Press Releases
WASHINGTON – U.S. Sens. Mark R. Warner (D-VA) and Todd Young (R-IN) joined by U.S. Rep. Suzan DelBene (D-WA-01) today introduced legislation to test innovative portable benefits designs for the growing independent workforce. The Portable Benefits for Independent Workers Pilot Program Act seeks to provide workers with access to insurance protections typically provided through traditional full-time employment. This legislation would establish a $20 million grant fund within the U.S. Department of Labor to incentivize states, localities and nonprofit organizations to experiment with portable benefits models.
“Each year more and more Americans engage in part-time, contract or other alternative work arrangements to support themselves and their families. But despite these shifts, our retirement and savings programs aren’t keeping up to help these workers,” said Sen. Warner. “This program will encourage experimentation at the state and local levels to support the realities of a 21st century workforce.”
“Job opportunities in the gig economy provide workers with utmost flexibility,” said Sen. Young. “Supporting portable benefit options helps uncover creative solutions to addressing the needs of our rapidly changing workforce. I am pleased to reintroduce this bill to make it easier for Hoosiers find the job opportunity that best suits their family situation.”
“The way we work is rapidly evolving, and it is time our laws caught up. Today, millions of workers lack access to benefits like workers’ compensation and paid time off. We must act to ensure our economy works for everyone,” said Rep. Suzan DelBene. “This legislation is an important step toward ensuring benefits are accessible to all workers, regardless of their work arrangement. Whether you are a rideshare driver or an online artisan, you should have the same benefits opportunities as other workers.”
The legislation is co-sponsored in the Senate by U.S. Sens. Angus King (I-ME), Kevin Cramer (R-ND), Michael Bennet (D-CO), and John Hoeven (R-ND).
“Independent workers make up a growing percentage of our workforce, yet they are often not eligible for many benefits typically offered by employers. North Dakotans in non-traditional work arrangements deserve access to the same benefits as the rest of the working public,” said Sen. Cramer. “These pilot programs encourage state and local governments to provide portable benefits and give independent contractors additional financial stability.”
“Information technology, analytics and the ‘gig’ economy are changing the complexion of the 21st century economy, so it’s vital that our federal policies evolve to stay in step with the reality faced by everyday workers,” said Sen. King. “Today, more and more Americans work as independent contractors, or are more regularly switching jobs to address new opportunities in the workforce – and they should have flexible benefit options for them and their families. This bipartisan bill would lay the groundwork for more portable benefits so we can effectively support independent workers as they help change and expand the modern economy.”
“As we experience a workforce shortage across the nation, offering more flexible benefits and support will help make it easier for workers across the country and in North Dakota to find the right job opportunity for them and their families,” said Sen. Hoeven.
In the past decade, the composition of the U.S. workforce has changed significantly, and those who earn all or some of their income as independent contractors, part-time workers, temporary workers or contingent workers have found it difficult and expensive to access benefits and protections that are commonly provided to full-time employees. These benefits include paid leave, workers’ compensation, skills training, unemployment insurance, tax withholding and tax-advantaged retirement savings. As the workforce changes, employers and policymakers need to consider a system that allows workers to carry these benefits with them from job to job across a lifetime in the workforce.
The Portable Benefits for Independent Workers Pilot Program Act would establish a portable benefits pilot program at the U.S. Department of Labor. It authorizes a total of $20 million for competitive grants to states, local governments and nonprofits for pilot projects to design, implement and evaluate new models ($15 million) or assess and improve existing models ($5 million) for portable benefits for independent workers such as contractors, temporary workers and self-employed workers.
Eligible models will provide a number of work-related benefits and protections – such as retirement savings, workers compensation, life or disability insurance, sick leave, training and educational benefits, health care, and more. In order to encourage innovative thinking on these challenging issues, programs focused solely on retirement-related benefits will not be eligible. In awarding grants, the Secretary of Labor is directed to prioritize models that can be replicated on a large scale or at the national level.
Sen. Warner and Rep. DelBene originally introduced this legislation in 2017, and have continued to lead the push for policy solutions to address shifts across our economy that have changed the workforce. During the COVID-19 pandemic, Sen. Warner doubled down on efforts to include expanded benefits eligibility in relief packages.
“Grantmakers in the Arts sees firsthand the negative impact on independent workers that their lack of access to workplace benefits has on their health, their stability, their families,” said Eddie Torres, President and CEO, Grantmakers in the Arts. “We see these negative impacts because so many artists are independent workers. Health insurance, disability insurance, retirement savings, and other benefits provide essential protections for traditional workers that independent workers simply do without. With the number of independent workers growing, the introduction of the Portable Benefits for Independent Workers Pilot Program Act comes at a crucial time. The bill will begin to lay the policy foundation to make workplace benefits available to independent workers, including artists. Grantmakers in the Arts strongly supports this legislation, and stands ready to work with Senators Warner and Young and Representative DelBene to have it signed into law this Congress.”
“The Association of Language Companies applauds Senator Warner and his colleagues for introducing the Portable Benefits for Independent Workers Pilot Program Act,” said Susan Amarino, President, Association of Language Companies. “The language industry works in every industry in the US. We support national security, economic growth, and the provision of vital language access to health care, education, and social services. The translators, interpreters, captioners, and other skilled language professionals deserve the ability to choose independent contractor status and receive the benefits necessary to take care of their families and plan for their futures. The pilot program for portable benefits would go a long way toward supporting the 21st-century knowledge-based workforce.”
A copy of the bill text is available here.
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WASHINGTON – Today, U.S. Sen. Mark R. Warner (D-VA), U.S. Sen. Todd Young (R-IN) and U.S. Rep. Suzan DelBene (D-WA) introduced legislation to test innovative portable benefit designs for the growing independent workforce. The Portable Benefits for Independent Workers Pilot Program Act seeks to provide these workers with access to social insurance protections typically provided through traditional full-time employment. This legislation would establish a $20 million grant fund within the U.S. Department of Labor to incentivize states, localities and nonprofit organizations to experiment with portable benefits models for the independent workforce.
“More Americans than ever are engaging in part-time, contract or other alternative work arrangements. As the workforce changes, it is increasingly important that we provide workers with an ability to access more flexible benefits that can be carried to multiple jobs across a day, a year, and even a career,” Sen. Warner said. “This program will encourage experimentation at the state and local levels to find ways we can better support our independent, 21st century workforce.”
“Job opportunities in the gig economy provide workers with utmost flexibility, which is increasingly needed as parents continue to adjust schedules due to the pandemic,” Sen. Young said. “Supporting portable benefit options helps uncover creative solutions to addressing the needs of our drastically changing workforce. I am pleased to reintroduce this bill to make it easier for Hoosiers find the job opportunity that best suits their family situation.”
“The way we work is rapidly changing but our laws aren’t keeping up. We need to ensure we have an economy that works for everyone and that includes making sure that gig economy workers can access the same types of benefits as traditional jobs,” Rep. DelBene said. “This legislation would take an important step forward on expanding the portability of benefits. Whether you make a living through mobile car services or by selling crafts online, workers deserve access to benefits.”
The legislation is also co-sponsored in the Senate by Sens. Angus King (I-ME), Ben Sasse (R-NE), Michael Bennet (D-CO), and John Hoeven (R-ND).
While the composition of the workforce has changed, those who earn all or some of their income as independent contractors, part-time workers, temporary workers or contingent workers find it difficult and expensive to access benefits and protections that are commonly provided to full-time employees, such as paid leave, workers’ compensation, skills training, unemployment insurance, tax withholding and tax-advantaged retirement savings. As the workforce changes, employers and policymakers need to consider a system of portable benefits that allow workers to carry these benefits with them from job to job across a lifetime in the workforce.
The Portable Benefits for Independent Workers Pilot Program Act would establish a portable benefits pilot program at the U.S. Department of Labor. It authorizes a total of $20 million for competitive grants to states, local governments and nonprofits for pilot projects to design, implement and evaluate new models ($15 million) or assess and improve existing models ($5 million) for portable benefits for independent workers such as contractors, temporary workers and self-employed workers.
Eligible models should provide any number of work-related benefits and protections – such as retirement savings, workers compensation, life or disability insurance, sick leave, training and educational benefits, health care, and more. In order to encourage innovative thinking on these challenging issues, programs focused solely on retirement-related benefits will not be eligible. In awarding grants, the Secretary of Labor is directed to prioritize models that can be replicated on a large scale or at the national level.
Sen. Warner and Rep. DelBene originally introduced this legislation in 2017.
Sen. Warner has been a leader in Congress in pushing for policy solutions to address the country’s ever-changing workforce. Earlier this month, He called on the SEC to require companies to report on how many workers they employ who are not classified as full-time employees, including independent and subcontracted workers. Sen. Warner has also successfully pushed the Labor Department to update its annual workforce surveys to collect better data on the independent workforce, and he also convinced the Internal Revenue Service to update its tax-filing and record-keeping guidance for independent workers. Since 2015, Sen. Warner has co-chaired The Aspen Institute’s bipartisan Future of Work Initiative.
Before joining Congress, Rep. DelBene had a long career in the technology industry and as an entrepreneur. She is viewed as a forward-looking lawmaker trying to update laws for the way the world works today.
A copy of the bill text is available here.
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WASHINGTON – U.S. Sen. Mark R. Warner (D-VA), a member of the Senate Committee on Banking, Housing, and Urban Affairs, and U.S. Sen. Sherrod Brown (D-OH), chairman of the committee, today called on the Securities and Exchange Commission (SEC) to require companies to report on how many workers they employ who are not classified as full-time employees, including independent and subcontracted workers.
“We believe that the disclosure of this data is critical to fully capture companies’ human capital management. We applaud the SEC for focusing on strengthening human capital disclosures as part of its regulatory agenda,” wrote the senators in a letter to SEC Chairman Gary Gensler. “It is clear that investors need more information to understand how companies treat people, the most critical asset of any company. We agree that investors need disclosures that include quantifiable and comparable datasets that clearly articulate a company’s human capital management, such as metrics on turnover, skills and development training, compensation, benefits, workforce demographic, and health and safety… That picture would be wholly incomplete, however, if companies are not required to disclose information about the number of independent contractors they use on a regular basis and the entire workforce that is material to their business strategy.”
Examples of subcontracted out workers considered part of the material workforce include security personnel, janitors, food service workers, housekeepers for hotels and lodging real estate investment trusts (REIT), and custodial workers.
“In recent decades, companies have replaced in-house operations with contracting, on-demand work, or other forms of independent and contracted work that lower short-term costs for the business but come at the expense of workers, who receive fewer benefits, lower wages, and have less upward mobility within the organization. This is one of the defining tensions that has emerged as companies have prioritized short-term profits at the expense of investments in their workforce and long-term productivity. As you know, these decisions have material effects on a business’ financial performance,” the senators noted.
Concluded the senators, “We appreciate the SEC is working towards the shared goal of ensuring that investors and shareholders have the information they need to understand companies’ human capital management, a critical piece of understanding a company’s performance as well as potential long-term, systemic risks to the U.S. economy. We urge you to ensure that future SEC rulemaking captures this long-term trend of companies’ increasing use of outsourcing, independent contractors, and subcontracting, which will be a critical data point in understanding companies’ human capital management.”
Sen. Warner, a former entrepreneur and venture capitalist, has long stressed the importance of updating human capital disclosure requirements to reflect the priorities of modern companies. In May, Sen. Warner introduced the Workforce Investment Disclosure Act, which would require public companies to disclose basic human capital metrics, including workforce turnover rates, skills and development training, workforce health and safety, workforce engagement, and compensation statistics.
A full copy of the letter is available here and below.
Dear Chairman Gensler:
We are writing to urge the Securities and Exchange Commission (SEC) to ensure that, as part of its agenda to improve human capital disclosure, companies report on the numbers of their workers who are not classified as full-time employees, including independent contractors, as well as the entire workforce that is material to the company and its investors (the “material workforce”) such as subcontracted workers. We believe that the disclosure of this data is critical to fully capture companies’ human capital management.
We applaud the SEC for focusing on strengthening human capital disclosures as part of its regulatory agenda. It is clear that investors need more information to understand how companies treat people, the most critical asset of any company. We agree that investors need disclosures that include quantifiable and comparable datasets that clearly articulate a company’s human capital management, such as metrics on turnover, skills and development training, compensation, benefits, workforce demographic, and health and safety. As you have indicated in prior remarks, “Large and small investors, representing literally tens of trillions of dollars, are looking for consistent, comparable, and decision-useful disclosures in these areas to determine whether to invest, sell, or make a voting decision one way or another.”
