Why many government workers aren’t eligible for unemployment benefits

Summary

Marketplace Morning Report: Why Many Government Workers Aren’t Eligible for Unemployment Benefits

Release Date: February 27, 2025
Host: David Brancaccio
Producer: Marketplace

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Introduction

In this enlightening episode of the Marketplace Morning Report, host David Brancaccio delves into the pressing issue faced by numerous government workers who find themselves ineligible for unemployment benefits. The discussion sheds light on the systemic challenges within unemployment insurance frameworks, particularly affecting independent contractors engaged with U.S. government agencies. Additionally, the episode highlights the broader economic impact of policy decisions and natural disasters on low-income and immigrant workers.

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Supreme Court Ruling and Its Impact on Government Workers

The episode opens with David Brancaccio informing listeners about a Supreme Court decision that grants the Trump administration additional time to disburse funds for foreign aid prior to the administration's freeze on foreign assistance. This ruling temporarily halts a lower court order that demanded immediate payment, thereby extending uncertainty for contractors reliant on these funds.

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Unemployment Benefits: The Exclusion of Independent Contractors

Nancy Marshall Genzer, Marketplace’s investigative journalist, provides an in-depth analysis of why many government workers, specifically independent contractors, are excluded from unemployment benefits.

Nancy Marshall Genzer [01:13]: “Unemployment benefits are funded by a tax companies pay on their employees’ wages. But contractors aren't employees. They're considered small businesses.”

She references Kathy Creighton from Cornell University's School of Industrial and Labor Relations, who explains that independent contractors do not contribute to the unemployment insurance system, thus making them ineligible for benefits.

Nancy Marshall Genzer [01:42]: “So they don't get money out of the system. And Creighton says just a very few states allow independent contractors, these gig workers, to collect unemployment benefits.”

This systemic exclusion disproportionately affects those engaged in freelance or contract work with agencies like USAID. The Trump administration’s efforts to reduce USAID’s footprint have led to significant contract cancellations, leaving many contractors without income or safety nets.

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Personal Stories: Contractors Struggling Without Benefits

The episode features the troubling story of Leanne Evanson, a government contractor whose $40,000 contract was abruptly terminated. Evanson is part of a group of over 150 self-employed government contractors and consultants facing similar predicaments.

Nancy Marshall Genzer [02:38]: “I used to do that when I had a full-time job, which is why I quit.”

Evanson expresses the emotional and financial strain caused by the loss of her contract:

Leanne Evanson [02:38]: “I wake up with fingernail marks in my hands because I'm clenching my fists.”

With limited financial resources, Evanson contemplates dipping into retirement savings to stay afloat. Additionally, she voices concerns about the broader implications of reduced USAID funding, such as the lack of critical medications for women with HIV.

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Policy Implications: Tariffs and Economic Uncertainty

David Brancaccio transitions to discuss the ambiguous future of U.S. import tariffs under President Trump. Although Trump hinted at a possible extension for tariffs on Mexico and Canada, the White House reaffirmed the existing March 4 deadline.

David Brancaccio [03:50]: “I have to tell you that, you know, on April 2nd, I was going to do it on April 1st continuing, but I'm a little bit superstitious.”

This uncertainty affects businesses and contractors alike, adding another layer of complexity to the economic challenges faced by workers dependent on government contracts.

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Economic Hardships: The Plight of Immigrant Workers Post-Wildfires

Shifting focus, the episode highlights the struggles of low-income immigrant workers in the aftermath of the Southern California wildfires. Cesar, a day laborer affiliated with the Pasadena Community Jobs Center, shares his experiences volunteering to clean fire debris while grappling with economic hardship.

Cesar [05:03]: “My name is Cesar. I am a day laborer. I mostly do landscaping, construction, and painting.”

Cesar details the precariousness of his financial situation, including late rent payments and reliance on food banks:

Cesar [05:03]: “I have made some arrangements with my landlord so that I can pay later, although he will charge me interest. And for food, well, there's a food bank here.”

Despite limited work opportunities and financial strain, Cesar underscores the importance of contributing to the community:

Cesar [06:18]: “Each Sunday. Since I am part of the community, I feel obliged to help the people who previously gave me work. I feel good. I feel like I am doing something that is necessary for me to do, something that belongs to me.”

He appeals to state officials for the inclusion of immigrants in unemployment insurance programs, emphasizing their contributions and tax payments.

Cesar [07:00]: “Governor Newsom, please. We have been fighting for unemployment insurance in case of disasters like right now when we do not have work for immigrants because there is no work at this time and we have paid taxes. Previously.”

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Conclusion

The episode concludes by emphasizing the systemic gaps in unemployment insurance that leave many government workers and immigrant laborers without essential safety nets. Through personal stories and expert analysis, Marketplace Morning Report highlights the urgent need for policy reforms to address the vulnerabilities faced by independent contractors and low-income workers in an evolving economic landscape.

