In the Future of Work, Who Provides the Benefits?

In the Future of Work, Who Provides the Benefits?

Katy Steinmetz at Time highlights a survey of 800 employers finding that the majority currently use independent contractors and plan to use more in the future, but “also believe the social contract should be reformed for such workers, people who generally don’t have access to the same kind of benefits as America’s W-2 employees—yet they don’t want the government getting involved”:

According to the survey, more than 80% of companies that use independent contractors say that they do so because they can quickly adjust the size of their workforce, save money on benefits and tailor the worker to a specific task. But more than half of the firms polled said that contingent workers are not as invested or loyal as employees, and that they’re not always around when needed. Nearly half say they’re harder to retain. …

Employers, according to the survey, do agree that change is needed. Nearly 70% of them say the social contract — “whereby health, retirement, and other benefits are generally tied to traditional, full-time W2-based employment” — should be reformed as more people move to making a living through alternative arrangements. A similar proportion believe that businesses, not the government, should determine whether contractors’ version of the social contract looks the same as full-time employees’. Yet there’s little agreement on who should be responsible for making it happen. While one-third of employers say they should be responsible for providing those benefits, the rest are split among other options like the workers themselves (22%), private companies (18%), the government (9%) and worker associations and unions (10%).

As the contingent workforce grows, this question of how to provide full-time independent contractors with the benefits associated with traditional employment will become ever more pressing. That’s especially true for gig economy platforms like Uber, which is battling several class-action lawsuits by drivers who want to be reclassified as employees rather than contractors—something Uber insists would undermine its entire business model. Some economists believe that the current situation is crying out for a new type of worker classification to be introduced into US employment law: an “independent worker” who enjoys some of the rights of an employee but not all.

At US News and World Report, meanwhile, Rebecca Smith, deputy director at the National Employment Law Project, posits that this is a false choice. On-demand businesses like Uber can treat their workforce as employees, she argues, without sacrificing flexibility:

The reality is that on-demand work is not necessarily as flexible as the companies make it seem: Workers must drive and deliver and run errands when consumers need them to. The peak demand hours for transportation network drivers, for example, are between 10 p.m. and 4 a.m. If you need money, those are the hours you work. That’s why it’s called “on-demand” work.

And let’s be honest: The degree of flexibility a worker enjoys has an inverse relationship to the amount of money he or she needs to pay the rent. If you already have a stable income from another source, you have lots of freedom to choose whether to pick up a few extra hours on Saturday night. If you rely on driving for Uber as your first or second job to meet basic needs, not so much. The 1 in 5 Uber drivers who work full time can only take a day off if the bills are paid. …

Some companies claim that they cannot offer flexible schedules to workers and still treat them as employees. Not so. In reality, many on-demand companies can and do offer flexible schedules to their workers, and they treat those workers as employees, with rights to minimum wage, civil rights protections, Social Security contributions and workers’ compensation. Companies such as the cleaning service Managed by Q even offer workers paid family leave and stock options. Instacart allows its employee-shoppers to choose their own hours. These companies prove that flexibility and employee status are perfectly compatible. All it takes is a company that cares not only about profits but its workers too.