That picture would be wholly incomplete, however, if companies are not required to disclose information about the number of independent contractors they use on a regular basis and the entire workforce that is material to their business strategy. Examples of subcontracted out workers that should be considered part of the material workforce include security personnel, janitors, food service workers, housekeepers for hotels and lodging real estate investment trusts (REIT), and custodial workers. In recent decades, companies have replaced in-house operations with contracting, on-demand work, or other forms of independent and contracted work that lower short-term costs for the business but come at the expense of workers, who receive fewer benefits, lower wages, and have less upward mobility within the organization. This is one of the defining tensions that has emerged as companies have prioritized short-term profits at the expense of investments in their workforce and long-term productivity. As you know, these decisions have material effects on a business’ financial performance.
We appreciate the SEC is working towards the shared goal of ensuring that investors and shareholders have the information they need to understand companies’ human capital management, a critical piece of understanding a company’s performance as well as potential long-term, systemic risks to the U.S. economy. We urge you to ensure that future SEC rulemaking captures this long-term trend of companies’ increasing use of outsourcing, independent contractors, and subcontracting, which will be a critical data point in understanding companies’ human capital management.
Thank you for your attention to this important matter.
Warner Welcomes Unemployment Insurance Fix
Feb 25 2021
WASHINGTON – U.S. Sen. Mark R. Warner (D-VA) today welcomed a move by the U.S. Department of Labor expanding the number of workers who are eligible for the Pandemic Unemployment Assistance (PUA) program that was created as part of the federal CARES Act. Last week, Sen. Warner and four of his colleagues raised concern with the Department that policy guidance issued to state unemployment offices on Jan. 8 was limiting the ability of workers whose hours have been reduced to access PUA benefits.
“There are workers all over the country who have had their hours reduced or been temporarily laid off due to COVID-19, and they should be eligible for Pandemic Unemployment Assistance under the CARES Act,” said Sen. Warner. “I’m glad to see the Department of Labor listened to our concerns and is adjusting their guidance to states to make clear that these workers are eligible for PUA benefits.”
On Feb. 17, Sen. Warner joined Sens. Maggie Hassan (D-NH), Ron Wyden (D-OR), Jeanne Shaheen (D-NH), and Sherrod Brown (D-OH) in calling on the U.S. Department of Labor to issue revised guidance making clear that workers who have had their hours reduced, or who have been temporarily laid off even though their employer remains open, are eligible for PUA.
In the Feb. 17 letter to the Department of Labor, the Senators wrote, “Partial closures are very common for businesses like restaurants that are operating with limited indoor dining capacity, or only offering take-out services, and have resulted in many service workers working reduced hours or being temporarily laid off even though their employer remains open. The recent guidance directs states to deny PUA eligibility to workers who have been impacted by partial closures. This is of particular concern for workers who do not have sufficient qualifying earnings to be considered eligible for state unemployment, including workers who are newly hired. It is clear from the language of the CARES Act that PUA is intended to cover workers who are ‘unemployed, partially unemployed, or unable or unavailable to work’, which would include workers affected by partial closures… We ask that the Department clarify that workers impacted by partial closures or their employer scaling back business operations are eligible for PUA, or use its authority under 2102(a)(3)(A)(ii)(I)(kk) of the CARES Act to ensure these workers are eligible. This clarification is vital so that these workers can make ends meet during the pandemic.
When emergency pandemic unemployment programs were set to expire at the end of last year, Sen. Warner successfully led the fight to include an extension in the $900 billion emergency COVID-19 relief legislation that Congress approved in December. From the start of this crisis, Sen. Warner, a former tech entrepreneur and longtime leader on labor issues affecting contractors and the contingent workforce, has pushed to expand benefits for Americans who have found themselves unemployed through no fault of their own during the pandemic. In March, Sen. Warner voted in favor of $2 trillion bipartisan legislation that, among other things, expanded access to unemployment benefits for gig workers, contractors and the self-employed. In the months following the signing of the legislation, Sen. Warner urged states to quickly implement federal provisions easing restrictions on emergency unemployment benefits, and called on the Department of Labor (DOL) to issue and clarify state guidance in order to ensure that workers were able to receive benefits. He also introduced legislation to help guarantee that Americans who earn a living through a mix of traditional (W-2) and independent employment income (1099) were able to fully access the financial relief made available under the PUA program.
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WASHINGTON – U.S. Sens. Mark R. Warner (D-VA), Elizabeth Warren (D-MA), Tom Carper (D-DE) and Tammy Baldwin (D-WI) announced the formation of a working group to develop legislative proposals and conduct oversight focused on fundamentally reforming corporate governance. This comes as the COVID-19 pandemic continues to underscore the urgency of reforming corporate practices that leave corporations with little to no savings, workers living paycheck-to-paycheck, and supply chains outsourced to the lowest bidder.
"For far too long, many companies have disregarded broad-based growth and put short-term profits ahead of workers, fueling inequality and restricting opportunities for the poor, for young people, and for people of color. Short-term financial pressure often pushes corporations to forgo necessary long-term investments, ignore the threat of climate change, and concentrate opportunity in ways that exclude too many of our communities," said the senators. "We will work together on ways we can fundamentally reform corporate governance in America."
The senators have each worked on proposals to hold American corporations accountable and create an economy that provides prosperity for all Americans.
- Sen. Warner has introduced the Workforce Investment Disclosure Act to require companies to disclose investments in workers, urged the Securities and Exchange Commission (SEC) to require disclosure of companies' human capital management policies, and has pushed for better reporting of non-financial indicators covering a company's environmental, social, and governance (ESG) practices.
- Sen. Warren has introduced legislation to transform corporate America, hold corporate executives personally accountable when their companies commit crimes, and empower workers and other stakeholders, not just shareholders. Her Stop Wall Street Looting Act would reform the private equity industry and she has been a leading voice in pressing corporations to address their role in fueling the climate crisis.
- Sen. Carper, as the top Democrat on the Senate Environment and Public Works Committee, has conducted rigorous oversight on the influence of major oil companies in federal rulemaking, helped to reach a voluntary greenhouse gas emissions deal between auto companies and California in defiance of the Trump Administration's federal rollback, and introduced legislation that would hold companies accountable to clean up their pollution.
- Sen. Baldwin has introduced legislation to: give workers a seat on corporate boards and restrict buybacks through her Reward Work Act and address abuses by activist hedge funds in her Brokaw Act.
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Warner & Brown Ask for Greater Study of Subcontracted Workers in the 21st Century Workforce
Sep 18 2020
WASHINGTON – U.S. Sens. Mark R. Warner (D-VA) and Sherrod Brown (D-OH) today urged the U.S. Government Accountability Office (GAO) to report on companies’ increased use of subcontracted and contingent workers for work that used to be performed by direct employees. This leads to the creation of ‘fissured workplaces’ – environments where primary employers outsource “non-core” business functions to subcontracted firms but still maintain tight control over the outcomes of those subcontractors. This has primarily affected occupations in payroll, accounting, janitorial services, facilities maintenance, security, food preparation, among others.
In a letter, the Senators pressed Comptroller General Gene Dodaro for more information to better understand how companies’ efforts to cut costs are affecting the long term resiliency and stability of workers, and how this trend is affecting the U.S. workforce and its paths for upward mobility.
“We suspect that fissured workplaces could be leading to an erosion of the American social contract. Employers’ use of contract and contingent workers, including subcontracted workers, independent contractors, and temporary workers, has likely contributed to the decline in employer-sponsored training, and led to ambiguity in terms of who is responsible for providing workplace protections and who must be at the bargaining table when workers form a union,” wrote the Senators. “The implications for fewer benefits for contract workers are far reaching: for example, studies in multiple states find that temp workers experienced twice the rate of injury as permanent workers perhaps due to the fact that they are nearly twice as likely as permanent workers to have never received safety training.”
“The rise of the fissured workplace may also partially explain the significant decline in the large firm wage premium,” they continued. “Researchers find that this change is largely a consequence of large firms with over 1000 employees no longer paying above market salaries to their workers. What’s more, others note that this decline has occurred exclusively for those at the lower and middle of the wage distribution, with no change in the wage premium for higher income earners.”
Currently, public companies are only required to report the number of full-time workers to the Securities and Exchange Commission (SEC), but are not required to report the number of contract or contingent workers, making it difficult for lawmakers to understand the extent to which public companies are now relying on these workers in order to save costs.
This lack of public knowledge is concerning, given the benefit and wage disparities that exist between contingent workers and company employees.
“We know that fissured workplaces can lead to compensation penalties for workers in certain subcontracted occupations. For example, by the year 2000, 45% of janitors and over 70% of security guards worked as subcontractors instead of in-house employees. While studying this phenomenon, researchers found that contracted janitors earned about 15% less than in-house janitors and, similarly, contracted security guards earned 17% less than in-house guards. This trend is troubling and all the more important following the onset of the COVID-19 crisis – clean and safe places of work are essential and all workers are worthy of fair and competitive compensation,” the Senators noted. “Current research suggests that workers in standard work arrangements are 10% more likely to have access to health insurance than independent contractors. That same research suggests that over 46% of full-time employees have access to a retirement plan, while only 2.3% of independent contractors and 38.3% of workers provided by a contract firm do. “
In their letter, the Senators also expressed concern about the rise in hiring of contract and contingent workers for particularly vulnerable occupations and tasks. They specifically highlighted social media companies’ high rates of reliance on these workers for work that could have significant long-term mental health consequences such as content moderation – the process of reviewing user content for adherence to company policy, a process that entails viewing disturbing online content like graphic violence, sexual predation and assault, child pornography, or other traumatic content.
In order to understand the prevalence and address the impacts of fissured workplaces in the economy, the Senators posed the following questions for Comptroller General Dodaro:
- Since 1980, to what extent have companies increased their use of temporary workers, subcontracted workers, independent contractors, and franchises for work that was typically done by direct employees? Is this use of alternative work arrangements typically permanent or long-term?
- What are the demographic characteristics of contract and contingent workers by sector? Are there any sectors in which these employment shifts have been the most pronounced? If so, what are the most common business justifications given for the use of these alternative work arrangements in those sectors and how do those justifications compare across sectors?
- How do the pay, benefits, schedules, access to workforce training opportunities, and job security of employees in these different work arrangements compare to the pay, benefits, schedules, access to workforce training opportunities, and job security of employees that are direct employees of the companies? How have these differences changed over time and to what extent have they contributed to reduced paths to upward mobility in the American economy?
- For contingent workers at large employers, how long do typical contingent workers work in each “gig” and how long does it typically take workers to find another “gig”? Are there typically pathways for workers who are temporary staff, subcontracted, or independent contractors to become full-time, direct employees of the companies?
- What are the estimated business savings to a company who uses temporary workers, subcontracted workers, and independent contractors?
- What are the long-term effects of contingent work in areas such as content moderation on workers’ future employment, psychological well-being, and physical health and does this work create costs or externalities borne by state, local, or federal governments? What are some potential long-term consequences for economic security for workers in contract and contingent work arrangements?
- Are there comprehensive federally available data to track companies’ use of alternative work arrangements? If so, what are the data sets, how often are the data collected, how comprehensive are the data sets, and what gaps remain? Does GAO have any policy recommendations for improving data collection on these employment trends?
- What private data are available to track these trends?
- In the technology sector, please use any private data, including private data provided by companies in that sector, to provide additional analysis of the use of these alternative work arrangements and assessment on the impact to employees’ pay, benefits, schedules, and job security. Additionally, to what extent do workers take on contract-based work with a hiring preference for full-time direct employment and an expectation that contract-based work will turn into a direct employee opportunity?
- Have these types of workers faced any additional economic hurdles brought about by COVID-19, such as greater likelihood of being laid off, furloughed, or reduced access to benefits, including employer-provided health insurance?
Sen. Warner has been an outspoken advocate of investing in workers and ensuring they are adequately equipped to participate in the 21st century labor force. Earlier this year, he called on the SEC to establish an Environmental, Social, and Governance (ESG) Task Force following a GAO report that revealed investors pursue reporting of non-financial indicators covering a company’s environmental, social, and governance practices. The report was a direct result of Sen. Warner’s efforts to get more details on the extent to which firms currently report on ESG issues, and whether Congress and the SEC should act to require such disclosures.
