In theory, working in the gig economy ought to be great. You get to make your own hours. You don’t have a boss looking over your shoulder. You have time for other things. But the reality, as has been well-documented, is often different. For thousands of people, it seems to mean scrambling between multiple “gigs” and never having the sort of security enjoyed by earlier generations. It means flexibility and freedom, but the kind of flexibility and freedom that comes with no vacation, no sick days, no health insurance, and no prospect of retirement.
This emerging reality has lately led to a backlash. Ride hailing services Uber and Lyft have faced lawsuits arguing they need to treat their contractors as employees (Uber lost one ruling by the California Labor Commissioner’s Office, though it’s appealing). And there have been various efforts by workers to organize and complain about their treatment. For example, one worker on Amazon’s Mechanical Turk platform wrote to Jeff Bezos, saying “I am a human being, not an algorithm.”
We can argue about the rights and wrong of the gig economy (no doubt there are plenty of people for whom it’s a great thing). But it’s pretty clear that technology currently outruns the traditional social contract between employers and employees and that companies like Uber have benefitted from the outdated rules about who and who isn’t a staff-member. The IRS’s 20-point definition was introduced in 1987, well before the internet economy took hold. It could well be time for new legal categories of employment that take account of the way we work now.
One idea comes from entrepreneur Nick Hanauer and David Rolf, a Service Employees International Union president in Seattle. Writing in the journal Democracy, they suggest the concept of “Shared Security Accounts” where gig workers would accrue “microbenefits” based on the hours they work:
One can think of the Shared Security Account as analogous to Social Security, but encompassing all of the employment benefits traditionally provided by a full-time salaried job. Shared Security benefits would be earned and accrued via automatic payroll deductions, regardless of the employment relationship, and, like Social Security, these benefits would be fully prorated, portable, and universal.
The idea is to end the situation where employees working 40-hours a week get full sick-pay and vacation time, but people working 39 hours get nothing (and end the perverse incentive for employers to keep working hours below 40). Benefits would be fractionalized, so workers would get percentages of the benefits enjoyed by their full-time peers. Everyone would get their share of five days a year of paid sick leave, 15 days a year of paid vacation, plus a matching 401(k) contribution, with employees building up their accounts across any of the platforms they worked for.
“The universal, portable, and prorated features of the Shared Security Account would assure that all workers accrued basic job benefits regardless of the changing nature of employment,” say Hanauer and Rolf. And it would also “level the playing field among employers while giving all Americans the opportunity to fully participate in our economy.”
Of course, the idea is likely to be fiercely contested by the likes the Uber and Lyft as it would eat into their profits. Twenty days of combined vacation and sick leave would mean employer contributions of $0.0769 for every dollar in wages–a huge amount in the aggregate. But there may be side-benefits, including more productive and more loyal workers, and more generally, a more secure middle class, say Hanauer and Rolf.
Ultimately, not paying people properly is self-defeating. It gives employers a bump in the short-term but reduces the ability of workers to themselves participate in the economy–to order Ubers themselves. “By establishing our 21st-century Shared Security System, we will usher in a new era of middle-class economic security, and by so doing also provide American businesses with the economic stability and certainty that they demand,” Hanauer and Rolf say.