The past decade has witnessed a significant rise in the gig economy, with a surge in the number of individuals working as independent contractors for platform companies. These gig workers provide a wide range of services, from driving customers to delivering goods, and even freelancing on online platforms. The growth in gig work has been remarkable, although measuring data on this sector can be challenging. According to Garin et al. (2023), the number of gig workers has increased by 5 million since 2012, comprising approximately 3% of the U.S. workforce by 2021. This growth was particularly accelerated during the pandemic, with the number of platform workers more than doubling.
A survey conducted by the Pew Foundation in 2021 found that 9% of the workforce reported working for an online platform in the past 12 months. The rise of companies like Uber, Lyft, DoorDash, and InstaCart has reshaped the labor market landscape, with over 1 million drivers each for Uber and DoorDash. The revenues of these platform companies have also seen a significant increase, reflecting the growing demand for gig services.
One of the key implications of the gig economy is the challenge it poses to the traditional model of employee benefits. In the conventional labor market, employers provide benefits to their full-time employees after a certain period of attachment to the firm. However, gig workers value flexibility and often work across multiple platforms, making it difficult to apply the traditional benefits model. This raises questions about who qualifies for benefits and how to provide them when workers have varied work arrangements.
Two main solutions have been proposed to address this issue. The first is to reclassify gig workers as traditional employees, as seen in legislation like California’s AB 5. However, this approach may not be effective as it could limit the flexibility that gig workers value in their work arrangements. The second solution involves introducing a new benefits model tailored to the needs of gig workers.
Based on a study surveying Uber drivers about their benefits preferences, a new model for providing benefits to gig workers is proposed. This model suggests the creation of a Gig Worker Benefits Platform (GWBP) that would host benefits for gig workers. The platform would allow gig platforms and workers to contribute to benefits accounts, providing a user-friendly interface for managing benefits.
The GWBP would mandate minimum contributions from gig platforms for gig workers earning above a certain income level. Additional voluntary contributions could also be made by platforms, workers, or both. The platform would offer options for contributions towards health insurance, retirement savings, and emergency savings accounts, based on the preferences of gig workers.
In conclusion, the gig economy presents a unique challenge in terms of providing benefits to workers. A new model like the GWBP could offer a flexible and comprehensive solution to address the needs of gig workers. By understanding the preferences and working circumstances of gig workers, policymakers can design a benefits platform that meets the evolving needs of this growing sector of the workforce.
