In 2024, it's high time to strengthen income, benefits and safety nets for workers in America's gig economy. More than 57 million workers today participate in some way in the gig economy – the economy of independent contractors, freelancers, and temporary and online platform workers. They work in all industries and professions: as do-it-yourselfers, temporary workers, hairdressers and as drivers for Uber, Lyft, DoorDash and the other delivery services. Their numbers increased by an estimated 15 percent in the decade of the 2010s and have continued to increase since then.
Many of the gig economy workers are there by choice: they prefer the flexibility and freedom of independent contractors. Others welcome the opportunity the gig economy offers to supplement their income. Small businesses often say they can't do without them because the costs and legal obligations of formal employees can be prohibitive, and even larger companies rely on the flexibility of gig economy workers to compete.
But the gig economy also has a dark side. Because they have to cover their own expenses, those who rely on the gig economy as their primary source of income may struggle to even earn minimum wage. They typically do not have access to health insurance, pensions, workers' compensation or unemployment insurance. Because they temporarily offer employers a cheaper alternative to traditional workers, they can undercut wages and undermine unions.
Some argue that the gig economy threatens the great 20th century trade between labor and capital, which depended on unions pushing for a robust share of industry profits and a strong social safety net.
The gig economy has accelerated the divide between the haves and have-nots, threatening the stability of our democracy. But there are things we can do to strengthen the position of gig workers in 2024. Here are three strategies.
People sign up to be Uber drivers at Uber's first Work On Demand recruiting event, hoping to recruit 12,000 new driver-partners in South Los Angeles.
MARK RALSTON/AFP via Getty Images
The first is “workforce intermediaries” who can close the performance gaps. The Black Car Fund is perhaps the best-known example of such an intermediary today. Founded by New York State and established in 2000, the company provides free workers' compensation to drivers who are independent contractors through a surcharge on each trip. It also offers independent drivers a range of affordable benefits: dental insurance, vision insurance and disability insurance.
Other nonprofit intermediaries such as Freelancers Union and for-profit intermediaries such as Trupo, Steady and GreenLight are driving innovation in affordable health care, disability insurance and financial management products for gig economy workers. But these intermediaries are fighting an uphill battle given today's skyrocketing health care and benefits costs. Supporting gig economy intermediaries should be part of the government's broader mandate in 2024 to reduce the cost of health care and social services.
A second, more systemic strategy is to move away from the current, outdated binary worker classification system, which divides workers into two categories: employees and independent contractors. The system is a remnant of the post-war economy. It does not take into account how the economy has developed. The fact that so many workers fall into a gray area—leading to numerous legal battles with state tax authorities and the IRS—suggests that further classifications may be necessary.
For example, Canada and a number of European countries have the “dependent contractor” classification. Dependent contractors, like independent contractors, offer their services to multiple companies. However, the dependent contractor receives more than 50 percent of his income from a single company, which, in addition to certain protective measures (termination), also brings with it certain advantages.
The dependent contractor is not necessarily the answer in the American economy. Different state governments will want to experiment with variations in collaboration with businesses, workers and other stakeholders. The basic principle should be to link benefits to the degree of economic integration between employees and companies.
A third way to support gig economy workers is through universal health insurance, such as a form of Medicare for All. It is unfair to expect companies to choose standard workers over temporary workers when they have to pay huge health insurance premiums for the former but not for the latter. Subsidizing health insurance for all would significantly reduce U.S. labor costs, make our country more competitive, support gig economy workers while supporting regular workers by reducing the incentive to outsource.
The gig economy is not going away. However, a better deal for workers can be achieved in 2024 by maintaining the flexibility of the gig economy while improving worker wages and protections.
Robert F. Kennedy Jr. is an independent candidate for President of the United States. Michael Bernick is the former director of the California Department of Labor.
The views expressed in this article are the authors' own.
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Newsweek strives to challenge conventional wisdom and find connections in the search for common ground.
Newsweek strives to challenge conventional wisdom and find connections in the search for common ground.
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