Workforce Development

New Democrat Coalition panel highlights the need for portable benefits innovation

June 23, 2017  • Alastair Fitzpayne

On June 14th, the House New Democrat Coalition Future of Work Task Force sponsored a panel on the growing need for portable benefits. Althea Erickson, Director of Public Policy at Etsy, Jamil Poonja, Senior Growth Strategy Manager at Stride Health, David Rolf, International Vice President at SEIU, and I presented diverse perspectives on this critical issue.

I focused on the fraying of the social contract between employers and employees that has accompanied the rise of the independent workforce. Given Congress’s current focus on healthcare, I discussed the importance of the portability of health benefits now provided under the Affordable Care Act and reviewed promising portability models under consideration in state legislatures. These innovative initiatives demonstrate the opportunity and necessity for federal leadership and support through the creation of a Department of Labor Benefits Innovation Fund.

Jamil Poonja from Stride Health noted that in the same way the Industrial Revolution marked a transition for workers from self-employment to being on a payroll, the rise of the digital economy will likely produce another transition to independent work. He cited, as evidence, the 28.6 million part-time workers, 8 million workers with multiple jobs, and 15 million self-employed workers in the American labor force. Given this data, Poonja questioned whether work-related benefits should be tied to full-time work or whether they should be attached to workers as they move from job to job. He concluded that a system of portable benefits could help “unlock” a generation of entrepreneurs and broaden economic opportunity.

Etsy’s Director of Public Policy, Althea Erickson, highlighted that Etsy now has 1.8 million sellers, 87 percent of whom are women. The vast majority begin as sole proprietors working out of their homes. Etsy has proposed an ambitious advocacy agenda for portable benefits, including a proposal to establish a federal portal to help workers consolidate multiple benefits, and a mechanism to fund benefits that relies on tax withholding rather than employer payroll deductions. As Erickson explained, “We need to broaden the conversation and start articulating alternatives that work just as well for Uber drivers as Etsy sellers, graphic designers, and home health care aides alike.”

David Rolf from SEIU spoke about the importance of the Treaty of Detroit and the impact that it had in establishing the principle of employer-provided health care and retirement benefits. He also noted that it created some unintended consequences, explaining how Ray Kroc built McDonald’s on a model of low-pay and no benefits. After Kroc, many other companies would follow suit and rely on a business model that used franchisees or independent contractors and avoid the benefit-related costs of hiring traditional full-time W-2 employees. As the workforce continues to fragment, and many workers have multiple income sources, Rolf emphasized the importance of work-related benefits being portable, prorated, and universal. In closing, he gave an example that policymakers need to consider: “There has to be a single standard that applies to all….The person, the TaskRabbit, who comes to my house to hang art on the wall, but whose day job is in an art gallery, and who also drives for Lyft and Uber, and delivers for Instacart on the weekends, can combine all those income sources into a single benefit plan.”

The panel was chaired by Representative Jared Polis (D-CO) and included ten additional New Dem members: Reps. Bill Foster (D-IL), Seth Moulton (D-MA), Jim Himes (D-CT), Lisa Blunt Rochester (D-DE), Suzan DelBene (D-WA), Derek Kilmer (D-WA), Donald Norcross (D-NJ), Darren Soto (D-FL), Kathleen Rice (D-NY), and Brad Schneider (D-IL). Rep. Blunt Rochester spoke about her family’s experiences as independent contractors. She asked: “I’ve been a contractor because I’ve had to… But also my two children, my son started his own recording studio and is independent, which I was scared as a parent. I did not want my child to not have a 401 K and all of those benefits that that go with it. So I was curious… is this wave happening because of the environment that we are in economically or is it choice or is it both?”

Rep. Blunt Rochester’s question exemplifies the complexities and risks of the gig economy. People do contracting work both out of want and need, and both types of workers will benefit from portable benefits legislation. Providing portable benefits, including the retirement accounts her son did not have, could help provide needed security and a safety net to workers of all ages.

The New Dem panel represents an important moment in the portable benefits conversation and highlights two main challenges: the need to enact innovative portable benefits legislation, such as that which has been introduced in Washington State and New Jersey, and the need to expand data collection and sharing to better understand the trends and needs of gig economy workers. These steps will help us meet the changing demands of the independent workforce.

Watch the full panel here.