Our labor markets have changed – so why haven’t so many of our labor laws?
America’s social safety net, instituted to protect the American worker and to guarantee laborers a wide array of benefits, was instituted during the Great Depression, and it remains largely the same set of laws today as it was nearly a century ago. Unsurprisingly, nine decades later, these laws no longer reflect the reality of the workforce or fulfill the needs of today’s worker. Our laws are, in some ways, simply inapplicable to the new economy. With as many as 68 million Americans now working in the independent labor force, and with as many as 50% of Americans poised to become gig workers (those engaged in nontraditional full-time work with a single employer) within the next decade, it may be time to reconsider the laws regulating our labor markets, the way individuals secure their social safety net benefits, and what we believe are the fundamental responsibilities of companies towards their workers.
Americans are engaging in the independent labor force in large numbers, largely to supplement existing income. They turn to gig work for the flexibility, autonomy, and control they can exert over their hours and projects, and because it fits in with their existing schedules, which largely include other full or part time work, school, and/or child care responsibilities. Gig work has been a boon to the economy, generating $1.2 trillion last year, and has proven a vital source of income for millions of workers.
The challenge, however, is that while independent work affords workers a wide array of benefits, workers are often left without the social safety net protections enjoyed by employees in traditional work arrangements. These protections include employer-provided health insurance, retirement benefits, paid sick and vacation leave, workers’ compensation, and unemployment insurance to highlight a few. In many cases, companies are willing to provide certain benefits to their workers, but don’t want to risk having their workers classified as “employees,” instead of independent contractors for fear of assuming much greater financial responsibility for those workers as required by law. As more and more Americans turn to gig work, it becomes increasingly important for policymakers to consider ways in which to extend the social safety net to all workers.
Policymakers have many options to consider, and there’s a very real balancing act that they must observe in trying to modernize our policies for the gig economy and towards these emerging firms. While it’s vital for independent workers to have access to safety net protections, it is also crucial that federal policy doesn’t stifle innovation or impede economic growth. To find an effective path forward, regulators will have to consider long-held assumptions about how benefits are delivered, under what conditions companies are responsible for providing any level of benefit, and how individual workers should maintain earned benefits given novel work arrangements.