from an analysis by the Fiscal Policy Institute which assumes that half of the undocumented immigrants employed in Wisconsin are paid on the books, with employers paying the same Unemployment Insurance taxes for these workers as for other employees.
Despite the fact that their work results in significant contributions to the trust funds, undocumented workers are blocked from receiving federal or state unemployment benefits — both the regular benefits as well as the expanded benefits available to help workers who lost their jobs during the pandemic. Federal lawmakers also excluded undocumented immigrants, along with their citizen children and spouses, from receiving the direct stimulus payments that the federal government paid to most residents to help ease economic hardship.
Some state and local governments have taken action to counteract the exclusion of undocumented workers from unemployment benefits by setting up funds to step in where the federal government has fallen short. Both California and New York City have worked with a consortium of foundations to create funds separate from Unemployment Insurance to help undocumented workers with one-time payments.
Unemployment benefits help jobless workers, of course, but they also help everyone else by stimulating the economy. Jobless workers spend their benefits on necessities at local businesses, creating economic demand and giving a boost to their communities. Excluding some immigrant workers from receiving these benefits harms everybody, by reducing economic activity and making it harder for communities to thrive. To speed the recovery, we need to make sure that all residents are eligible for unemployment benefits and other forms of economic support.