November 16, 2022 — Modern Economy Project
In today’s economy, workers increasingly value jobs that offer them maximum flexibility and autonomy.
More than one-third of American workers – about 60 million people – are estimated to identify as independent workers who participate in the so-called “gig economy.”
These workers range from freelance writers and consultants to mobile app-based rideshare drivers and dog walkers.
But there’s often a trade-off for the independence these types of jobs provide: a lack of benefits like health insurance, retirement contributions or paid leave.
Companies that participate in the gig economy often maintain that they can't offer many of these benefits without having to adopt business models that undermine the flexibility prized by these workers.
That’s why some lawmakers in at least a dozen states across the country are proposing a new model of “portable benefits.” Under these proposals, workers could keep the same benefits from job to job.
Lawmakers in states such as Alabama, California, Connecticut, Georgia, Massachusetts, New Jersey, New York, Washington and Vermont, have introduced legislation to create portable benefits programs, according to the National Conference on State Legislatures.
During a recent “Our American States” podcast hosted by the National Conference of State Legislatures, Georgia state Sen. Elena Parent, a Democrat, said the changing nature of work has made this a pressing issue in her state.
“The expectation that most people would get health care and retirement through their employer [is] really an outdated notion in many ways,” Parent said. “So we just really need to reimagine the entire way that these core benefits are provided to Americans.”
Parent said that there are a variety of ways for stakeholders, including government, businesses and workers, to split the costs of a portable benefits program.
"I think that if we were going to make it be something that is a benefit to the freelance gig economy folks the same way being an employee is, we would not want to expect that the employee would foot the bill for the entire thing which then of course leaves the employer, taxpayers and customers. There are various different ways that you could divvy up the costs between these categories," Parent said.
Alabama state Sen. Arthur Orr, a Republican, agreed that public policy "really needs to catch up with the times in this space."
"[T]here is a targeted group out there that again have skills, want to work, want to participate in the economy and the workforce, but the benefits that they are able to get under current law are slim to none and that makes no sense from a policy perspective," Orr said.
Orr said that he favors an approach to portable benefits that allows for "a la carte" plans where people can pick and choose benefits. He warned that a "kitchen sink" approach could make employers balk at the cost.
"So, making it an a la carte and letting the workers choose perhaps what they want to participate in or not and get that tax benefit of going back to retirement, let them donate which part of their wages end at 40l(k) that’s portable that they can take from employer to employer to employer," Orr said.
While states have been at the forefront of innovation with devising portable benefits programs, there’s increasingly been more action at the federal level in recognition of this issue.
Congress granted non-traditional workers access to state-administered unemployment insurance programs as part of the CARES Act pandemic relief law in 2020. Sen. Mark Warner (D-Va.) and Rep. Suzan DelBene (D-Wash.) have also introduced bipartisan legislation that would direct the Labor Department to establish a pilot program for providing portable benefits through grants to state and local governments or nonprofit organizations.
At the Modern Economy Project, we believe it’s essential to find bipartisan solutions that reflect the changes in today’s economy. Lawmakers on both sides of the aisle increasingly recognize that all Americans should have access to essential benefits like health care and retirement security, regardless of their individual work structure.
We look forward to working with lawmakers, both at the state and national levels, to enact benefits programs that will allow for increased economic opportunity for all.