Last year, the SEC announced a proposed Regulation S-K rule following advocacy by Sen. Warner, who previously urged the Commission to heed the calls of investors and utilize its rulemaking authority to require companies across the board to provide further details relating to human capital management. Sen. Warner has also sent a letter requesting that the SEC require companies to disclose specific metrics in addition to human capital resources, measures, and objectives. In May, Sen. Warner along with U.S. Rep. Cindy Axne (D-IA) urged the SEC to require that human capital management information is made publicly available in a timely and accurate manner to help determine whether a company will be successfully able to weather risks following the COVID-19 crisis – a critical issue for investors and the overall economy.
A copy of the letter can be found here and text is available below.
Dear Mr. Dodaro:
In the past several decades, large companies have faced increased pressure from short-term oriented shareholders and executives to cut costs and increase efficiency. As the onset of the COVID-19 crisis has demonstrated, this focus on hyper efficiency has come at the cost of long term resiliency for many. David Weil at Brandeis University notes that companies have – in many cases – responded to short-term pressures by increasingly focusing on “core business” functions, outsourcing competencies perceived as less essential or valuable to subcontractors.[i] In practice, this meant that certain tasks and occupations in payroll, accounting, janitorial services, facilities maintenance, security, food preparation, and others, would no longer be done or performed by in-house employees of the company. Instead, these tasks might still be completed by workers in the same building as core company employees, but – in reality – their compensation and benefits would be provided by a subcontractor. This type of arrangement is known as a “fissured workplace” – an environment where a primary employer outsources non-core business functions to subcontracted firms but still maintains tight control over the outcomes of those subcontractors.[ii] It has been the subject of many articles over the years, most notably Neil Irwin’s in the New York Times titled, “To Understand Rising Inequality, Consider the Janitors at Two Top Companies, Then and Now,” outlining the stark differences in paths for upward mobility between a janitor at Kodak in the 1980s and a janitor at Apple today.[iii]
We know that fissured workplaces can lead to compensation penalties for workers in certain subcontracted occupations. For example, by the year 2000, 45% of janitors and over 70% of security guards worked as subcontractors instead of in-house employees.[iv] While studying this phenomenon, researchers found that contracted janitors earned about 15% less than in-house janitors and, similarly, contracted security guards earned 17% less than in-house guards.[v] This trend is troubling and all the more important following the onset of the COVID-19 crisis – clean and safe places of work are essential and all workers are worthy of fair and competitive compensation. We should know more about the extent to which this disparity in compensation is prevalent in other subcontracted occupations and across sectors.
We suspect that fissured workplaces could be leading to an erosion of the American social contract. Employers’ use of contract and contingent workers, including subcontracted workers, independent contractors, and temporary workers, has likely contributed to the decline in employer-sponsored training,[vi] and led to ambiguity in terms of who is responsible for providing workplace protections and who must be at the bargaining table when workers form a union. Current research suggests that workers in standard work arrangements are 10% more likely to have access to health insurance than independent contractors.[vii] That same research suggests that over 46% of full-time employees have access to a retirement plan, while only 2.3% of independent contractors and 38.3% of workers provided by a contract firm do.[viii]; [ix] Additional reports from the National Employment Law Project suggest that the differences are stark for certain types of contract and contingent workers: potentially only 12.8% of temporary help agency workers, 28.2% of on-call workers, and 41.3% of workers provided by contract firms have access to employer-provided health insurance compared to a majority of direct employees.[x] The implications for fewer benefits for contract workers are far reaching: for example, studies in multiple states find that temp workers experienced twice the rate of injury as permanent workers perhaps due to the fact that they are nearly twice as likely as permanent workers to have never received safety training.[xi]
The rise of the fissured workplace may also partially explain the significant decline in the large firm wage premium. For most of the 20th century, large firms paid higher wages than smaller firms, even after controlling for the quality of the worker, across many countries.[xii] In fact, they were an important way to mitigate labor market wage inequality – less-educated workers received a higher wage premium from working for large firms than more-educated workers.[xiii] In the past few decades, however, the average worker earnings premium for a large firm has fallen from 47% in 1980 to 20% in 2013.[xiv] Researchers find that this change is largely a consequence of large firms with over 1000 employees no longer paying above market salaries to their workers.[xv] What’s more, others note that this decline has occurred exclusively for those at the lower and middle of the wage distribution, with no change in the wage premium for higher income earners.[xvi] We don’t know why this is occurring, but researchers suggest this may be a result of changing norms[xvii] around acceptable compensation for workers at the lower end of the wage distribution and fissured workplaces.[xviii] Since large firms are not required to disclose information about workers that are not considered employees, it is possible that the large firm wage premium is even lower than what scholars have found.
Increasingly, essential functions routinely completed by full-time employees are being relegated to contract and contingent work. Companies such as Google rely on lower-paid contractors even for software development.[xix]According to investigative reports and accounts from those with access to internal company databases, the total number of contractors at Google outnumbered direct employees in 2018.[xx] Those same reports suggest that, in some cases, those lower-paid contractors were performing work often indistinguishable from functions completed by direct employees[xxi] without access to the same benefits and compensation. Contractors are also reportedly prevalent at other tech giants, such as Apple, Facebook, and YouTube, similarly without access to the same worker benefits as traditional employees.
While reports indicate that tasks typically associated with skilled labor, such as programming, are increasingly going to contractors, technology companies frequently seem to hire contract and contingent workers for particularly vulnerable occupations and tasks. At social media companies, reports find that contract workers are used at high rates for content moderation – the process of reviewing user content for adherence to company policy, which entails viewing disturbing online content that can include graphic violence, sexual predation and assault, child pornography, or other traumatic content.[xxii] These positions frequently involve repetitive tasks, queue- and rate-based decision-making, and daily quotas.[xxiii] While this type of work could have significant long-term mental health consequences, there are reports that moderators are often required to sign a non-disclosure agreement that prevents them from seeking outside counseling.[xxiv] Similar to other types of subcontracted workers in other industries, reports find that content moderators suffer a wage penalty and lack the employment benefits of their in-house counterparts.[xxv] At Facebook, for example, starting salary for a content moderator is only 14% of the median full-time employee salary.[xxvi]
Understanding the full extent of the fissured workplace is a difficult task. Though public companies are required to report the number of full-time workers to the Securities and Exchange Commission, they are not currently required to report the number of contract or contingent workers. Often in household surveys, workers will incorrectly classify themselves as employees of the primary firm when, in reality, they work for a subcontractor or as independent contractors.[xxvii] This misunderstanding may help partially explain why scholars note an increase in self-employment through tax filings data while standard measures of self-identification in the Bureau of Labor Statistics’ surveys have not seen an increase in contract or contingent work.[xxviii]
For policymakers to address the impacts of fissured workplaces in the economy, we need to understand how prevalent the situation is for American workers. For example, research suggests that Black and Hispanic workers are overrepresented in contract-based work, [xxix] which could have economic ramifications for upward mobility and financial security. To more thoroughly study the fissured workplace, scholars call for marrying business transaction data with worker data.[xxx] Current conservative estimates suggest around 19% of the private sector workforce operates in industries with fissured workplaces.[xxxi]Estimates that include industries with mixed use of practices could double this figure, which would suggest that working in fissured workplaces is more common today than being a member of a union was at its peak of 34% in 1956.[xxxii]
In light of these issues, we would like GAO to report on the following:
- Since 1980, to what extent have companies increased their use of temporary workers, subcontracted workers, independent contractors, and franchises for work that was typically done by direct employees? Is this use of alternative work arrangements typically permanent or long-term?
- What are the demographic characteristics of contract and contingent workers by sector? Are there any sectors in which these employment shifts have been the most pronounced? If so, what are the most common business justifications given for the use of these alternative work arrangements in those sectors and how do those justifications compare across sectors?
- How do the pay, benefits, schedules, access to workforce training opportunities, and job security of employees in these different work arrangements compare to the pay, benefits, schedules, access to workforce training opportunities, and job security of employees that are direct employees of the companies? How have these differences changed over time and to what extent have they contributed to reduced paths to upward mobility in the American economy?
- For contingent workers at large employers, how long do typical contingent workers work in each “gig” and how long does it typically take workers to find another “gig”? Are there typically pathways for workers who are temporary staff, subcontracted, or independent contractors to become full-time, direct employees of the companies?
- What are the estimated business savings to a company who uses temporary workers, subcontracted workers, and independent contractors?
- What are the long-term effects of contingent work in areas such as content moderation on workers’ future employment, psychological well-being, and physical health and does this work create costs or externalities borne by state, local, or federal governments? What are some potential long-term consequences for economic security for workers in contract and contingent work arrangements?
- Are there comprehensive federally available data to track companies’ use of alternative work arrangements? If so, what are the data sets, how often are the data collected, how comprehensive are the data sets, and what gaps remain? Does GAO have any policy recommendations for improving data collection on these employment trends?
- What private data are available to track these trends?
- In the technology sector, please use any private data, including private data provided by companies in that sector, to provide additional analysis of the use of these alternative work arrangements and assessment on the impact to employees’ pay, benefits, schedules, and job security. Additionally, to what extent do workers take on contract-based work with a hiring preference for full-time direct employment and an expectation that contract-based work will turn into a direct employee opportunity?
- Have these types of workers faced any additional economic hurdles brought about by COVID-19, such as greater likelihood of being laid off, furloughed, or reduced access to benefits, including employer-provided health insurance?
Sincerely,
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WASHINGTON – Today, U.S. Sens. Mark R. Warner (D-VA) and Tina Smith (D-MN) introduced the Mixed Earner Pandemic Unemployment Assistance Act of 2020 to help ensure Americans who earn a living through a mix of traditional (W-2) and independent employment income (1099) can fully access the financial relief made available under the Pandemic Unemployment Assistance (PUA) Program.
Following March passage of the CARES Act, states were directed to establish PUA to distribute benefits to workers who would normally not be eligible for unemployment assistance, such as self-employed workers or freelancers, to help them stay afloat during the COVID-19 economic crisis. However, the program has unintentionally disqualified these non-traditional workers from participating in the PUA program if they have mixed sources of income that make them eligible to receive the minimum benefit in regular unemployment insurance. This affects any primarily self-employed or independent worker who receives a secondary source of W-2 income, such as working part-time as a server or caterer, retail worker, entertainment worker, or otherwise are hired by a company part-time as an employee.
“As the nation continues to deal with the economic devastation caused by COVID-19, we’ve got to ensure that workers have the assistance they need to cope with the dire financial straits many are unexpectedly finding themselves in,” said Sen. Warner. “While Congress extended a lifeline under the Pandemic Unemployment Assistance Program, a large swath of gig and independent workers were unexpectedly left out from receiving the full benefits they are entitled to. Today, we’re introducing a commonsense fix to help millions of independent, freelance, and entrepreneurial workers who were left out of this critical safety net at no fault of their own.”
“In the current economic crisis we must do all we can to support Americans who have been forced to go without work," said Sen. Smith. "Earlier this year, Congress enacted a historic expansion of unemployment insurance, but some people who worked multiple jobs have found themselves in an unintended no man’s land between unemployment programs that has resulted in drastically reduced unemployment compensation. I’ve heard directly from several Minnesota workers caught in this position who are now struggling to get by. That’s why I’m working to fix this problem and help these families get the assistance they need during difficult times.”
According to recent figures by the Bureau of Labor Statistics, as many as 1 in 10 American workers may presently participate in the labor market with gig, independent, and self-employed work as their primary form of occupation. Last week, based on the unadjusted data released by the U.S. Department of Labor, 2 million Americans filed new unemployment claims – 1.2 million for regular unemployment insurance and almost 1 million for the PUA program. The data also indicates that 33.8 million Americans are either receiving unemployment benefits or have applied and are awaiting approval. Out of the total number of unemployment claims, more than 15 million have been for the PUA program.
The Mixed Earner Pandemic Unemployment Assistance Act would:
· Allow workers who earn a minimum of $7,250 independent (e.g. 1099) income to request reconsideration into receiving PUA benefits instead of regular state unemployment compensation.
· Allow states to opt-in to implement this expanded coverage for mixed earners, acknowledging that not every state will be ready to implement this change.
The bill is cosponsored by Sens. Richard Blumenthal (D-CT), Kamala Harris (D-CA), Ed Markey (D-MA), Amy Klobuchar (D-MN), Dianne Feinstein (D-CA), Elizabeth Warren (D-MA), Martin Heinrich (D-NM), and Chris Coons (D-DE). A copy of the bill text can be found here. Companion legislation was also introduced in the House of Representatives by Reps. Adam Schiff (D-CA) and Judy Chu (D-CA).
