Leave No Worker Behind: Reimagining Benefits in the On-Demand Economy
Earlier this month, the Brookings Institute outlined the employment insecurity that Rust Belt communities are now facing: job loss, disappearing pensions, industrial restructuring, and automation.
This lack of jobs and safety nets is ironic because these Midwestern industrial states and unions led the way for employer-sponsored benefits post-World War II. That many Rust Belt workers are now suffering is a tragedy because, as Brookings outlines, it shouldn’t have to be like this.
The benefits crossroads
75 years. That’s roughly how long employer-sponsored benefits — that staple of American working life — have been around. It’s something of a paradox: benefits have been in place long enough that they’re taken for granted and yet, objectively speaking, 75 years is almost no time at all in the history of work.
Back then, systemic change happened in response to a confluence of forces that made the timing both urgent and right. The conclusion of World War II, the rise of unions, and government support created the benefits system we all have learned to lean on.
But today, we’re standing in another moment of change. We’re seeing a new and extraordinary convergence of factors — the on-demand economy, the increase in alternative work arrangements, the decline of traditional industrial sectors — that should push us to make the smart changes that protect and support a bulk of working Americans.
The on-demand economy
We need benefits to evolve again as our new reality of work evolves again. We’re seeing the rapid decline of traditional corporate jobs. Big industrial sectors like coal, oil and gas, and manufacturing are declining or moving overseas. At the same time a full-time, nine-to-five, corporate job is not the only brass ring we can reach for. By 2020, a full 40 percent of the labor pool is expected to be contingent. Freelancers are growing at triple the rate of the overall domestic workforce. Alternative work arrangements underpin the majority of net employment growth, as Brookings noted.
Beyond economic necessity, we’re seeing everyone from Millennials to early-retirees thrive working for themselves, curating a career that suits their individual needs and circumstances. Flexibility is the number one, non-monetary benefit workers want — and now they can get it on their own. Almost half of millennials want to start a business in the next three years. 54 percent would start one in the next six months with the right resources.
So how should benefits evolve?
As independent work becomes the norm, more people have the potential to be left behind (e.g., certain Rust Belt workers) unless we decouple benefits from big employers and make them more flexible too. The concept of “portable benefits” are to today’s workforce what employer-sponsored benefits were post World War II: a much-needed change to support the economic security of all Americans.
To deliver them effectively, portable benefits should be:
Applicable to every worker: full time, part-time, independent or gig. Why? Portable benefits will help stabilize total workforce income, regardless of employment status, and encourage a more productive overall workforce. If you’re not worrying about paying healthcare bills, you can stay in a job you love, start your own company, or even try a brand-new career path. And why should you switch insurance plans every time you switch jobs? You should be able to take it with you.
Advantageous for both employers and workers, which means for employers to make pre-tax, prorated contributions to all benefits. Companies are naturally incentivized to retain good workers and as more people go independent, there is already a war for exceptional on-demand talent. Let’s level the playing field with the incentives offered by the government to big corporate benefits plans and we’ll see rapid adoption.
Administered by public/private partnerships, at least initially. We don’t need to wait for the public sector to do this (and we certainly don't need another government-implemented, Healthcare.gov 2.0-style solution). We need great public sector legislation and great private sector implementation to make this work. There is an opportunity to spur private sector innovation to deliver a comprehensive set of benefits to workers and manage the complexities of contributions across employers and modern labor platforms.
It’s time to stop lamenting the decline of traditional nine-to-five jobs. Romanticizing the past doesn’t help us embrace a future of work that has largely already arrived. Instead, we should ensure this modern workforce can not only survive but thrive in a freelance economy that’s here to stay.
