Gig economy could transform social safety netArticle added by Marlene Y. Satter on March 2, 2017
Marlene Satter

Marlene Y. Satter

Joined: April 29, 2015

Some cities and states are exploring ways to provide benefits that are completely portable, because of such gig-economy employers.

The rise of the gig economy, lacking benefits—health, vacation, retirement, or, for that matter, anything else—could lead to a sea change in the way workers are treated as at least some lawmakers investigate the possibility of making all benefits portable.

Related: 5 job trends to watch in 2017

That’s according to a Huffington Post report, which says that some cities and states are exploring ways to provide benefits that are completely portable, including such measures as access to workers’ compensation, unemployment insurance and even assistance in paying for health insurance.

One of those lawmakers is Rep. Jessyn Farrell, a Democratic representative from Washington state, who has put forth a bill that could begin the process of creating a more flexible and inclusive system of benefits.

The bill would mandate that companies and people acting as brokers for independent contractors put money toward a contract worker’s benefits.

In New York, there are other strategies afoot, with state legislators considering allowing online platforms, such as home cleaning services, to pay into a benefit fund for workers who use their app or website.

Meanwhile, the New York City Council has heard proposals for a surcharge on riders to pay for benefits for taxi, livery cab, Uber and Lyft drivers.

Related: Flexible work schedules hurt women’s careers

Considering that, despite all the hype about a booming economy, a full 40 percent of workers don’t have a full-time job, the economy isn’t booming for anyone who needs benefits—from sick leave to health care to a retirement account.

And we already know how bad the retirement crisis is, with 40 million Americanshaving nothing saved for retirement.

In fact, although many states have taken steps to create portable retirement plans for the 45 percent of workers who don’t even have access to a retirement plan at work, the Republican administration has done its best to quash that, killing a safe harbor law that would have encouraged such plans by providing a safe harbor from ERISA fiduciary requirements.

Since many companies using gig workers already do so because they want to avoid the legal responsibilities and expense of the traditional employer/employee relationship, the move toward portable benefits could have a tough uphill battle ahead of it—but that doesn’t mean it isn’t a good idea.

If the gig economy continues, sooner or later the debate will reach critical mass.

David Rolf, an official with the Service Employees International Union in Seattle and a founder of the “Fight for $15” movement to boost the minimum wage, points out in the article that only systemic changes will make sure everyone has access to basic benefits such as workers’ compensation.

He’s quoted saying, “Are we going to try to recreate the employment contract and the social contract of the mid-20th century, are we going to reinvent it for a new era, or are we going to lose it altogether?”

The Washington bill would require people or companies, like Uber, for instance, that find work for and transfer payments to independent contractors, to kick in to a pool of money that would be managed by an independent nonprofit.

The broker could charge consumers extra or take the money out of workers’ pay. Contributions would be made at least monthly, and total either $6 per hour worked or 25 percent of the sum charged to the consumer, whichever is smaller. The money could be used for paid time off, to pay for health insurance or for other qualified benefits.

Rolf and venture capitalist Nick Hanauer have envisioned a new benefit system, which they published a manifesto in the journal Democracy.

Not only would workers have a benefits account, but it would be paid into by multiple employers—not tied to the job, but tied to the worker. In addition, workers wouldn’t need have to work a minimum number of hours each week to qualify, but would instead get “an hour’s worth of benefits for an hour’s work.”

Originally published on BenefitsPro.com
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