There is a growing consensus across the political spectrum that worker benefits should be more portable – that is, workers should be able to access benefits outside of a traditional employment relationship and take them from job to job. This is particularly important as the number of workers that lack a full-time employment arrangement increases, and are therefore less likely to receive benefits, such as worker’s compensation, paid leave, unemployment insurance, or training. We expect online labor platforms, such as those used by Uber, Lyft, and Handy, to accelerate this trend – recent research shows that they are doubling every year.
While federal policymakers are debating reforms to an existing portable benefit – the Affordable Care Act – policymakers at the state and local level are taking important steps to advance the debate on portable benefits for independent workers.
Legislation in Washington State would require labor platform (Uber, Lyft, Handy, etc) and other contracting companies to make contributions to a portable benefit fund equal to 25 percent of worker income, up to $6 per hour. The fund would provide workers’ compensation benefits, and could provide additional benefits – such as health coverage, paid leave, and retirement – depending on workers’ preferences. The fund would be non-profit and partly run by the workers themselves, meaning that this organization could represent worker interests in decisions concerning their benefits.
In New York, Gov. Cuomo announced his intention to form a task force to “study creative options and make a recommendation for the State to help ensure all workers in New York, regardless of their industry, trade or skill, have affordable access to benefits.” Legislation may also be introduced to establish portable benefits in New York. Roberta Reardon, the state Department of Labor commissioner and Howard Zemsky, President and CEO of Empire State Development, will lead the task force.
The Aspen Institute Future of Work Initiative, led by Honorary Co-Chairs Senator Mark Warner and Purdue President Mitch Daniels, strongly supports the efforts of state and local governments to experiment with different portable benefit models for independent workers. In the last year, we published a report evaluating different portable benefit models, as well as a resource guide to help state and local policymakers forge partnerships with companies, benefits providers, and workers to create innovative portable benefit models. While we believe that state and local governments should serve as the “laboratories of democracy” for portable benefit models, we also believe that the federal government has a role to play in helping update the social contract.
For this reason, we offer a new proposal: a federal competitive grant program for portable benefit pilots. Building off of funding that was allocated by the Department of Labor in 2016, these grants would help fund the design, implementation, and evaluation of new and existing models and approaches to providing portable benefits to independent workers. Eligible applicants would include state or local governments, or nonprofit organizations.
The grant program would have two main goals:
Experimentation. As we observe in Portable Benefits in the 21st Century, there are a variety of portable benefit models available. The role of the federal government should not be to choose a specific model, but rather to support a variety of approaches. This proposal encourages experimentation, providing future policymakers with real-life examples from which they can learn the strengths and weaknesses of each approach.
Innovation. Independent workers may require different types of benefits than traditional workers. For example, unemployment insurance is difficult to apply to independent workers because, legally, they are not employed. On the other hand, they may benefit greatly from services that help them manage income volatility, which is a particular problem for independent workers. This proposal allows for a wide variety of eligible benefits, such as traditional benefits like retirement, health care, and disability, but also allows for innovative new benefits related to short-term savings, access to credit, tax withholding, and training and education benefits.
Modernizing the social contract to include all workers is no easy task – it requires cooperation across all levels of government. State and local governments, along with the private sector, should experiment with benefit models, and the federal government should support these efforts.