The Mixed Earner Pandemic Unemployment Assistance Act is endorsed by the Actors’ Equity Association, All Creative Writes – New York, Alternate ROOTS, American Association of Independent Music, American Federation of Musicians, Americans for the Arts, American Photographic Artists, Artist Rights Alliance, Arts & Business Council of Greater Boston, Arts Council of Greater Baton Rouge, Arts in a Changing America, Arrowmont School of Arts and Crafts – Tennessee, Asian American Arts Alliance, Association of Performing Arts Professionals, Atlanta Contemporary – Georgia, The Authors Guild, BMI, C4 Atlanta, California Lawyers for the Arts, CERF+- the Artists Safety Net, Chocolate Factory Theater – New York, Chorus America, Christian Music Trade Association, Copyright Alliance, CreativeFuture, Dad’s Garage Theatre Company – Georgia, Dance/NYC – New York, Department for Professional Employees – AFL-CIO, Digital Media Association, Dramatists Guild of America, The Field – New York, Fourth Arts Block – New York, Freelancers Union, Future of Music Coalition, Graphic Artists Guild, Guild of Italian American Actors, Halau Hula Ka Lehua Tuahine – Hawaii, Independent Music Professionals United, International Documentary Association, The Laundromat Project – New York, Lawyers for the Creative Arts – Chicago, League of American Orchestras, Live Nation, Maryland Volunteer Lawyers for the Arts, Mississippi Center for Cultural Production, More Art Inc – New York, Museum of Contemporary African Diaspora Art, Music Artists Coalition, Music Business Association, Music Workers Alliance, Musicians for Musicians Inc., The Nashville Songwriters Association International (NSAI), National Coalition for the Art’s Preparedness and Emergency Response, National Employment Law Project, National Press Photographers Association, National Writers Union, Naturally Occurring Cultural Districts – New York, New Yorkers for Culture and Arts, New York Foundation for the Arts, North American Nature Photography Association, Opera American, PA’I Foundation – Hawaii, Peters Valley School of Craft – New Jersey, Philadelphia Volunteer Lawyers for the Arts, Power Haus Creative – Georgia, Recording Academy, the Recording Industry Association of America, SAG-AFTRA, Songwriters Guild of America, Songwriters of North America, SoundExchange, Southeast Community Cultural Center – Georgia, Springboard for the Arts, Minnesota Lawyers for the Arts, St. Louis Volunteer Lawyers and Accountants for the Arts, True Colors Theatre Company – Georgia, Universal Music Group, UrbanGlass – New York, Washington Area Lawyers for the Arts, and the Writers Guild of America – East.
The legislative fix comes on the heels of a letter Sens. Warner and Smith led, along with Sens. Richard Blumenthal (D-CT), Kamala Harris (D-CA), Ed Markey (D-MA), Amy Klobuchar (D-MN), Martin Heinrich (D-NM), Dianne Feinstein (D-CA), Elizabeth Warren (D-MA), Chris Coons (D-DE), to urge Senate leaders to ensure that these workers who have mixed forms of income can access the PUA program – which is available through December 2020 – as negotiations between Senate Republicans and Democrats continue.
“It is clear that allowing workers in alternative work arrangements to access the PUA program is an important lifeline for many during this crisis,” the Senators wrote in a letter to Senate Majority Leader Mitch McConnell, Senate Minority Leader Chuck Schumer, and the Chairman and Ranking Member of the Senate Committee on Finance. “However, for workers whose primary source of income is independent, freelance, or self-employed work but who also receive some W-2 wages as a secondary source of income – such as working part-time as a server or caterer, retail worker, entertainment worker, or otherwise are hired by a company part-time as an employee – an exclusion leaves them without access to a safety net for their primary source of income. Specifically, we hope that modification of the PUA program can be made to allow individuals with over $7,250 in self-employed income to request a reconsideration of their PUA eligibility, where both their 1099 and W-2 income will be aggregated for their weekly benefit calculation. Acknowledging that some states will be better positioned than others to implement this, participation in the fix to the PUA process should be optional for individual states.”
A copy of the letter can be found here.
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WASHINGTON – Today, U.S. Sens. Mark R. Warner (D-VA) and Steve Daines (R-MT), members of the Senate Finance Committee, introduced bipartisan legislation to establish a $500 million emergency portable benefits fund for states. Under this legislation, the U.S. Department of Labor would administer funds to states to assist them with setting up a portable benefits program for independent workers. The federal funds would also pay for a portion of the costs associated with modernizing states’ Unemployment Insurance (UI) technology systems – a move that would facilitate expanded benefits eligibility and support long-term innovation. Sens. Warner and Daines are seeking to include the proposed legislation in the next COVID-19 relief package.
“Right now, millions of independent, freelance, domestic, and entrepreneurial workers have no social safety net to fall back on. I’ve been sounding the alarm on this for years, and as this pandemic has shown, this is a problem that can wreak havoc on both individual families and on our economy as a whole,” said Sen. Warner. “As we continue to face this health and economic crisis, Congress must act to give states the tools they need to address this problem for the long term. We shouldn’t need an Act of Congress to get workers access to a safety net every time there’s a crisis or economic downturn. We will be right where we were before this crisis if we don’t find some innovative solutions. That’s why we’re introducing this legislation to provide funding for states to experiment with new models for assisting workers and learn what works through a national impact evaluation.”
“Allowing states to experiment with portable benefit models and providing funding to modernize Unemployment Insurance technology systems are just plain commonsense ideas,” said Sen. Daines. “This bill will help encourage bottom-up solutions to the problems we are seeing play out in real-time during this pandemic, and help make sure the country is better prepared to deal with these issues when the next crisis hits.”
The CARES Act granted these non-traditional workers access to state-administered unemployment insurance (UI) programs for the first time. However, reports indicate that millions of these workers have struggled to access these benefits in part due to clunky and outdated state IT systems that administer the benefits and implementation issues. What’s more, the programs created by Congress are temporary and do not address access to portable benefits in the long term.
Moving forward, this legislation would provide supplemental funds for states to update their unemployment systems for the 21st century, for the purposes of long-term innovation. The emergency benefits proposal would also provide funding for states – in partnership with cities, localities and worker advocate non-profits – to experiment with innovative proposals for portable benefits, such as paid leave, retirement plans, the longer-term expansion of UI eligibility, and other programs specific to local economies.
This bill will also help shed light on which experimental portable benefit models work best. Under this legislation, states are required to submit data on the effectiveness of their approach and its returns for workers, broken down by socioeconomic and racial figures. The Government Accountability Office will then evaluate this data and use it to create a report on the impact of the program.
For more than three years, Sen. Warner has led the bipartisan Portable Benefits for Independent Workers Pilot Program Act to establish a grant fund for states, localities and nonprofit organizations to experiment with portable benefits models for the growing independent workforce. Today’s bill – which comes after an initial bill proposal – builds on that effort in light of the COVID-19 health and economic crisis, which has left many self-employed entrepreneurs and independent workers with no or reduced incomes and little access to long-term traditional benefits programs.
This legislation has the support of a number of experts and groups including David Rolf the former President of SEIU 775, the National Domestic Workers Alliance, the Aspen Institute’s Future of Work Initiative, Marcela Escobari of the Brookings Institution, R Street Institute, the Center for American Entrepreneurship, and SAG-AFTRA.
“The Center for American Entrepreneurship applauds the introduction of the Emergency Portable Benefits for Independent Workers Act. The fact that critical benefits such as paid leave, worker retraining, child care, and retirement security are typically provided by corporate employers has emerged as a significant public policy challenge, as 1 in 10 Americans in the labor force are consistently in alternative work arrangements. In addition, the prospect of losing such employer-provided benefits is a major structural obstacle to entrepreneurship at a time when rates of new business formation have been in decline for years. By providing a framework for entrepreneurs to access benefits independent from employers, the Act will accelerate policy innovation within states with regard to the provision of critical benefits and enhance worker mobility. CAE thanks Senators Mark Warner (D-VA) and Steve Daines (R-MT) for their leadership, and looks forward to working with them toward swift passage of the Act,” said John Dearie, President, Center for American Entrepreneurship.
“We applaud Senator Warner’s long commitment to ensure independent workers have basic protections for themselves and their families when striving to make a living in the emerging gig economy. Establishing a basic set of benefit protections that working Americans can carry with them, when working and when between jobs, is critical to the safety and well-being of a growing workforce. This truth has become ever more essential in the era of a global pandemic, when so many Americans have lost jobs but still need to provide the protection of basic health care and other support for their children and families. Many of our SAG-AFTRA members take on all manner of jobs as they work to build a career in entertainment, and we want to see them supported throughout their journey,” said David White, National Executive Director, SAG-AFTRA.
“For years, a mix of too much regulation and too little creativity has led to near-stasis in the ways American firms and governments have allowed those working under alternative arrangements to access benefits. This bill promises to break through the morass and encourage real creativity. Anyone who wants to use this moment of crisis to innovate should strongly consider supporting it,” said Eli Lehrer, President, the R Street Institute.
A summary of the bill is available here. Text of the bill can be found here.
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WASHINGTON – Today U.S. Sen. Mark R. Warner (D-VA) and U.S. Rep. Suzan DelBene (D-WA) released the text of draft bicameral legislation to establish an emergency portable benefits fund for states. The proposal would create a $500 million fund at the U.S. Department of Labor to be administered to states to pay for the costs moving forward of modernizing state Unemployment Insurance (UI) technology systems to facilitate expanded benefits eligibility and support long term innovation, and to create portable benefits programs.
Since 2017, Warner and DelBene have been the lead Senate and House sponsors of the Portable Benefits for Independent Workers Pilot Program Act to establish a grant fund for states, localities and nonprofit organizations to experiment with portable benefits models for the growing independent workforce. Today’s new proposal builds on that effort in light of the COVID-19 health and economic crisis, which has left many self-employed entrepreneurs and gig workers with no or reduced incomes and little access to long-term traditional benefits programs. Warner and DelBene are seeking to include the proposed legislation in the next COVID-19 relief package.
“For years, I’ve been sounding alarm bells about how millions of self-employed, gig and contract workers are falling through the holes in our social safety net. Now, the coronavirus crisis has put that grim reality into stark relief,” said Warner. “It’s imperative that Congress act to provide states with the flexibility to experiment with innovative models for assisting these workers.”
“COVID-19 is devastating our local economies and leading to a historic rise in unemployment across the country. Congress needs to provide states the flexibility to design new benefit programs for the long-term to protect independent workers and give them control of their benefits,” said DelBene. “No one should fall through the cracks during or after this pandemic.”
The CARES Act allowed these workers, for the first time, access to state-administered unemployment insurance (UI) programs. However, reports indicate that millions of these workers are struggling to access the benefits Congress granted them in part due to clunky and outdated state IT systems that administer the benefits and a lack of federal guidance. Moving forward, the Warner-DelBene proposal would provide supplemental funds for states to update their unemployment systems for the 21st century, for the purposes of long-term innovation and expanded eligibility.
The emergency benefits proposal would also provide funding to states – in partnership with cities, localities and non-profits – to experiment with innovative proposals for portable benefits, such as paid leave, worker’s comp, the longer-term expansion of UI eligibility, and other programs specific to local economies.
“Senator Warner & Representative DelBene’s proposal accomplishes two essential goals: modernizing state unemployment system technology, and jump-starting portable benefits for the millions of hard working Americans who have been excluded from employment-based benefits. It simultaneously responds to the crisis at hand and lays the groundwork for a more inclusive system of benefits in the future,” said David Rolf, founder and president emeritus, SEIU 775.
“The ‘Emergency Portable Benefits Program’ is an urgent step needed to ensure every working person has access to a safety net that works for all of us, no matter how you work, how many hours you work or who you work for. Close to 2.5 million domestic workers do the essential work of caring for our homes and families every day without paid leave when they are sick, health insurance or retirement security. Before the pandemic, domestic workers were one emergency away from a crisis. Now facing a global public health and economic crisis, they deserve a benefits system that works for them, because no one should have to choose between working while sick or losing income they need to take care of their family, no matter what kind of work they do, and especially those who take care of us,” said Palak Shah, Social Innovations Director, National Domestic Workers Alliance.
“The COVID-19 crisis has highlighted the inadequacy of America’s safety net, which leaves millions of non-traditional and low-wage workers without access to key workplace benefits and protections. Although the Pandemic Unemployment Assistance program expanded unemployment benefits to self-employed and freelance workers, it is temporary and has been difficult to administer. The resources provided by this legislation will provide critical aid to help states implement expanded unemployment insurance programs, and encourage the development and expansion of portable benefit systems that can provide financial security to workers across different types of work arrangements during the current crisis and beyond,” said Alastair Fitzpayne, Executive Director, Aspen Institute’s Future of Work Initiative.
