Fast Company - Sen. Warner: The American Dream Is Fading For Millions Of Freelancers. Portable Benefits Could Save It
Senator Mark R. Warner says the U.S. needs a fresh wave of innovation around how benefits are delivered in the modern workforce. “We’re already behind the curve.”
Jul 05 2017
By Sen. Mark R. Warner
If you’ve taken a sick day, contributed to a retirement plan, or received health insurance through an employer, you’re familiar with how America has delivered social safety-net benefits for nearly 75 years. Unlike in most other industrialized countries, in the United States these benefits are traditionally tied to the job rather than the individual. More and more, this 20th-century approach is failing workers in the 21st-century economy.
Today, as much as one third of the U.S. workforce is engaged in temporary, contract, or on-demand work. While this independent work can offer more flexibility, it can also reduce stability and predictability for those who work this way.
But while the nature of work in this country has been changing, private and public responses have lagged behind. The first 401(k) retirement plans, and the changes that made them ubiquitous in the workplace, didn’t come into effect until the 1980s. It’s been less than 25 years since paid sick days became widespread—not a long time in the grand scheme of things. And most of today’s highly valued on-demand platforms didn’t exist even a decade ago.
For a brief while longer, I can still claim to have spent more time in business than in politics. During those years, I launched businesses, failed at a few of them, and was fortunate to get in on the early days of the cellphone industry. What I learned from my setbacks is that experimentation is the only way to figure out what works and what doesn’t. And now it’s time for government to do the same.
As the independent-worker population continues to grow, we need to come up with ways to provide benefits that workers can carry with them from job to job. I’ve been advocating for a variety of pilot programs for delivering a modern and meaningful social safety net to these workers for some time. And in May, I introduced legislation that does just that—setting up a testing ground for local governments, nonprofits, and labor unions to receive funding and explore ways to provide portable benefits for independent workers.
These are benefits that would be tied to the worker instead of the employer. As individuals transition through multiple jobs or gigs, or dip in and out of part-time employment, they could carry these benefits across a day, a year, or a career. New models could vary widely to include benefits ranging from retirement savings, workers’ compensation, life or disability insurance, and sick leave to training and educational benefits, health care, and more.
The legislation I’ve proposed establishes a $20-million grant fund within the U.S. Department of Labor to incentivize states, localities, and nonprofit organizations to develop portable-benefits models for the independent workforce. This should accelerate experimentation at the state and local levels to better support a more independent 21st-century workforce. And businesses can fuel this innovation, too, by partnering with nonprofits and governments to test these same benefits.
Some companies and localities have already started experimenting on their own, knowing that the future of work will largely depend on their ability to become partners in our quest to define what a modern set of benefits will look like.
Recently in New York, Uber has taken a new hybrid approach to employee benefits, by supporting an Independent Drivers Guild—a first in the nation—formed in a way that maintains some of the traditional organizing principles of a union while bringing nontraditional independent workers on board. Last February, Washington state legislators introduced a bill that would create a benefits system for independent contractors, based on contributions from contracting companies and administered by qualified nonprofit providers.
Because definitions of gig work and freelancing vary, so do estimates of the number of independent workers in the American workforce—ranging from less than 4 million to as many as 55 million—but their ranks are growing, and it’s clear that we’re overdue for a relevant and modern system of social insurance to support them. If we can’t come up with one, when they hit a rough patch—and let’s face it, almost all of us do—there will be nothing there to catch their fall. And with new technologies and expanded automation emerging at the speed of light, now is the time to prepare for even more seismic shifts in the future of work.
It’s too early to tell what the right model for portable benefits will ultimately look like, but we’re already behind the curve. And one thing is certain: We’ll all pay the price if we can’t meet the American workforce where it already is today—let alone where it’s headed tomorrow.
Mark R. Warner is the senior United States Senator from Virginia.