The rise of alternative work arrangements has created a rift in the labor system. Because our system ties many rights and programs to full-time employment, the gig economy–ushered in by Uber, Lyft, Handy, TaskRabbit, Postmates, and a growing list of companies–is creating a second class of workers that don’t have the same benefits.
The gig companies say workers are voluntarily giving up things like paid time off, sick leave, retirement savings, and healthcare, in order to have flexible schedules. The legality of that argument hinges on the argument that gig companies are merely platforms for contractors–not employers, a fight that continues to play out in courts across the country.
But Senator Mark Warner (D-VA) wants to fix the problem fundamentally, and has introduced four bills to create a new system of support for gig workers, by giving tax credits to businesses that train workers, help workers pay for their own training, make it easier for non-full-time employees to get mortgages, and help start a system that untethers benefits like healthcare and sick days from full-time employment.
“We can’t and shouldn’t try to regulate our economy into looking like it did 50 years ago,” Senator Warner said in his announcement. “If we want to grow our economy and expand opportunity, Congress has to take steps to increase access to skills training and support workers with access to flexible, portable benefits that carry from job to job.”
The four bills are:
- Investing in American Workers Act: This proposal suggests giving businesses tax credits for investments they make in formally training employees who make less than $82,000 in total compensation annually. To qualify for the credit, employees must undergo training by a qualified institution, like a government recognized apprenticeship program or technical school.
- Lifelong Learning and Training Account Act: As an alternative to actually paying for employee training, this bill recommends the creation of a lifelong learning and training money account where employers could put pre-taxed dollars, so workers can pay for their own training. An employer can also set up this program so that employees contribute pre-taxed dollars from their paycheck to such an account; employers could then also offer to match those funds.
- Self-Employed Mortgage Access Act: Mortgage lenders require loan applicants to submit a W-2 making it hard for self-employed or contract workers (who often earn more than their full-time counterparts) to get a mortgage. This act would require lenders to come up with additional ways to assess the risk of self-employed mortgage applicants.
- Portable Benefits for Independent Workers Pilot Program Act : One of the biggest problems of the modern worker is that they can’t take their benefits with them when they leave. For gig workers, the issue is that not all of the entities that they contract with offer benefits (gig companies would argue they’re not allowed to provide benefits as non-employers). When they go from job to job there’s no continuity of insurance or retirement savings or even paid time off. This bill would put $20 million toward a grant program aimed at figuring out a way for platforms like Uber and Handy to contribute to a benefit fund that workers can take with them wherever they go.
The number of gig workers in the U.S. economy–and thus the scope of this problem–has been heavily debated. In his statement announcing the bills, Sen. Warner said that as much as a third of workers are engaged in temporary, contract, or part-time work. Last year, the Bureau of Labor Statistics released a report saying gig work is actually declining. But some groups have questioned the efficacy of the BLS gig worker survey. And as more companies increasingly embracing contract and part-time workers without a solution either from the government or the courts, the problem of inequity will continue to worsen. As reported by the Guardian last year, approximately 50% of Google’s workforce is comprised of temporary, contract, and part-time workers.
There is a fear that introducing portable benefits system will encourage companies to shift more of their workforce to part-time or contract status. Last year, several state bills were introduced aimed at connecting marketplace platform workers with benefits, while simultaneously codifying their status as contractors. “If you take that approach, companies will take advantage,” says Alastair Fitzpayne, Executive Director of the Future of Work at the Aspen Institute. Still, he thinks there is a responsible way to create legislation that ensures workers of all classifications are connected to a benefits system.
“The hope and aspiration around portable benefits is not to fundamentally rewrite classification law,” he says, “it’s simply to allow businesses to contribute to benefits for all of their workers, rather than a portion of their workers.”