“Our employment system needs to catch up with the rapidly changing technological landscape and shifting nature of work. Portable benefits made sense before the crisis, and today the need is urgent,” said Marcela Escobari, senior fellow at the Brookings Institution. “This legislation provides the impetus for states to upgrade systems, innovate, and support workers through streamlined delivery of benefits. Portable benefits are a key component of a modernized employment system. By making it easier for workers to access benefits like healthcare, sick leave, and training, portable benefits can help states create a more resilient and tech-savvy workforce as we emerge from the COVID-19 crisis.”
Draft text of the proposed bill is available here.
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Warner Presses Trump Administration to Ensure Workers Receive Unemployment Benefits Amid COVID-19 Pandemic
Apr 13 2020
WASHINGTON – Today, U.S. Sen. Mark R. Warner (D-VA), a member of the Senate Finance Committee, joined his Senate Democratic colleagues in pressing the U.S. Department of Labor (DOL) to ensure workers Congress intended to be covered by the Pandemic Unemployment Assistance Program receive the benefits they deserve. The program, which was established in the CARES Act, is intended to make sure that individuals who would normally not qualify for unemployment benefits under state law, but are currently unemployed, unable, or unavailable to work as a direct result of the COVID-19 health crisis, are eligible to receive unemployment compensation.
“[P]arts of the guidance appear narrow or ambiguous, which could make states think they need to exclude workers who Congress clearly intended to receive unemployment compensation through the Pandemic Unemployment Assistance (PUA) program,” wrote the Senators in their letter to Secretary of Labor Eugene Scalia.
In the letter, the Senators are requesting the Department of Labor clarify its guidance pertaining to workers who have been diagnosed with COVID-19 without receiving a test, workers with COVID-19 who take time off of work, workers without child care options in summer months, workers unable to get to work due to stay-at-home orders, workers with underlying health conditions like asthma, and self-employed workers like gig workers who are unable to work due to plummeting demand for their services.
Earlier this month, Sen. Warner sent a letter to Secretary Scalia calling on the federal agency to streamline the Pandemic Unemployment Assistance (PUA) process by issuing additional, more comprehensive guidance to states so they can quickly implement the unemployment provisions in the CARES Act and ensure that gig workers are able to access unemployment benefits in the midst of the growing economic emergency. Among other recommendations, the letter called on the Department of Labor to take the lead with innovative technological solutions for administration of the PUA that states could use in order to facilitate the process and limit the need to stand up new state-level solutions.
In addition to Sen. Warner, today’s letter was led by Sen. Ron Wyden (D-OR), Minority Leader Chuck Schumer (D-NY) and co-signed by Sens. Patrick Leahy (D-VT), Sherrod Brown (D-OH), Patty Murray (D-WA), Chris Van Hollen (D-MD), Michael Bennet (D-CO), Ed Markey (D-MA), Doug Jones (D-AL), Sheldon Whitehouse (D-RI), Angus King (D-VT), Bob Menendez (D-NJ), Cory Booker (D-NJ), Ben Cardin (D-MD), Kirsten Gillibrand (D-NY), Mazie Hirono (D-HI), Amy Klobuchar (D-MN), Tom Carper (D-DE), Richard Blumenthal (D-CT), Debbie Stabenow (D-MI), Tina Smith (D-MN), Tammy Duckworth (D-IL), Bob Casey (D-PA), Elizabeth Warren (D-MA), Bernie Sanders (I-VT), Dianne Feinstein (D-CA), Dick Durbin (D-IL), Jeff Merkley (D-OR), Jack Reed (D-RI), Catherine Cortez Masto (D-NV), Jacky Rosen (D-NV), Maria Cantwell (D-WA), and Tom Udall (D-NM).
A copy of the letter can be found here and below. A list of Sen. Warner’s work to protect Americans amid the COVID-19 outbreak is available here.
The Honorable Eugene Scalia
Secretary of Labor
U.S. Department of Labor
200 Constitution Ave. NW
Washington, DC 20210
Dear Secretary Scalia:
Thank you for entering into agreements with states and territories and issuing some of the key guidance needed to implement new federal unemployment compensation programs on April 4 and April 5, 2020 (Unemployment Insurance Program Letter [UIPL] Numbers 15-20 and 16-20). This guidance is essential to start getting more unemployment benefits to workers across the country, including self-employed and other workers who are not covered by the traditional Unemployment Insurance (UI) program.
We understand that the examples of covered workers provided in the guidance are not intended to be exhaustive. However, parts of the guidance appear narrow or ambiguous, which could make states think they need to exclude workers who Congress clearly intended to receive unemployment compensation through the Pandemic Unemployment Assistance (PUA) program.
We request that the Department of Labor (the Department) issue additional guidance on the issues described below no later than Friday, April 17. Understanding that you are still working diligently to release guidance for several CARES Act programs, if you are unable to issue clarifying guidance by Friday, April 17, we request a written response to this letter providing a timeline for issuing clarifying guidance and detailing how you intend to address these issues.
- The Department’s guidance for sections 2102(a)(3)(A)(ii)(I)(aa), (bb), and (ff) reference circumstances under which an individual testing positive for COVID-19 is a possible qualification for a person receiving PUA. In the CARES Act, Congress deliberately used language referring to a “diagnosis” rather than “tested positive”, knowing testing shortages, delays in test results, and guidance instructing people to stay home rather than travel to medical facilities could make testing-based criteria difficult to meet. Furthermore, if someone suspects they have COVID-19 but can care for themselves at home, the Centers for Disease Control and Prevention (CDC) recommends they recover at home to avoid infecting others.
We are pleased that the language in the Department’s guidance says that someone may qualify for PUA if they have tested positive or received a diagnosis, but we request that the Department make crystal clear that while a positive test would be sufficient to qualify for PUA under these provisions, a qualifying diagnosis never requires a positive test. Any diagnosis from a health care provider, including one made via phone or telehealth, is also sufficient for a person to qualify for PUA.
- The two examples provided in UIPL 16-20 Attachment I (C)(1)(a) of the guidance for an individual who might qualify for unemployment benefits under section 2102(a)(3)(A)(ii)(I)(aa) of the CARES Act based on their own illness both involve an individual who must quit a job. This provision of the CARES Act also covers any individual who is forced to take unpaid time off work for the reasons described, regardless of whether their employment relationship is formally severed. The guidance should be clarified to ensure that such individuals are covered.
- Section 2102(a)(3)(A)(ii)(I)(dd) of the CARES Act says an individual may qualify for PUA if “a child or other person in the household for which the individual has primary caregiving responsibility is unable to attend school or another facility that is closed as a direct result of the COVID–19 public health emergency and such school or facility care is required for the individual to work.” The guidance in UIPL 16-20 Attachment I (C)(1)(d) provides accurate examples of situations in which a caregiver could qualify for PUA under this provision.
However, the guidance later states that “a school is not closed as a direct result of the COVID-19 public health emergency, for purposes of section 2102(a)(3)(A)(ii)(I)(dd), after the date the school year was originally scheduled to end.” Many families rely on child care, summer camp, or other facilities (including school facilities) to care for their children in the summer and those facilities may remain closed as a result of COVID-19. The guidance should be clarified to confirm that individuals may qualify under section 2102(a)(3)(A)(ii)(I)(dd) during the summer months, for families that rely on any of those facilities.
- Section 2102(a)(3)(A)(ii)(I)(ee) of the CARES Act says that an individual who is “unable to reach the place of employment because of a quarantine imposed as a direct result of the COVID–19 public health emergency” may qualify for PUA. The example of a quarantine provided in UIPL 16-20 Attachment I (C)(1)(e) of the Department’s guidance describes “a state or municipal order restricting travel” preventing an individual from getting to work. We are concerned that using the language of “restricting travel” may be too narrow to capture all of types of quarantine orders that are covered under this provision of the CARES Act. The guidance should clarify that such an order includes any stay-at-home, shelter-in-place, social distancing, or other order that requires individuals to stay home in quarantine to reduce the spread of COVID-19.
Similarly, UIPL 16-20 Attachment I (C)(1)(g) references a “state or municipal order restricting travel” with respect to section 2102(a)(3)(A)(ii)(I)(gg) of the CARES Act. This should also be clarified as described above.
- Section 2102(a)(3)(A)(ii)(I)(ff) of the CARES Act says that an individual who is “unable to reach the place of employment because the individual has been advised by a health care provider to self-quarantine due to concerns related to COVID–19” may qualify for PUA. The examples specified in the Department’s guidance describe a person who suspects they are infected with COVID-19 and a person who is immune-compromised because of a serious health condition.
The reference to a person “whose immune system is compromised by virtue of a serious health condition” in the guidance does not cover the wide range of reasons a health care provider may advise self-quarantine. For example, while the CDC considers older Americans more at risk of serious complications from COVID-19, states may not think they are covered under Department’s guidance. Furthermore, workers with certain health conditions (such as a respiratory condition) may not technically have a compromised immune system but would be at increased risk from COVID-19 and may need to self-quarantine. As we learn more about COVID-19, we may discover that there are other populations at risk too.
The Department needs to clarify that anyone advised by a health care provider to self-quarantine due to increased risk of COVID-19 should be covered by PUA, regardless of the underlying reason for their increased risk.
- We are pleased that the Secretary established additional criteria under section 2102(a)(3)(A)(ii)(I)(kk) of the CARES Act to clarify that self-employed individuals such as independent contractors who may not have one specific place of employment are covered by PUA, in keeping with the intent of the legislation. While we believe that such workers are covered by the text of the law, we appreciate the Department’s action to eliminate ambiguity and ensure these workers receive benefits.
However, to avoid any confusion about who should qualify under UIPL 16-20 Attachment I (C)(1)(k), the Department must clarify that an independent contractor who is unable to work and forced to suspend work activities because there is reduced demand for their services also qualifies for PUA benefits. Many independent contractors have seen demand for their services dry up as a direct result of COVID-19. In the example of a ride share driver, a driver should be able to claim PUA when they are forced to suspend their work because there are too few customers seeking rides. For an independent contractor, losing many or all of their customers overnight is analogous to an employee being laid off by an employer, or, as the Department’s guidance notes, their “place of employment” being closed. Congress created the PUA program with the intent to cover workers like independent contractors and gig workers who may not have traditional employment relationships, but who have suddenly lost their livelihoods during this time of crisis. We believe that that the CARES Act definitively covers such workers, and the Department should clarify its guidance to reflect this.
- The Department’s guidance says that “States should bear in mind that many of the qualifying circumstances described in section 2102(a)(3)(A)(ii)(I) are likely to be of short term duration.” Although we agree that some individuals may qualify for PUA for only a short period, many applicants will rely on PUA for longer periods, especially if this public health crisis persists. Furthermore, the way an individual qualifies for PUA may vary from week to week. For example, someone could first qualify if they get sick with COVID-19, then their child’s school may close as they recover, and they would qualify based on the new circumstance.
The Department’s guidance should encourage states to consider this as they create PUA application systems. It would be inefficient for both the claimant and the state workforce agency if individuals have to file a new initial application each time their qualifying circumstance changes. Individuals continue to qualify for benefits as long as they continue to meet at least one of the qualifying circumstances described in section 2102(a)(3)(A)(ii)(I), even if the precise provision under which they qualify changes.
- We have heard conflicting reports of whether the Department’s guidance allows for the addition of the $600 federal supplement to PUA benefits in U.S. territories that do not have UI programs. The guidance the Department has issued for Federal Pandemic Unemployment Compensation and PUA is ambiguous on this matter.
Section 2102(d) of the CARES Act says that for an individual who lives in these territories, “the assistance authorized under subsection (b) for a week of unemployment shall be calculated in accordance with section 625.6 of title 20, Code of Federal Regulations, or any successor thereto, and shall be increased by the amount of Federal Pandemic Unemployment Compensation under section 2104.” This language makes clear that the “amount of Federal Pandemic Unemployment Compensation” ($600) should be included in the PUA benefit amount for anyone qualifying for PUA in any of the territories. We would appreciate if the Department would clarify this matter to facilitate the administration and payment of benefits in these territories.
In addition to the concerns we have raised above, we know that states will have additional questions as they continue to implement PUA and other CARES Act programs. We urge the Department to respond to questions from states as quickly as possible to avoid causing any delay in the processing of benefits.
