PORTABLE BENEFITS

A fund for NYC drivers models how benefits could work in the gig economy

French livery drivers block with their cars a traffic circle at Port Maillot, one of the entries to the city after they carried out a…
French livery drivers block with their cars a traffic circle at Port Maillot, one of the entries to the city after they carried out a…
Image: AP Photo/Francois Mori
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More than one in every ten American workers—15.5 million people—rely on on-call, temp-agency, contract-firm jobs or independent contracting for their main job in the US, which is more people than work in manufacturing. This estimate came recently from the Bureau of Labor Statistics (BLS) Contingent Worker Supplement (CWS), which was conducted for the first time in thirteen years, and measures how many Americans are engaging in alternative work as their main job.

These workers struggle to access workplace benefits and protections like health insurance, retirement plans, and workers compensation. According to the CWS, these workers in alternative arrangements are 50% more likely to be uninsured than those in traditional work arrangements.

One of the most striking changes since the last CWS in 2005 was the jump in health coverage rates across all alternative work arrangements. The Affordable Care Act likely played a large role, expanding access to health coverage for millions of workers. Since 2005, in fact, the portion of alternative workers without insurance went from more than a third to just under a quarter. But even with this increase in coverage, there are still substantial gaps in access to benefits between alternative workers and traditional workers. Traditional workers are over twice as likely to receive employer-provided health insurance as the wage and salary alternative workers, and 60% more likely to access employer-provided retirement plans.

While there is debate—and litigation—about whether these workers should be properly classified as employees under the law, for the time being they lack any access to traditional employment benefits and protections. At a time when so many Americans are without benefits and cannot rely on the traditional employer-provided benefit model, we’re faced with the challenge of finding new ways to allocate benefits to workers. Benefits should be portable, meaning workers should be able to access them regardless of their work arrangement and be able to take them from job to job. This portability is a vital step in improving stability and economic security for both traditional and independent workers.

Benefits could be pro-rated, as more and more workers have multiple income streams. And, they should be universal: no matter how you work in America, you should be protected.

The concept of portable benefits isn’t new. Just look at the Hollywood guilds that support a flexible and shifting workforce of actors, screenwriters and directors. But with the rise of platform companies like Uber, Lyft, and Etsy, we’ve seen momentum building for the idea of portable benefits for workers in the gig economy.

We need to pilot these ideas in cities and states—the laboratories of democracy—so ultimately inform the next social contract on the federal level. One such pilot is the Black Car Fund in New York.

When you hop in an Uber or hail a cab, your driver is most likely an independent contractor, and thus unable to receive the traditional benefits and protections that many workers receive from their employer. But the exception to this can be found in New York City where nearly twenty years ago, legislators established a system to provide workers’ compensation to drivers. Named the Black Car Fund, it is an important model for how portable benefits could work. For nearly two decades, a small surcharge on every ride taken in New York has financed workers’ compensation protection for the more than 80,000 independent drivers (including Uber and Lyft drivers) in New York. Without this arrangement, New York’s drivers would be completely on their own if they were injured on the job—like they are everywhere else.

Building on the success of its workers’ compensation benefit, the Black Car Fund recently announced that it will offer two new benefits. For the first time, drivers will have free access to telemedicine, over the phone or live stream access to a doctor who can provide basic primary care and write prescriptions for basic maladies like the flu. In addition, the fund is offering a vision plan, which provides free access to an eye exam and a free pair of glasses. The delivery of free benefits is already drawing attention from policymakers interested in portable benefits.

This announcement from the Black Car Fund is a small but important step forward in updating the social contract to better meet the needs of the modern American workforce. We hope that New York’s model serves as an example to other states looking to pilot a 21st century social safety net.

Natalie Foster is an advisor to the Aspen Institute Future of Work Initiative. David Rolf is the founding president of SEIU 775.