Whenever you’re introduced to someone, one of the first questions typically asked is “Where do you work?” Today, “What are you working on?” might be more appropriate.
That’s because the U.S. workforce is increasingly composed of freelancers, independent contractors and the otherwise self-employed. Yet Washington has mostly remained on the sidelines as the U.S. economy, workforce and workplace have undergone perhaps the most dramatic transformations in decades.
Some two dozen people are considering running for president in 2016, and none of them are talking much about these issues. That’s remarkable.
Whether by economic necessity or by choice, as many as one-third of U.S. workers now find themselves piecing together two, three or more on-demand work opportunities to make a living. This is often called the gig economy or the sharing economy.
This group of workers includes a lot of millennials who began entering the workforce in 2000. It also includes middle-age professionals downsized at mid-career and baby boomers hit with a premature end to what they thought were solid careers. And it includes a lot of folks for whom working multiple jobs is nothing new: It’s just how they’ve always gotten by.
Today, online platforms such as Airbnb, Uber, TaskRabbit and Etsy can provide granularity in matching supply and demand for things many people may never have thought about monetizing before: A spare room. A ride in a family car. Free time.
But many of the business models in this on-demand economy are built on the premise that workers are independent contractors, not employees. That means companies do not have to pay costs such as health insurance or retirement benefits. They also typically do not pay a share of unemployment or workers’ compensation coverage.
So these workers, even if they are doing very well, exist on a high wire, with no safety net beneath them. That may work for many of them — until the day that it doesn’t. That’s also the day that taxpayers could be handed the bill, which is why Washington needs to start asking some tough policy questions:
First, the biggest challenge may be this change in the employer-employee relationship. Are there other options for providing safety-net benefits to workers who are not connected to a traditional full-time employer? Who should administer them? Should they be opt-in or opt-out?
We could look to the Affordable Care Act’s health-care exchanges as a public-private model or perhaps borrow 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. It could be consumer driven in part, too — perhaps allowing customers to designate a portion of their payments to go to a fund that helps support workers. There are other possible public-private models that deserve a look.
Second, while litigation is underway about whether on-demand workers are independent contractors or employees, this question is too important to leave to the courts alone. As policymakers, we should begin discussing whether our 20th-century definitions work in a 21st-century economy.
Third, the federal government needs to become much more nimble. We need better data on how many people are part of the gig and sharing economies, and we need to recommit to extending broadband Internet service to underserved and unserved regions. We should also streamline the hodgepodge of federal programs — currently scattered across dozens of federal agencies — meant to support innovators and entrepreneurs.
And we cannot forget the opportunity costs of this generation’s combined $1.2 trillion in student debt, which is limiting options for young workers.
Finally, the millennial generation already is beginning to fuel a tremendous shift in one of the traditional anchors of America’s economy. Many younger Americans have made it clear they prefer sharing and renting over ownership. This could have a huge impact on traditional tax systems at every level of government, because we currently use the tax code to reward ownership of everything from homes to vehicles to factories.
Barely five years ago, no one had even heard of Uber or Airbnb. And while we don’t know what the disruptive technologies of tomorrow might look like, we know developments such as driverless cars, same-day drone deliveries and 3-D printing appear to be right around the corner. Instead of trying to make the new economy look more like the old, Washington should encourage these innovations and work to create more opportunities and upward economic mobility for everybody.