Thank you for your attention to this important matter.
Sincerely,
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WASHINGTON – A week after Congress responded to the coronavirus pandemic with a $2.2 trillion package designed to provide economic relief to workers and businesses that for the first time provided unemployment benefits to gig workers and the self-employed, states are struggling to implement in its provisions and swiftly provide financial aid to Americans who are part of the “gig economy.” Sen. Mark R. Warner (D-VA), a longtime national leader on labor issues affecting contractors and the contingent workforce, today called on the U.S. Department of Labor (DOL) to issue better guidance to states allowing them to quickly implement the provisions in theCoronavirus Aid, Relief, and Economic Security (CARES) Act allowing these workers to access unemployment benefits in the midst of a growing economic emergency. Though DOL issued initial guidance on the CARES Act to states late yesterday, it failed to address several key issues, leaving many states flailing in their efforts to quickly make the new unemployment benefits accessible to Americans who need it, and ensuring that it may be weeks before some workers can access the financial relief as Congress intended.
“The CARES Act directs states to stand up a new program, the Pandemic Unemployment Assistance (PUA) Program, to disburse benefits to workers who would normally not be eligible for unemployment assistance, such as gig workers or freelancers. Unfortunately, we are already hearing reports from unemployment officials from around the country that it will likely take weeks to stand up a new program and disburse benefits to these newly eligible workers,” Sen. Warner wrote in a letter to Secretary of Labor Eugene Scalia. “In the middle of the COVID-19 pandemic, with unemployment claims overwhelming state systems, there is no time to waste. While I appreciate the initial round of guidance that was released yesterday, the Department of Labor should have already issued more comprehensive guidance to states this week.”
In order to enable the rapid implementation of the CARES Act, Sen. Warner urged DOL to issue guidance on several problems that were missing from its release yesterday. Sen. Warner called on DOL to: streamline the Pandemic Unemployment Assistance process by removing burdensome regulatory barriers limiting worker participation; require states to accept electronic documentation and allow them flexibility to make determinations on eligibility for the program on a case-by-case basis; take the lead on contracting innovative technologies to implement the program and avoid all 50 states having to each “reinvent the wheel”; and increase flexibility for states to calculate and disburse weekly benefits.
In early March, Sen. Warner successfully called on leading gig worker platform companies to commit that independent contractors who deliver their services will not be penalized for following recommended health procedures to protect the public from further spread of the coronavirus. For years, Sen. Warner has championed legislation to establish portable benefits systems that would allow gig workers, independent contractors, and the self-employed to access benefits and protections that are commonly provided to full-time employees, such as paid leave, workers’ compensation, skills training, unemployment insurance, tax withholding and tax-advantaged retirement savings.
Following the March 18 passage of the Families First Coronavirus Response Act, Sen. Warner also led several of his colleagues in urging state governors and workforce administrators to implement its provisions easing restrictions on emergency unemployment benefits as swiftly as possible.
A copy of today’s letter is available here and below. A list of Sen. Warner’s work to protect Americans amid the coronavirus outbreak is available here.
April 3, 2020
The Honorable Eugene Scalia
Secretary of Labor
U.S. Department of Labor
200 Constitution Ave, NW
Washington, DC 20210
Dear Secretary Scalia,
Yesterday, the Department of Labor released the latest number of unemployment claims around the country. The numbers are unprecedented: 6.6 million new unemployment claims this past week in addition to the 3.3 million from the week before. In a span of two weeks, more workers filed unemployment claims than the entirety of the 8.7 million jobs lost during the Great Recession. In light of the record-breaking unemployment numbers and the tremendous pressure this places on state unemployment agencies, I write to urge the Department of Labor to issue additional, more comprehensive guidance to states on implementation of the unemployment provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Public Law No. 116-136, as quickly as possible.
The CARES Act directs states to stand up a new program, the Pandemic Unemployment Assistance (PUA) Program, to disburse benefits to workers who would normally not be eligible for unemployment assistance, such as gig workers or freelancers. Unfortunately, we are already hearing reports from unemployment officials from around the country that it will likely take weeks to stand up a new program and disburse benefits to these newly eligible workers. In the middle of the COVID-19 pandemic, with unemployment claims overwhelming state systems, there is no time to waste. While I appreciate the initial round of guidance that was released yesterday, the Department of Labor should have already issued more comprehensive guidance to states this week.
To enable the rapid implementation of the CARES Act, the Department of Labor should issue guidance on the following issues that were missing from DOL’s release yesterday:
- As others have stated, the Pandemic Unemployment Assistance process should be streamlined as much as possible. Streamlining could include the removal of burdensome regulatory barriers normally applicable under the Disaster Unemployment Assistance program that limit worker participation.
- Given the present Center for Disease Control and Prevention’s public health recommendation urging individuals to stay home, states should be required to accept electronic documentation submissions and have the flexibility to make determinations on eligibility for the program on a case by case basis.
- The Department of Labor should be taking the lead on innovative technological solutions that relieve the burden on states to recreate the wheel on their own. As others have noted, vendors with cloud-based solutions for PUA processing could streamline the process for state unemployment agencies.
- States should have increased flexibility to calculate weekly benefit calculation for part-time workers in a way that takes into consideration the expansion of part-time work in the gig economy. They should also be given the flexibility to determine wages using alternative forms of wage information other than state tax returns and be encouraged to disburse benefits while processing documentation.
Ensuring swift, and effective, implementation of section 2102 of the CARES Act will require that both the federal government and states to be nimble, and act swiftly, to shore up the critical social safety net for all American workers. It is paramount that people who normally would fall through the cracks of the current system, like gig workers and freelancers, get needed support as quickly as possible as the country weathers the economic downturn caused by the COVID-19 pandemic. I’m hopeful that, long-term, we will learn something from this about supporting worker benefits in ways that can improve our public health and make our economy more resilient.
Again, I urge you to issue more comprehensive guidance on the implementation of the CARES Act as quickly as possible. Thank you in advance for your prompt attention to this matter. I look forward to working with you on your next steps.
Sincerely,
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Statement of U.S. Senator Mark R. Warner on Senate Passage of Coronavirus Relief Legislation
Mar 25 2020
WASHINGTON – U.S. Sen. Mark R. Warner (D-VA) released the following statement after voting in favor of a $2 trillion bipartisan package to provide financial relief to businesses and families as well as hospitals and local governments during the novel coronavirus (COVID-19) pandemic:
“This is not the first step Congress has taken to deal with the COVID-19 pandemic, nor will it be the last. This bill provides significant financial relief to our families and businesses struggling with the effects of widespread closures and other public health measures. It greatly expands access to unemployment benefits – including, for the first time, gig workers, contractors and the self-employed – and includes tax credits and other incentives I negotiated with the Trump Administration to help small businesses keep workers on payroll and keep them from going out of business during this crisis. This bipartisan bill also includes a massive infusion of resources for hospitals, frontline caregivers, and states and localities dealing with the brunt of COVID-19. I strongly urge the House of Representatives to pass this bill without delay, so that we can get this urgently-required relief to those who so badly need it.
“This is a challenge unlike any we have faced in recent memory, but I believe that we as a country can and will get through this together. I will remain in close touch with state, local and health officials to ensure that we are doing everything possible to provide the resources needed to fight the coronavirus.”
Previously, the President signed a bipartisan $8.3 billion emergency funding bill that directed needed resources to federal, state and local agencies responding to coronavirus. This legislation immediately provided Virginia with $13.3 million in federal funding to help cover the costs of preparations for this public health emergency. It also included language based on Sen. Warner’s CONNECT for Health Act of 2019, which reduces restrictions on the use of telehealth for public health emergency response, as well as $500 million to facilitate its implementation.
On March 18, the President signed a second bipartisan coronavirus response bill that focused on the immediate economic impact of the coronavirus. This legislation expanded paid sick leave to many Americans, cut restrictions on unemployment insurance for workers who have lost their jobs or had their hours cut, and guaranteed freed coronavirus testing. It also included significant emergency funding for Medicaid, nutrition assistance, state unemployment programs, and coronavirus testing at Department of Veterans Affairs medical centers.
Today’s legislation provides for $1,200 in direct payments to most Americans, and includes billions of dollars in lending and grant programs designed to help businesses, workers and municipalities survive this crisis, along with strong transparency and accountability measures to make sure that federal funding doesn’t go towards stock buybacks or bonuses for corporate executives. Today’s bipartisan bill also provides for $150 billion for hospitals and other public health infrastructure, part of an unprecedented investment that Sen. Warner and other Democrats fought to include as our frontline responders struggle under the weight of the coronavirus pandemic. It also includes an important change to existing tax policy allowing employers, for the first time, to use pre-tax dollars to help pay down employees’ student debt – provision modeled after Sen. Warner’s bipartisan Employer Participation in Repayment Act.
A more comprehensive list of Sen. Warner’s work to protect Americans amid the coronavirus outbreak is available here.
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WASHINGTON – Today U.S. Sens. Mark R. Warner (D-VA) and Chris Coons (D-DE) announced that they will introduce legislation to make lifelong learning more accessible for low- and moderate-income workers. TheLifelong Learning and Training Account Act would establish a tax-preferred savings account with a generous government match to assist workers seeking to retrain or upskill over the course of their careers.
In the coming years, more workers will be required to learn new skills throughout their careers. According to the McKinsey Global Institute, up to one-third of the U.S. workforce will need to learn new skills or find work in new occupations by 2030 due to automation. As a result, American workers are increasingly likely to hold many different jobs over the course of their careers, and in many cases technology will transform the skills they need and even the types of jobs available. The Lifelong Learning and Training Account Act would provide workers with a portable, government-matched savings vehicle for lifelong learning.
“Lifelong learning is quickly becoming a necessity for American workers. We need to make sure Americans are able to retrain and upskill throughout their career, so they can thrive in the modern economy,” said Sen. Warner. “This will not happen on its own. It requires a serious investment to help workers pay for the education and training necessary to modernize their skills—by employees, by employers, and by the government. The Lifelong Learning and Training Account Act represents that serious investment.”
“The digital, fast-changing nature of today’s economy has significant consequences for workers. More than ever before, individuals will need to acquire new skills over the course of their careers,” said Sen. Coons. “TheLifelong Learning and Training Account Act empowers workers, with help from government and employers, to take charge of their future by actively planning, saving for, and completing the training programs they need to thrive in this economy.”
“Although national unemployment is at historic lows, small business owners are still struggling to find the workers they need due to a skills gap,” said John Arensmeyer, Founder & CEO of Small Business Majority. “In fact, Small Business Majority's scientific opinion polling found more than one-third of small employers said it is difficult to find candidates with the right education, skills or training. Since small firms rarely have enough time to dedicate to extensive staff training or sufficient funds to pay for employee education, the Lifelong Learning and Training Account Act would be a huge boost to small businesses by offering them another way to invest in the development of their staff. This legislation would also help solo entrepreneurs invest in their own development and acquire skills without the aid of an employer.”
“In an economy where more than 80 percent of all jobs require some form of education and training beyond high school, it is more important than ever for workers to be able to access the skills and credentials that can help them advance their careers,“ said Kermit Kaleba, Federal Policy Director of the National Skills Coalition.“The Lifelong Learning and Training Account Act would provide workers with a critical tool to take advantage of emerging educational opportunities so they can keep pace with a rapidly changing labor market. We applaud Senator Warner’s continued leadership on this issue, and we look forward to working with the Senator to ensure passage of the Lifetime Learning and Training Account Act.”
“Education and training shouldn’t stop after high school or college. We need to provide workers with new opportunities to add or update skills throughout their careers,“ said Alastair Fitzpayne, Executive Director of the Aspen Institute’s Future of Work Initiative said. “Creating a culture of lifelong learning is critical to building a skilled and resilient workforce. By incentivizing workers, businesses, and government to co-invest in education and skills training, Lifelong Learning & Training Accounts will help workers continue to develop skills and better manage their economic future.”
The Lifelong Learning and Training Account Act creates employee-owned Lifelong Learning and Training Account (LLTA) savings plans. Contributions to an LLTA by low- and moderate-income workers or their employers are eligible for a dollar-for-dollar federal match of up to $1,000. The federal matching funds are directly deposited into the LLTA immediately after the contribution by the worker or employer. The worker then gets to choose how to use the LLTA funds, which can be applied towards any training that leads to a recognized post-secondary credential.
