Apr 27, 2019

Rethinking work and safety nets

Illustration: Sarah Grillo/Axios

U.S. employers currently have just 2 options for classifying their workers: employees and independent contractors.

But but but: Neither really suits the on-demand economy.

  • Employees are considered to be under the control of their employer, which can dictate when and how they perform their work. It's antithetical to the flexible design of on-demand economy jobs, while the corresponding liabilities are antithetical to on-demand economy business models.
  • Independent contractors provide goods and services while retaining control over schedule and compensation. But on-demand economy workers clearly don't have real control over what they're paid, as evidenced by recent ride-hail driver strikes in Los Angeles after rates were suddenly slashed.

A solution could be the widespread adoption of "portable benefits."

  • On-demand economy workers would earn a per-transaction fee that gets put into an account they could carry from job to job, redeemable for benefits like health insurance.
  • Each company's contribution would thus be proportional to the amount of work performed.
  • Portable benefits bills have been introduced in several states, like Washington, and at the federal level in 2017 by Rep. Suzan DelBene (D-Wash.) and Sen. Mark Warner (D-Va.).

The pros: This would provide on-demand economy workers with many of the rewards of employment without actually having to be employed. Plus, while not directly impacting compensation, it could reduce the costly variability of health-care expenses.

The cons: Some workers might prefer to receive those per-transaction fees directly, or companies might use such fees as a pretext to lower take-home pay. Plus, it might not always be applicable to those working part-time, or might effectively force those people to work longer hours.

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