Think of it as a pistol shot kicking off the labor and employment debates of the next decade.
Two statements released this week—an open letter organized by a Silicon Valley nonprofit and a policy brief from the R Street Institute—launch a new and sure to be much contested national conversation about the sharing economy. The perplexing, unanswered question: how to combine the flexible hours and independence that draw people to work for an on-demand company like Uber or TaskRabbit with some kind of safety net to protect workers when they’re injured or want to retire?
It’s a conundrum for workers, but also for the companies that make up the gig economy, which want to look as appealing as possible to would-be customers and investors; white-hat, people-friendly firms or even “networks,” rather than big, bad traditional corporations. There’s some debate about how much of the economy would be affected by a solution. One school of thought estimates that the number of part-time workers is the same today as it was 10 and even 20 years ago—roughly 16 to 18 percent. Others believe the number is much larger and growing rapidly: The U.S. Government Accountability Office says 40 percent of workers now hold what it labels “contingent” jobs.
The Silicon Valley group and R Street aren’t the first to address the issue. Virginia senator Mark Warner, a Democrat, floated a few ideas last summer. But his proposals got little traction on the Hill or elsewhere. The California letter brings a handful of marquee names to the conversation: Its 40 signatories range from former McCain-campaign economist Douglas Holtz-Eakin to the Service Employees International Union, plus several iconic sharing-economy companies, including Lyft. The R Street policy brief by senior fellow Ian Adams brings some badly needed intellectual fire-power.
All three proposals—Warner’s, R Street’s, and the California group's—start with the same basic construct. Companies would contribute money into a fund run by a third party—Warner calls it an “hour bank”—that workers could draw on even after they left the firm to cover unemployment, disability, retirement and potentially training expenses. The underlying principle is the same as in any insurance policy. The difference in this case: the benefits would be what the California letter calls “pro-rated” and portable. If you work half-time, the company contributes half as much as it would if you worked full-time, and you can accumulate benefits over a lifetime as you move from job to job.
The critical question: What’s in it for the companies, other than PR credit? And this is where the R Street proposal adds an intriguing new idea.
Among the biggest threats hanging over any sharing-economy company is that the government will deem the people who work for it to be conventional employees rather than independent contractors. That triggers a host of employer obligations: everything from overtime rules to OSHA protections to collective bargaining rights that may not be appropriate for a part-time worker setting her own schedule or driving his own vehicle. And this is the issue at the heart of several pending lawsuits—workers suing Uber, among other companies, for allegedly “misclassifying” them as independent contractors in order to avoid reimbursing them for business expenses.
The R Street answer to this problem: Perhaps companies contributing to the hour bank should be given a safe harbor. The government would presume their workers were independent contractors, rather than employees. And in states like California, where current law puts the burden on the company to prove that suing workers are contractors, Adams raises the possibility of reversing the presumption. Under his proposal, if the firm were contributing to the benefits fund, the burden would fall on the worker to prove that he or she was an employee and entitled to employee benefits.
Both new proposals leave many questions unanswered. Both are deliberately general and broadly framed—30,000-foot calls for more discussion of an issue where the only thing that ultimately matters will be the fine print of the legal provisions. Who should run the hour bank? (Adams wisely argues against any role for government.) How to ensure that it remains truly voluntary for companies? What about the scope of the protections covered? And these are the just the obvious, big-picture questions. Even if a consensus emerges around the idea of a benefits fund, the business-labor negotiations are sure to be painstaking and hard-fought.