For workers that need to contribute to the cost of updating their job skills, this significant federal investment can make a huge difference in whether or not these workers seek additional training. If employers are willing to match employees’ savings, the returns can be even greater—a $500 contribution by a worker would create $2,000 in training opportunities (a $500 match by the employer, and then a $1,000 match from the federal government.) The accounts are portable from job to job, and always under the workers’ control.
Contributions by workers and employers are after-tax dollars, but face no additional taxes on earnings if the LLTA funds are used for qualified training expenses. Eligibility is for workers age 25 to 60, with incomes of up to $82,000 per worker. States will manage the accounts. Accounts are designed to encourage the worker to use the funds to regularly update their skills, rather than build up large balances over many years. Restrictions are put in place to ensure that the government’s matching dollars go only to qualified training expenses.
The full text of the bill can be found here. The bill will be officially introduced when the Senate returns after Thanksgiving.
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Warner & Rounds Introduce Legislation to Expand Mortgage Access for Self-Employed Workers
Aug 28 2018
WASHINGTON – Today, U.S. Sens. Mark R. Warner (D-VA) and Mike Rounds (R-SD), both members of the Senate Banking Committee, introduced legislation that would help expand access to mortgages for the self-employed, gig workers, and other creditworthy individuals with non-traditional forms of income while protecting consumers. The Self-Employed Mortgage Access Act would help creditworthy borrowers with non-traditional forms of income by allowing lenders to verify an applicant’s income using additional forms of documentation other than the W-2.
“An increasing number of Americans make their living through alternative work arrangements, like gig work or self-employment. Too many of these otherwise creditworthy individuals are being shut out of the mortgage market because they don’t have the same documentation of their income – paystubs or a W-2 – as someone who works 9-to-5. This bill will allow these workers to supply other forms of paperwork to verify their income while continuing to protect consumers from predatory lending,” said Sen. Warner.
“Small businesses in South Dakota are the backbone of our economy and the heartbeat of our communities,” said Sen. Rounds. “We shouldn’t unfairly punish entrepreneurs, farmers and other small business owners because they don’t earn income on a W-2. Our legislation gives financial institutions flexibility in the forms of documentation that can be used when applying for mortgage credit, making it easier for South Dakota families to realize their dreams of homeownership.”
In response to the mortgage crisis, in 2010, Congress included in the Dodd-Frank Wall Street Reform and Consumer Protection Act a requirement that creditors determine whether a borrower can afford to repay a mortgage loan as part of the lending process. In January 2013, the Consumer Financial Protection Bureau (CFPB) adopted the Ability-to-Repay (ATR) Rule, which requires lenders to look at a customer’s income, assets, savings, and debt in relation to monthly loan payments in order to satisfy the requirements for a Qualified Mortgage (QM). Since the QM standard was finalized, lenders and investors in the mortgage market have shown a clear preference for QM loans due to the potential for liability associated with making non-QM loans.
Unless a loan is eligible for sale to the government-sponsored enterprises (GSEs) or insurance by government agencies, QM loans require lenders to satisfy the rigid requirements of the CFPB’s Appendix Q guidelines. These guidelines often results in a less precise calculation of income for borrowers with non-W-2 income sources, such as rental income, retirement income, or income from self-employment. The effect is creditworthy individuals relying on non-traditional income, who represent up to 42 million Americans, or 30 percent of the labor force, are unduly constrained in their ability to obtain a mortgage.
The legislation would expand the types of documentation that self-employed individuals could submit to demonstrate they are a credit worthy borrower and banks could use to keep a loan in qualifying mortgage status. Those types of documentation include the IRS Form 1040 Schedule C for sole proprietorships, the IRS Form 1040 Schedule F for farming, the IRS Form 1065 Schedule K-1 for partnerships and the IRS Form 1120-S for S Corporations.
“The ability to repay and associated Qualified Mortgage rules are among the most important consumer protections to emerge from the financial crisis and the Dodd-Frank Act. This bill would provide common sense direction to the CFPB in its application of the statutory requirements and give lenders and consumers alike an easier, less burdensome way to meet these tests without weakening their important protections for consumers,” said Barry Zigas, Director of Housing, Consumer Federation of America.
“The Mortgage Bankers Association strongly supports the Self-Employed Mortgage Access Act, introduced by Senators Mark Warner and Mike Rounds. This bipartisan, common sense legislation would allow the use of prudent and well-established underwriting standards to responsibly expand access to mortgage credit by providing lenders and investors greater certainty about standards for validating borrower ability to repay. We believe consumers who own small businesses or are otherwise self-employed should not face unnecessary obstacles to homeownership. By allowing the use of standards already in place at FHA, VA, USDA, Fannie Mae, and Freddie Mac, this legislation better ensures that all consumers are treated on a level playing field when it comes to mortgage underwriting,” said Bill Killmer, Senior Vice President of Legislative and Political Affairs, Mortgage Bankers Association.
“The consumer protections embedded in the ability to repay and Qualified Mortgage rules must be preserved as a centerpiece of post-financial crisis mortgage reforms. But experience has demonstrated that inadequate lender guidance on how to underwrite applicants that do not fit a standardized model has left many consumers underserved. By expanding responsible lender guidance beyond that available in Appendix Q, this bill should broaden access to credit for self-employed, seasonal workers, and low- and moderate-income borrowers,” said Michael Stegman, Senior Fellow, Housing Finance Program, Center for Financial Markets, The Milken Institute.
Full bill text is available here.
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WASHINGTON – At an event today on Capitol Hill to discuss policy solutions for the contingent and alternative workforce, Sen. Mark R. Warner (D-VA) announced two new bipartisan co-sponsors for his legislation to establish a portable benefits pilot program.
As much as a third of the U.S. workforce is currently engaged in temporary, contract or on-demand work, but those who earn all or some of their income as independent contractors, part-time workers, temporary workers or contingent workers find it difficult and expensive to access benefits and protections that are commonly provided to full-time employees, such as paid leave, workers’ compensation, skills training, unemployment insurance, tax withholding and tax-advantaged retirement savings. Initially introduced last year with Sen. Todd Young (R-IN), the Portable Benefits for Independent Workers Pilot Program Act would establish a $20 million grant fund within the U.S. Department of Labor to incentivize states, localities and nonprofit organizations to experiment with portable benefits models for the independent workforce that would allow workers to carry these benefits with them from job to job.
At today’s event, hosted by the Aspen Institute’s Future of Work Initiative – for which Sen. Warner serves as honorary co-chair – Sen. Warner announced that Sen. Michael Bennet (D-CO) and Sen. Ben Sasse (R-NE) have signed on to sponsor the portable benefits legislation.
“The nature of work is changing rapidly, but there’s a growing recognition that our policies are still mostly tied to a 20th century model of traditional full-time employment. As more and more Americans engage in part-time, contract or other alternative work arrangements, it’s increasingly important that we provide them with an ability to access more flexible, portable benefits that they can carry with them to multiple jobs across a day, a year, and even a career,” said Sen. Warner. “I’m grateful to have the support of Sen. Bennet and Sen. Sasse for this important bill, which will encourage experimentation at the state and local levels to find ways we can better support a more independent 21st century workforce. This issue doesn’t break down on partisan lines, nor should it – it’s more about whether we are going to stay stuck in the 20th century policies of the past, or put ourselves on strong footing for the economy of the future.”
Also at today’s event, which was convened to discuss the findings from the June 7 release of the Bureau of Labor Statistics’ (BLS) Contingent Worker and Alternative Work Arrangement Supplement (CWS) to the Current Population Survey (CPS), Sen. Warner announced that he will be seeking two additional studies – one from the Treasury Department and one from the Government Accountability Office (GAO) – to equip policymakers with better data about the tax situations of people in the contingent and alternative workforce.
“Between 2005 and 2018, the federal government collected basically no data about the size and scope of the contingent workforce. This month’s release from BLS was an important step, but there’s frankly still a lot we don’t know about this population of the American workforce. Without more data on this diverse population, it’s hard for policymakers to develop solutions to support them,” noted Sen. Warner. “For instance, we know from tax data that Americans are consistently reporting more self-employed or independent income than they did twenty years ago. And whether they rely on this work for all or just some of their income, one of the biggest complaints I hear from independent and contract workers is that tracking expenses and filing their taxes is just too complicated. But how many people are using that work as a ‘side hustle,’ and how many are actually relying on this work as their primary source of income? Are their tax challenges really the same? There are still big questions we don’t have the answer to, and better information is going to be key to bringing our workforce policies in line with the employment realities of the 21stcentury.”
“We learned last week that there are fifteen million Americans, or about a tenth of the workforce, who rely on nontraditional work as their primary source of income. Unfortunately, there are still many unanswered questions about how Americans are working today, including how many rely on nontraditional work to supplement their income. The federal government needs to collect comprehensive and consistent data in order to better identify the challenges of today’s workers. With additional information, policymakers can develop policies to modernize the social contract for all workers,” said Alastair Fitzpayne, Executive Director, Aspen Institute’s Future of Work Initiative.
Sen. Warner today introduced legislation that would direct the U.S. Department of the Treasury to study tax issues for a broad set of these workers – all those earning “non-employer business income.” This research would examine how tax compliance can be made easier and more effective for many independent and contingent workers, addressing issues such as information reporting, withholding, and tax filing. In addition, as follow-up to the release of the BLS contingent worker survey data, this research would examine changes in the relative share of workers earning wage or non-employer business income, looking over multiple years and across the income spectrum. This would provide new information on how workers are using non-employer business income as a supplement to wages. Bill text is available here.
In addition, Sen. Warner sent a letter today to the GAO requesting a study on the tax situation of “platform workers” – those workers who earn income through online and mobile platforms. Policymakers currently have little data on the tax situation of these workers. The GAO study would help Congress understand the tax challenges faced by these workers, how the tax code can help the platform workforce comply, and what the U.S. government needs to do to ensure appropriate revenue collection. A copy of that letter is available here.
“On behalf of Airbnb's 465,000 U.S. hosts, more than 50 percent of whom are using the money they earn on our platform to stay in their homes, we welcome efforts to create an easier, updated tax reporting system that reflects the new realities of how Americans are earning money. The typical Airbnb host in the United States earns $7,300 annually – supplemental, but meaningful income – and this research is an important step towards ensuring it is easier, not harder, for everyday Americans to supplement their income and follow tax rules,” said Casey Aden-Wansbury, Director of Federal Affairs, Airbnb.
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WASHINGTON – Today, U.S. Sen. Mark R. Warner (D-VA) sent a letter to Bureau of Labor Statistics (BLS) Acting Commissioner William Wiatrowski, urging the agency to conduct further research on the contingent workforce. The letter follows last week’s release of the Contingent Worker and Alternative Work Arrangement Supplement (CWS) to the Current Population Survey (CPS). The survey, which had not been conducted since 2005, found that contingent workers play a significant role in our economy, with tens of millions of Americans – more than one in ten workers – identified as independent contractors, temps, and contract-firm workers.
“While the CWS is considered the gold standard for measuring these type of work arrangements in the American workforce, data about the size and scope of the contingent workforce had not been collected since 2005, after funding was eliminated. A lapse of 13 years between surveys is too long, given cyclical economic fluctuations in an era where new technology and changes to the nature of work have increased the range of opportunities for workers to pursue flexible arrangements. It is important to understand how these employment figures are affected by external forces, such as under periods of higher unemployment or slower economic growth. Without consistent information, policymakers and experts are in the dark about the size and needs of this population, making it harder to find common ground on solutions to help all workers achieve economic security,” wrote Sen. Warner. “I urge BLS to institute best practices and field the CWS annually, and I will continue to push for appropriate levels of funding in Congressional appropriations for the Bureau of Labor Statistics to ensure the fielding of the survey.”
For years, Sen. Warner has been urging the federal government to collect better, more complete data on the number and type of workers who are part of the contingent workforce economy. Estimates of the contingent labor force range from a few percentage points to nearly a third of the American labor force engaging in some type of independent work arrangement.
Added Sen. Warner, “While the data provided a window into how many Americans claim contingent and alternative arrangements as their main job in a given one-week period, it also demonstrated where there are still gaps. There is no official measure of supplemental work. There is little insight into how workers assemble many different kinds of work arrangements to amass sources of income and livelihood. Without these additional data, it is difficult to help this dynamic segment of workers receive more training and resources, access a system of portable benefits they can carry from job to job, or file their taxes and claim deductions and credits. Moving forward, it is imperative that the BLS measure, in a holistic way, how contingent and alternative work arrangements are both central and supplementary to the foundation of our labor force.”
