With more than one-third of Americans now working in the gig economy, the concept that such side hustles – or in the case of 23% of gig workers, their full-time hustles – doesn’t require some form of worker protection is coming under increasing fire. How that protection looks, however, has remained elusive.
According to a report from Fortunly, gig workers earn 58% less than full-time workers on average, and more than half of them don’t have access to employer-provided benefits. Legislative efforts to reclassify gig workers as employees, and therefore eligible for company benefits, have faced challenges – both from the gig industry and from the workers themselves. The reality, though, is that there is also a segment of gig workers who would like employee status to gain access to benefits.
A 2021 survey from McKinsey, the McKinsey American Opportunity Survey, found that 62% of contract, freelance and temporary workers would prefer full-time, permanent employment.
“This finding is perhaps unsurprising given that contract, freelance or temporary workers were more likely than other respondents to say that they have suffered decreased income over the past 12 months,” McKinsey wrote. “These workers were also nearly twice as likely than others to say that they could not afford health insurance (22%, compared with 13% for all workers) and more likely to cite access to affordable health care and insurance as barriers to their well-being.”
Gig workers are commonly associated with Uber (NYSE: UBER), Lyft (NYSE: LYFT) and related companies, but as e-commerce has grown, there are a number of last-mile delivery companies that now employ gig workers.
Sens. Mark R. Warner, D-Va., and Todd Young, R-Ind., and Rep. Suzan DelBene, D-Wash., last week introduced legislation that would test portable benefits for independent, or gig economy, workers.
The Portable Benefits for Independent Workers Pilot Program Act would establish a $20 million grant fund within the U.S. Department of Labor to incentivize states, localities and nonprofits to test out a portable benefits model, providing workers with access to benefits typically provided through full-time employment.
“More Americans than ever are engaging in part-time, contract or other alternative work arrangements. As the workforce changes, it is increasingly important that we provide workers with an ability to access more flexible benefits that can be carried to multiple jobs across a day, a year, and even a career,” Warner said in a statement. “This program will encourage experimentation at the state and local levels to find ways we can better support our independent, 21st century workforce.”
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The legislation is co-sponsored in the Senate by Angus King, I-Maine; Ben Sasse, R-Neb.; Michael Bennet. D-Colo.; and John Hoeven, R-N.D.
Warner and DelBene introduced similar legislation in 2017, but it never progressed under the Republican leadership. The bill is S. 3674.
One of the challenges for gig companies in providing benefits is that nearly 80% of gig workers work on more than one platform at a time, something called “multi-apping.” There are a few companies that have tried to address this.
Stride Health in October 2021 announced a $47 million series C funding raise. The California-based company plans to use the money to establish portable benefits accounts for independent contractors, freelancers and part-time employees who lack necessities such as health care and dental insurance.
Moves Financial is on a similar mission, working to help gig workers earn shares of the companies they work for through its Moves Collective initiative. In its current form, The Moves Collective has two main components. The first is a set of “tasks” that customers can complete in exchange for a reward denominated in company stock. For example, one task is to earn $5,000 on gig economy apps over 90 days, for which a user will be rewarded with $50 in Uber stock. The second component is a brokerage account that holds the stock for the user. For every user of The Moves Collective, Moves Financial goes through the legal process of creating a brokerage account, which would give workers legal ownership over the stock and the ability to sell it or move it to a different account.
Earlier this month, a group called the Justice for App Workers coalition, which represents several ride-share organizations, took to the streets near Foley Square in New York City to protest their displeasure with working conditions.
“As it stands, app workers like us are cut out of receiving many of the rights and protections so many workers take for granted. But we will no longer settle for less,” Ivan Ventura, a leader with Black Car Mafia that is part of the group, said in a statement. “Uber and Lyft need to understand that we are not backing down until we have the right to form a union. We want to sit at the table and bargain for our wages, our benefits and our futures.”
Other member organizations include the NYC Rideshare Club, United Delivery Workers Association, International Alliance of Delivery Workers, Independent Drivers Guild, Long Island Uber & Lyft Network, UzBER, Utany and NYC Drivers Unite. The coalition includes an estimated 100,000 members.
Watch: Getting into the gig economy
In Massachusetts, gig companies successfully pushed for a ballot referendum in November that would ask state residents to create a third category of worker that falls between employee and independent contractor. That new category, similar to the “worker” category that exists in the U.K., would allow gig workers to maintain their independent status while receiving some of the benefits that typically are afforded to full-time workers.
The legislative proposal from Warner, DelBene and Young would split the $20 million into two pots – $15 million to design, implement and assess new models of providing portable benefits and $5 million to assess and improve existing models. To be eligible, the models would need to include work-related benefits and protections such as retirement savings, workers’ compensation, life or disability insurance, sick leave, training and educational benefits, and health care.
“The way we work is rapidly changing but our laws aren’t keeping up. We need to ensure we have an economy that works for everyone and that includes making sure that gig economy workers can access the same types of benefits as traditional jobs,” DelBene said. “This legislation would take an important step forward on expanding the portability of benefits. Whether you make a living through mobile car services or by selling crafts online, workers deserve access to benefits.”
The bill would allow for employers and/or employees to contribute to the benefits package in much the same way that traditional employers/employees contribute to benefit plans.
Click for more articles by Brian Straight.
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