Almost everything in modern life is portable. If you move states, you can keep your cell number. Your entire music library, the collected works of J.K. Rowling, and all five seasons of Breaking Bad: all portable. With a laptop, Wi-Fi, and the cloud, many jobs are portable, too. But you know what’s not portable? Benefits.
Not yet, anyway. And the lack of portable benefits is one of the biggest impediments blocking U.S. workers from thriving in the new economy, where flexibility is king.
Today’s businesses expect a workforce available on short notice, for temporary engagements, with specialized skills. Consumers, too, expect to be able to order a taxi, a movie, or even a doctor on demand.
But despite all this flexibility, the system for supporting the independent workers who provide these services is the opposite of flexible. Our health insurance, unemployment insurance, and workers compensation are rigidly attached to the employer. When you leave the company, you lose your employee benefits. This system makes no sense in today’s economy, where people move from job to job to build a career.
It’s not working for the growing legion of independent workers—almost 54 million at last count, or about one-third of the workforce. Freelancers don’t have just one employer in a year, they may have five. That means these independent accountants, designers, and caregivers don’t have steady access to essentials like medical coverage, unemployment insurance, or workers compensation. Many go without.
Binding health care or retirement benefits to a single employer runs counter to today’s ideals of disruption and innovation. Just ask anyone who’s ever abandoned the dream of striking out on their own because they couldn’t give up their company’s family health plan.
It’s time to create a new system of benefits that’s portable—one that’s attached to the worker, not the employer. This idea is not new, but it is starting to gain momentum. Last month, a group of tech, public policy, and labor leaders signed an open letter to lawmakers calling for the creation of a stable and flexible safety net for all types of work.
The signatories ranged from the heads of Lyft and Etsy, to professors at NYU Stern School of Business and University of California, Berkeley, to a partner at venture capital firm Union Square Ventures, to the presidents of two Service Employees International Unions. This diverse group of people all shared a basic and bold vision:
Everyone, regardless of employment classification, should have access to the option of an affordable safety net that supports them when they’re injured, sick, in need of professional growth, or when it’s time to retire.
The signers—which included the Freelancers Union—all agreed that stability and flexibility are good for both workers and businesses, and that flexibility should not and need not come at the expense of economic security.
Already, people are debating how this new system would look. Should it come from the public sector or the private sector? But it doesn’t have to be an either/or discussion.
The Freelancers Union recognized this challenge early on. We launched the first portable benefits delivery system a decade ago—long before the Affordable Care Act—specifically tailored to meet the needs of the new workforce. Over the years we served hundreds of thousands of members.
This experience has given us perspective on the evolving needs of independent workers and the nuances involved in delivering such benefits. We’ve seen what works and what doesn’t.
For a portable benefits system to truly serve independent workers, it should adhere to the following tenets:
1. Build it by and for the people. The organization providing portable benefits should have a social purpose, not simply a profit mission. It needs to be administered by a nonprofit, so that revenues get recycled back into the enterprise to sustain it. Certainly the financial sector will have a role in providing products and services, but the entity organizing the benefits should be a nonprofit community organization, labor union, faith-based organization, etc.
2. Fund it for the long haul. The portable benefits system should be built to last. That means funding should come from patient capital with the worker’s interests in mind, rather than from venture capital where an exit strategy is always part of the calculus. Contributions should come from diverse sources—employers, the government, and workers—and should be tax deductible.
3. Make it truly portable. There should be no "job lock" that ties a worker’s benefits to a given employer. Models already exist within the building trades and entertainment unions where the worker gets to designate their benefit holder. Furthermore, workers of all income levels should have access to some type of portable safety net.
4. Keep it in check. As with any major benefits system, the portable safety net must be regulated by the government, with fiduciary requirements, so that its commitment to the public good remains intact over time.
When labor leaders, venture capitalists, tech CEOs, and economists all agree on something, it’s time to take action. Our economy is already charging ahead with new business models and tech innovations. In order to sustain that growth, we need to make sure its workers are also moving forward. Ultimately, a flexible economy needs a flexible safety net to go with it.