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Sen. Mark Warner makes the case for a new social contract for gig economy workers.
When you meet someone for the first time nowadays, the first question you’re likely to ask is no longer “Where do you work?” but rather “What are you working on?” That’s because the U.S. labor market is experiencing one of the most dramatic transformations in decades. Whether by economic necessity or choice, as many as one-third of Americans are now participants in the contingent workforce. In other words, they are working as independent contractors, temps, freelancers, or in the so-called sharing or gig economy.
In some ways, this phenomenon is not new. The last official U.S. government survey identified up to 50 million contingent workers, and that count was tallied in 2005—before the gig economy even existed.
Technology and globalization have accelerated employers’ ability not just to move positions offshore but also to disaggregate jobs into discrete tasks that can be farmed out to different people at varying times.
To be sure, all this innovation has enormous upsides, including the flexibility for employees to work when they want to and for as long as they want to. Likewise, individuals’ ability to monetize their time—or cars or apartments—provides new opportunities for them to supplement their household incomes.
Yet these changes are a two-way street: If we’re going to share more freedoms, we also have to share more responsibilities. For too many Americans in today’s contingent work environment, the old social contract of employer-based health insurance, retirement and other social insurance benefits is no longer an option.
The shared responsibility between employers and employees developed over the past 75 years provided a critically important safety net for individuals and families. This network of benefits helped protect taxpayers when the stuff hit the fan, which it occasionally does over the course of a person’s working life.
So the question is: “How do we modernize and improve a social contract that was designed for yesterday’s workforce to better meet the needs of today’s economy?”
An Uncertain Framework
Striking this new bargain is not a one-shot deal. It’s a process that requires experimentation to address new and old challenges alike.
For instance, what does unemployment insurance—which was designed to protect workers during layoffs and downturns—mean for an Uber or Lyft driver who chooses when and when not to work? How will workers, long accustomed to a suite of benefits and workplace protections through their employers, build a safety net while working for multiple on-demand businesses simultaneously and over time?
Even in the midst of an economic revolution—perhaps especially now—it is essential to recognize that some needs and rights of workers have not changed. People still require access to health care and retirement security as well as protection from injury and exploitation. We need to find creative ways to increase the economic security of contingent workers without undermining the flexibility of the new economy.
For the past year, I’ve been crisscrossing the country and attempting to learn everything I can about these issues. Here’s what I have concluded so far:
We have a greater responsibility to strengthen the social contract than ever. Too many low- and middle-income Americans are getting the short end of the stick. For the past two decades, the economy has been in the midst of a massive transformation. The objectives of the social contract, including stability and security, remain the same, but the pathways to achieving them need to be modernized to meet the demands of this new era.
We have to make innovation our ally, not our enemy. Solutions to these challenges should develop from some of the same technological advances and entrepreneurial creativity that are driving new business models.
We should act now to design models that can support the many new ways people work. Portable benefits should be attached to individuals regardless of the number of jobs they might have over the course of a day or a career.
As a longtime entrepreneur myself, I continue to challenge the innovators to innovate before the regulators rush to regulate. Forward-leaning business leaders and policymakers need to look for opportunities and creative partnerships to further explore which solutions work and which don’t.
In some places, such experimentation has already begun. In New York City, for example, the International Association of Machinists and Aerospace Workers has created an Independent Drivers Guild recognized by Uber—repurposing an 11th century model in a way that has promising potential to provide benefits and protections to drivers in the on-demand economy. Our country needs more of these experiments from states, cities, employers, unions, associations and nonprofits alike.
We also could look toward the idea of the “hour bank,” used by the building trades for 60 years, to administer benefits for members who work for a series of contractors over the course of a year. Such a bank tracks an individual’s labor for multiple employers or contractors, with a trusted third party collecting and administering the employers’ contributions for training, insurance and retirement programs based on the total hours worked.
Barely five years ago, no one had even heard of Uber or Airbnb. And while it’s not clear what the disruptive technologies of tomorrow might look like, we know that developments such as driverless cars, same-day drone deliveries and 3-D printing appear to be right around the corner.
The broad outline is clear: The U.S. economy is changing faster than we think—and, so far, we aren’t keeping up.
Mark Warner is a Democratic senator from Virginia. He is a former Virginia governor and a co-founder of Nextel Communications.
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