Last year, Sen. Warner introduced bipartisan legislation to test and evaluate innovative portable-benefits models for independent workers. He is also the author of bipartisan legislation aimed at increasing the availability of job training to lower- and moderate-income workers, in an effort to stay on top of the rapidly changing technology and skills requirements for today’s workforce.
The full text of today’s letter appears below. A copy of the signed letter is available here.
William J. Wiatrowski, Acting Commissioner
U.S. Bureau of Labor Statistics
Postal Square Building
2 Massachusetts Avenue,
Room #4040
NE Washington, DC 20212
Dear Acting Commissioner Wiatrowski,
I write today to commend the Bureau of Labor Statistics (BLS) for fielding, analyzing, and releasing the preliminary findings of the Contingent and Alternative Work Arrangement Supplement (CWS) to the Current Population Survey (CPS) on June 7, 2018. For the first time in over a decade, this report provided a snapshot of the contingent and alternative worker population.
This new report demonstrates that alternative workers not only play a significant role in our economy, but are also a consistent part of our labor force. Millions of Americans – more than one in ten workers – identify independent contracting, temp, on-call and contract-firm work as their main job. These workers are an important segment of our labor force, who may be working without access to a traditional set of employment benefits as a safety net.
While the CWS is considered the gold standard for measuring these type of work arrangements in the American workforce, data about the size and scope of the contingent workforce had not been collected since 2005, after funding was eliminated. A lapse of 13 years between surveys is too long, given cyclical economic fluctuations in an era where new technology and changes to the nature of work have increased the range of opportunities for workers to pursue flexible arrangements. It is important to understand how these employment figures are affected by external forces, such as under periods of higher unemployment or slower economic growth. Without consistent information, policymakers and experts are in the dark about the size and needs of this population, making it harder to find common ground on solutions to help all workers achieve economic security.
I urge BLS to institute best practices and field the CWS annually, and I will continue to push for appropriate levels of funding in Congressional appropriations for the Bureau of Labor Statistics to ensure the fielding of the survey.
While the data provided a window into how many Americans claim contingent and alternative arrangements as their main job in a given one-week period, it also demonstrated where there are still gaps. There is no official measure of supplemental work. There is little insight into how workers assemble many different kinds of work arrangements to amass sources of income and livelihood. Without these additional data, it is difficult to help this dynamic segment of workers receive more training and resources, access a system of portable benefits they can carry from job to job, or file their taxes and claim deductions and credits.
Moving forward, it is imperative that the BLS measure, in a holistic way, how contingent and alternative work arrangements are both central and supplementary to the foundation of our labor force. To address these issues, I urge the BLS to add questions about supplementary work and consider expanding the use of administrative data for research and program evaluation as recommended by the Commission on Evidence-Based Policymaking.
Survey research is difficult, methodologically rigorous work and I appreciate the efforts the BLS undertook in order to release this year’s CWS. While it would have been preferable for the BLS to release the results of all of the questions from the CWS simultaneously, I look forward to reviewing the answers to the four new questions measuring electronically-mediated employment I pushed for in September 2018. In the meantime, I will continue to work toward a strong and collaborative relationship with the Bureau to ensure adequate data collection and a thorough understanding of our economy.
Sincerely,
Mark R. Warner
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WASHINGTON – Today, U.S. Sen. Mark R. Warner (D-VA) released the following statement after the Bureau of Labor Statistics (BLS) issued a report that for the first time in years provided a snapshot of the contingent and alternative worker population.
The Bureau of Labor Statistics’ Contingent Worker and Alternative Work Arrangement Supplement (CWS) to the Current Population Survey (CPS) is considered the gold standard of measuring who is doing what in the American workforce, but data about the size and scope of the contingent workforce had not been collected since 2005 after its funding was eliminated. Since then, the federal government had struggled to keep up with an explosion in new technology and changes to the nature of work that have increased the range of opportunities for workers to pursue flexible arrangements. In the Senate, Sen. Warner led the charge in restoring funding to help collect this data and requesting the Department of Labor to relaunch the survey that culminated in this report.
“The federal government and the general public have lacked for many years reliable data to help paint a clear picture of our contingent workforce and their future. Without this crucial information, policymakers and experts are in the dark about the size and needs of this population, making it harder to find common ground on solutions that will help them navigate our intricate labor market. For this reason, I urged the federal government to re-establish these best practices and issue this report, which will help provide us with a direct understanding of what this part of our workforce looks like.
“Today’s news show that contingent workers play a significant role in our economy, with tens of millions of Americans - more than one in ten workers - identified as independent contractors, temps, and contract-firm workers. An while the data shows that there’s been a downward shift in the number of people who rely on contingent work as their main job, we still don’t know how many of them do so in order to supplement their income. Without this crucial piece of data, it will be tough for us to make an accurate assessment of the best way to help this dynamic segment of workers receive more training and resources, access a system of portable benefits they can carry from job to job, and file their taxes and claim deductions and credits. I will continue pushing the federal government and outside experts to fill-in these gaps and provide a full picture of this part of our workforce, and expect to seek more information on the tax challenges of these workers in the near future.”
For years, Sen. Warner has been urging the federal government to collect better, more complete data on the number and type of workers who are part of the contingent workforce economy. Estimates of the contingent labor force range from a few percentage points to nearly a third of the American labor force engaging in some type of independent work arrangement.
Last year, Sen. Warner introduced bipartisan legislation to test and evaluate innovative portable-benefits models for independent workers. He is also the author of bipartisan legislation aimed at increasing the availability of job training to lower- and moderate-income workers, in an effort to stay on top of the rapidly changing technology and skills requirements for today’s workforce.
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WASHINGTON – U.S. Sens. Mark R. Warner (D-VA), Bob Casey (D-PA), and Debbie Stabenow (D-MI), members of the Senate Finance Committee, introduced legislation today that encourages employers to invest more in quality skills training for their workers, creating a tax credit for increased training expenses directed at lower- and moderate-income workers. The Investing in American Workers Act proposal is aimed at encouraging new investments in qualified training that will help more employees advance their careers by staying on top of changing technology and skills requirements.
“To be in the middle class now requires lifelong learning not just to get a job but to hold on to one. Yet in an era when people change jobs frequently and no longer work at one company for their entire careers, the incentive for businesses to invest in their workers—especially their lower- and middle-income workers—has declined,” said Sen. Warner. “This proposal takes positive steps towards helping American workers climb the economic ladder by encouraging more training opportunities for workers while also incentivizing employers to increase both the amount and the quality of the training they’re currently providing.”
“This bill is about helping workers access the kind of job training that leads to increased wages,” said Sen. Casey. “Under this bill, businesses across Pennsylvania will be able to invest in their workforce and build a foundation for growth. In order to rebuild the middle class, we must spur investments in workers, and that’s what this bill will do.”
“The number one issue I hear about from businesses in Michigan is the need for more skilled workers,” said Sen. Stabenow. “This legislation will cut taxes for businesses who are investing in high-quality training for employees and help workers attain the skills they need for good-paying jobs.”
The Investing in American Workers Act legislation encourages high-quality training programs by:
- Establishing a tax credit for employers who increase their spending on training lower- and moderate-income workers. The credit would be equal to 20% of the increased spending on qualified training beyond the average spent over the previous three years.
- Incentivizing high-quality training by specifying a wide range of allowable providers and programs, including training provided through apprenticeship programs, community colleges, accredited career and technical schools or labor organizations.
- Encouraging small businesses to upskill their workers by providing a simplified filing process and allowing them to apply the credit against payroll and alternative minimum taxes.
- “U.S. businesses – including small and medium sized employers – are investing every day in the skills of their workforce, helping their employees advance their careers and creating new job opportunities in our communities. But today’s tax code doesn’t adequately reward those companies that are willing to make these critical investments, making it harder for businesses to compete in a global economy,” said Kermit Kaleba, federal policy director for the National Skills Coalition. “Sen. Warner’s legislation is an important step in the right direction, and will help expand high quality training that leads to better results for companies and workers alike. We look forward to working with Senator Warner to advance this legislation and we applaud his leadership and vision on this vital issue.”
- "As the leader of a company that is deeply committed to creating opportunities for youth, I want to commend Sen. Warner on the big step he has taken today to accelerate a much-needed focus on apprenticeships in the U.S.,” said CEO Chris Nassetta of Virginia-based Hilton. “At Hilton, we have seen tremendous results from this model, with thousands of with thousands of opportunities offered to young people to-date and counting. I look forward to seeing apprenticeships become a real pathway to success in America for years to come."
- “Workforce development is the single most important investment we make at Newport News Shipbuilding,” said Jennifer Boykin, President of Newport News Shipbuilding. “Our skilled workforce is the backbone of our success, and we are committed to being an employer that puts our people first by supporting their development, providing the tools and technology needed to do their jobs, and providing a positive and modern work environment. Senator Warner’s efforts will help other companies make this important investment.”
- “Many employers, including retailers and domestic manufacturers, want to run their own workplace training programs or partner with external career and technical education offerings, but lack the resources and capacity to do so,” said Bruce Harris, Vice President of Federal Government Affairs for Walmart. “One of the best ways to address this need is to incentivize employers to create and expand skill-building programs – including apprenticeships and other work-based learning opportunities – for new and seasoned workers.”
- “As artificial intelligence and automation continue to impact and disrupt the economy, having an educated and well-trained workforce is increasingly important for workers and companies to remain competitive and succeed,” said Al Fitzpayne, Executive Director of the nonpartisan Aspen Institute’s Future of Work initiative.“Workers will need to become lifelong learners and access opportunities to acquire new skills or sharpen their existing skills. A worker training tax credit would provide a meaningful incentive for companies to boost competitiveness by investing in the skills of their workforce, while helping employees succeed through access to education and skills development through their work.”
- “Every day I see the impact of training on the thousands of workers employed by Managed by Q and the service providers on its marketplace,” said Dan Teran, CEO of Managed by Q, which maintains and manages workspaces. “We see training as a driver of customer satisfaction and employee retention, as well as a pathway for workers to enhance their earning potential. I am excited to see Senator Warner making it easier for employers to do the right thing by investing in their workers.”
Since 2015, Sen. Warner has served as honorary co-chairman of the nonpartisan Aspen Institute’s Future of Work initiative, which is researching proposals to strengthen the workforce and the national economy. Earlier this year, Sen. Warner introduced the first federal legislation to experiment with different models for portable benefits for independent workers. He also has sponsored bipartisan legislation to make it easier for startups and privately-held firms to give employees an ownership stake by providing profit-sharingamong a broader range of employees.
The proposal at the center of the Investing in American Workers Act, a tax credit for qualified training, was included in the Democratic Party’s ‘A Better Deal’ package unveiled this summer.
WASHINGTON – U.S. Sen. Mark R. Warner (D-VA) released the following statement on a Government Accountability Office (GAO) report titled “DOL Can Better Share Information on Services for On-Demand, or Gig, Workers” that identifies areas where the public workforce system can better serve workers engaged in on-demand work:
“As we continue to assess the scope and policy implications of the growing independent workforce, it is vital that we rely on sound data to inform our decisions,” said Sen. Warner. “This report details several areas where our public workforce system could improve to be more responsive to this dynamic segment of the economy. I’m hopeful that we can work together to make these improvements and identify others that will make our federal training and employment resources better suited to the 21st century.”
The report is the culmination of a request that Sen. Warner made in 2015 asking GAO to assess: what types of workers are participating in the gig economy, what skills they need to be successful, what challenges they face in navigating employment and training opportunities, and to what extent federal workforce and education programs provide resources and tools that help workers acquire necessary skills. GAO’s report sheds light on these areas and will help inform federal policymaking, including Sen. Warner’s ongoing efforts to identify legislative solutions necessary to support people engaging in the contingent workforce:
“Today’s GAO report provides important insights into how the workforce development system fails to consistently retrain workers for the growing number of non-traditional work opportunities and fails to help the tens of millions of independent workers further develop their skills,” said Alastair Fitzpayne, Executive Director of the Aspen Institute's Future of Work Initiative. “Policymakers should read this report and develop ideas that help modernize the workforce development system so that it accounts for all forms of work.”
Sen. Warner also wrote Secretary of Labor Alexander Acosta requesting that he take action on a number of recommendations and observations identified in GAO’s report, including: making resources relevant to independent workers more easily accessible, clarifying to state and local workforce officials that there are no federal prohibitions against posting gig work opportunities in job centers, and working to better measure the impact of contingent work and integrate this information with traditional labor market data.
The full text of the GAO report is available here. The full text of Sen. Warner’s letter to Sec. Acosta is available here.
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