Want to be your own boss?
If so, you’re in good company. Contingent workers — gig workers (i.e., temporary employees), freelancers (e.g., Uber drivers), and independent contractors (e.g., marketing consultants) — now comprise over a third of America’s labor force. According to Intuit CEO Brad Smith, 43 percent of the workforce will be contingent by 2020.
In a nod to the gig economy’s growth, U.S. Sen. Mark Warner (D-VA) and U.S. Rep. Suzan DelBene (D-WA) have introduced resolutions into their respective Houses of Congress, both titled “Portable Benefits for Independent Workers Pilot Program Act.” These bills propose allotting $20 million to study contingent worker benefit options.
Warner and DelBene’s proposal may sound radical, but almost all U.S. job growth since 2005 has been in alternative work arrangements. Somehow, we as a society need to address the dissatisfaction that these workers are feeling. More than two-thirds of people who’ve worked as independent contractors say they wouldn’t want to do so again.
Contingent work is our future. Unless we listen to workers’ needs, our economy will suffer.
Engaging America’s Workforce
Despite the disenchantment of many contingent workers, alternative work arrangements are exploding. Forty-two percent of executives surveyed by Deloitte expect to increase, some significantly, their future use of independent contractors; only 16 percent plan a decrease.
The solution? Something I call “total workforce engagement.” Inspired by total talent management, TWE calls upon HR leaders to measure and maximize engagement across all types of talent. Historically, employers have concerned themselves with engaging only full-time employees. TWE is a strategic approach to managing all ways of getting work done — full-time employees, independent contractors, robots, and everyone in between.
If HR leaders are to successfully engage the entire workforce — and if America’s economy is to continue succeeding — we need ideas like Warner and DelBene’s.
Investing in Our Economy
Try as we might, HR and business leaders cannot do it alone. Policymakers must invest in this workforce with us. Until then, TWE cannot succeed. Contingent workers will continue to feel insecure, unappreciated, and less valuable than traditional employees.
To engage the entire workforce, we must:
Full-time and temporary employees have a safety net in unemployment benefits. But non-employee workers don’t qualify for unemployment insurance, so they must rely on savings during dry spells. Whether they’re engineers or writers, freelancers deserve the security of a safety net.
2. Create another worker classification.
It’s time to update our worker classification system to recognize today’s diverse workforce. Policymakers should add a third classification: a hybrid of a W-2 worker and a 1099 contractor that would allow non-employee workers to access the safety net available to traditional employees.
3. Make health insurance costs more equitable.
Health problems don’t care whether someone is a W-2 employee or a 1099 worker.
But while employees pay about 18 percent of employer-sponsored healthcare premiums for single coverage, non-employee peers pay 100 percent of their premiums. These workers should be able to carry benefits between gigs, and they shouldn’t have to pay more to do so.
4. Increase coverage mobility.
We need to make it easier for contingent workers to satisfy health insurance eligibility requirements. Thirty- or 90-day waiting periods routinely prevent contractors from qualifying for employer insurance. This is the primary issue that the Portable Benefits for Independent Workers Pilot Program Act aims to address.
5. Update workers’ compensation programs for non-employee workers.
Today, companies aren’t required to provide workers’ compensation for most independent contractors who may suffer a workplace injury. In Canada, independent contractors may enroll in workers’ compensation programs; in some jurisdictions, they’re even required to do so. One way or another, our workers’ compensation laws need another look.
6. Offer retirement savings opportunities to independent contractors.
Retirement plan participation among full-time workers has more than tripled since the 1970s. Although independent contractors can enroll in retirement plans, they don’t benefit from employer matching like traditional employees do.
Technological change has caused the loss of more than 6 million U.S. manufacturing jobs in the past decade. Yet across all sectors, 600,000 roles remain unfilled due to a skills shortage.
Together, executives and policymakers must predict what skills workers will need in the coming decades. Workers of all stripes could benefit from courses in entrepreneurship and financial management.
The gig economy may work for some, but it doesn’t work for everyone — not yet, anyway. We need to recognize independent contractors and temporary employees as vital members of our economy. Because, after all, they are, and they deserve to be treated like it.