Employment and Jobs

Portable Benefits Discourse Distracts from Gig Companies’ Power Play

May 26, 2021  • Shelly Steward

The past year has brought new attention to workers’ rights challenges. The COVID-19 pandemic highlighted the inadequacy and inequity of our existing systems of paid leave, health care, unemployment insurance, and other benefits, while a series of legal and legislative battles underscored the need to address the misclassification of workers. Legislative proposals put forward by gig companies collapse these issues into one conversation. They claim worker classification is about benefits and offering any form of benefits negates the need to enforce existing classification laws. This argument, however, distracts voters and policymakers from the questions of power that are at the core of classification and threaten to worsen our already weak system of benefits. To improve the lives of working people, we must both address misclassification in the gig economy and reimagine existing workplace benefits.

Since Uber popularized platform-based work in the early 2010s, most gig companies have classified their workers as independent contractors despite controlling many aspects of work, like setting wages and incentivizing work at certain hours. After nearly a decade of misclassification allegations, in 2019, California passed Assembly Bill 5 (AB5), which established a simplified, worker-centered definition of employment, under which most gig workers would be considered employees. Unwilling to comply with the law, gig companies spent an unprecedented amount to promote Proposition 22, which passed in November 2020. Prop 22 exempts platform-based transportation and delivery companies from classification laws, while mandating they provide a scant set of benefits to workers. In their promotion of the ballot measure, companies relied on an argument for “portable benefits,” which served to distract from the issues of control at the core of classification and deceive voters into thinking that the measure would offer financial stability to gig workers.

If there is one thing advocates of Proposition 22 got right, it is that too many workers today, whether employees or independent contractors, lack access to basic workplace benefits. Recipiency of many benefits has fallen in recent decades, and low-income workers most in need of stabilizing benefits are typically the least likely to receive them. The pandemic has drawn attention to these challenges, as 7 million people lost health insurance when they lost their jobs, millions more had to choose between health and a paycheck in the absence of paid leave, and our unemployment insurance system proved incapable of delivering timely benefits to millions. This fractured system needs to be reimagined to provide universal access to essential benefits with simplified, worker-centered delivery.

Gig Company Campaigns Redefine “Portable Benefits”

Gig companies are using broad recognition of the inadequacy of the safety net to garner support for their legislation. In Prop 22, they put forward a suite of so-called “portable benefits” for gig workers. Portability refers to the ability to carry benefits from job to job without losing coverage — and is best exemplified by Social Security, one of the longest-standing workplace benefits. In this program, both workers and employers contribute to a publicly administered fund throughout a career, which then ensures basic financial stability later in life. More recently, state-level paid family and medical leave and IRA programs have followed this model. However, the gig company conversation around portable benefits ignores these existing programs and instead offers something less portable and less generous.

Rather than being publicly administered social insurance programs, the “portable benefits” of gig companies are individualized, like modest stipends to contribute to the cost of health insurance, and privatized, like occupational hazard insurance instead of state-licensed workers’ compensation. In addition, these benefits are not portable across jobs, as they are limited to app-based transportation-sector work. These benefits force gig workers into a second-tier class of work, widening gaps between work arrangements rather than facilitating transitions between them.

Companies, eager to rewrite laws to suit their exploitative business models, have co-opted the idea of portability to garner support. As they look beyond California, companies have started applying this playbook again, with similar legislation on the horizon in Massachusetts, Illinois, New Jersey, Colorado, and elsewhere.

We Need Worker-Centered Solutions

Classification is about the relationship between workers and companies, and the power dynamic between them. When companies control conditions of work, employment laws provide basic protections and a framework for empowering workers. Legislation that exempts gig companies from basic labor laws puts a band-aid on wounds these companies have inflicted. The concessions offered by Prop 22 distract from the real issues at play and threaten to weaken working conditions across the labor market. Furthermore, the gig companies’ role in drafting the ballot measure further shifts power into corporate hands, forcing workers into a Devil’s bargain, gaining short-term sustenance while facing long-term deterioration of job quality.

Workers, and the economy, need real solutions that both enforce classification laws and reimagine workplace benefits. We need clear, worker-centered classification laws, like AB5, that ensure people who are working for others receive basic benefits and protections of employment. We also must rebuild our safety net with universal, equitable, portable benefits that can support not only gig workers but also the millions of employees and truly independent contractors who struggle with unstable work, low wages, and inadequate benefits.

As we work toward both of these goals, solutions must be centered on workers and not drafted by corporations. As corporate power has grown, wages have stagnated and job quality has declined. We are overdue for a rebalancing that equips workers to have a role in shaping their lives and livelihoods today and into the future.


Share

#PortableBenefits can be an essential component to uplifting workers, but they should be centered on workers and their needs—not drafted for the convenience of corporations.

Gig company proposals for #PortableBenefits don’t offer financial stability to #gigworkers, but are meant to distract voters from core issues of worker misclassification in the #gigeconomy. @Shellysteward explains.

Misclassification in the #gigeconomy is contributing to the widening gap between work arrangements. Here, @AspenFutureWork’s @shellysteward discusses how gig companies’ version of #portablebenefits hold #gigworkers back.

The #PortableBenefits designed by gig companies are not actually very portable: they’re limited to app-based transportation-sector work.

Let’s reimagine our economy in a way that centers our workers—with universal access to essential benefits and simplified delivery.

Failing to recognize #gigworkers as employees forces them into a second-tier class of work. Classification enforcement is as important as #portablebenefits in ensuring fair protection of workers and their benefits.

From @shellysteward’s blog post on the failure of current #portablebenefits proposals for #gigworkers: “To improve the lives of working people, we must both address misclassification in the gig economy and reimagine existing workplace benefits.”


Learn More

The Future of Work Initiative aims to identify, develop, and amplify solutions that address the challenges of today while building toward a future in which workers are safe, empowered, and equipped to thrive in our changing world. The Future of Work Initiative is an initiative of the Economic Opportunities Program.

The Economic Opportunities Program advances strategies, policies, and ideas to help low- and moderate-income people thrive in a changing economy. Follow us on social media and join our mailing list to stay up-to-date on publications, blog posts, events, and other announcements.