Listeners are encouraged to access the full episode and additional resources via marketplace.org.

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Note: Personal identifiers such as Cesar's last name were withheld to protect privacy.

Transcript

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[David Brancaccio]

Many government workers getting thrown out of work are not eligible for unemployment benefits. I'm David Brancaccio. The Supreme Court is giving the Trump administration more time to pay for the foreign aid work done before the administration froze foreign assistance. The high court ruling puts a temporary hold on on a lower court order that had said the money had to get paid by yesterday. Among those caught up in all this are independent contractors who have contracts to work with the U.S. agency for International Development. Their work has evaporated, but they can't file for unemployment. Marketplace's Nancy Marshall Genzer has been looking into this. Nancy, why is this the case?

[Nancy Marshall Genzer]

Well, David, unemployment benefits are funded by a tax companies pay on their employees wages. But contractors aren't employees. They're considered small businesses. Kathy Creighton at Cornell University's School of Industrial and Labor Relations explained it to me this way. Pretty much in almost every state in.

[David Brancaccio]

The country, independent contractors do not get unemployment insurance benefits. And that's because they don't pay into the system.

[Nancy Marshall Genzer]

So they don't get money out of the system. And Creighton says just a very few states allow independent contractors, these gig workers, to collect unemployment benefits.

[David Brancaccio]

So this brings us to the government contractors who are caught up in the Trump administration's work to dismantle USAID in the name of cost cutting. Work for many of those contracts is drying up.

[Nancy Marshall Genzer]

Yeah, they're feeling the ripple effects of the dismantling of usaid, David. So for example, I talked to one contractor, Leanne Evanson. She just had a $40,000 contract canceled. She's essentially a freelancer hired by nonprofits who do work for usaid. She writes reports and grade grant applications. She has no work now and as we said, is not eligible for unemployment. She's under a lot of stress and here's what she said when I asked if she was sleeping at night. I am, but I wake up with.

[Intuit Sponsor]

Like fingernail marks in my hands because I'm clenching my fists.

[Nancy Marshall Genzer]

I used to do that when I had a full time job, which is why I quit. Now obviously Evanson is trying to keep her sense of humor, David, but she is in a very tight spot. She may have to dip into her retirement savings. She got her last paycheck just a few days ago. But she's also worried about people around the world who rely on USAID programs. She specifically mentioned women with HIV who are pregnant can't get medication that would prevent their HIV from being transmitted to their babies.

[David Brancaccio]

Among the ripple effects of the Elon Musk Advisory Group's cuts. But what Evanson was talking about is that did she work for the federal government or not?

[Nancy Marshall Genzer]

Not directly. And many of the nonprofits Evanson works for are not getting paid by usaid. They're canceling their contracts with people like her. Evanson is part of a networking and superior group of more than 150 self employed government contractors and consultants. They're all in the same boat. She says one group member calculated that just 22 of them have lost more than a million dollars so far.

[David Brancaccio]

All right, Nancy, thank you for this. The direction of US import taxes was left unclear by President Trump who suggested yesterday that Mexico and Canada might get another month extension. That said, the White House then said the current March 4 deadline is still in place. And here's how President Trump put it yesterday, quote, I have to tell you that, you know, on April 2nd, I was going to do it on April 1st continuing, quote, but I'm a little bit superstitious. I made it April 2. The tariffs go on. Well, not all of them, but a lot of them. We've been looking at the economic impact of the Southern California wildfires from varied angles. Let's hear now from a day laborer named Cesar who's among those who worked with the Pasadena Community Jobs center to volunteer his time to help with cleaning fire debris in an area hit so hard. Burnt out businesses are legioned so finding paid work is especially hard. It's an account that sheds light on economic conditions for low income immigrant workers.

[Cesar]

My name is Cesar. I am a day laborer. I mostly do landscaping, construction and painting. I have made some arrangements with my landlord so that I can can pay later, although he will charge me interest. And for food, well, there's a food bank here. I'm bringing food to my house. It is a little difficult. My wife also cleaned houses and some of her employers houses were affected. Currently she only has one house left to clean, but this one is located in Highland, California. She has to travel on the train for an hour and a half to get there. Each Sunday. Since I am part of the community, I feel obliged to help the people who previously gave me work. I feel good. I feel like I am doing something that is necessary for me to do, something that belongs to me. Now. It is not much, but whatever I can do, I am contributing. So I would like to send a message more than anything to the state officials. Governor Newsom, please. We have been fighting for unemployment insurance in case of disasters like right now when we do not have work for immigrants because there is no work at this time and we have paid taxes. Previously.

[David Brancaccio]

We withheld Cesar's name over privacy concerns. You can hear more about Cesar's work volunteering to help in the wake of the Eaton fire in the valley northeast of Los Angeles. It's streamable from marketplace.org if you missed it on the air. I'm David Brancaccio with the Marketplace Morning Report from apm, American Public Media.