Thu, Jun

We Have to Strengthen the Gig Economy and Its Workers in 2024. Here's How

People sign up to become Uber drivers at the first of Uber's 'Work On Demand' recruitment events where they hope to sign 12,000 new driver-partners, in South Los Angeles.


GUEST OP/ED -It's past time in 2024 to strengthen the income, benefits, and safety net for workers in America's gig economy. More than 57 million workers participate in some way in the gig economy today—the economy of independent contractors, freelancers, and contingent and online platform workers. They are in all sectors and occupations: as home repair persons, temp workers, hair stylists, as well as drivers for , Lyft, DoorDash, and the other delivery services. Their numbers rose by an estimated 15 percent in the decade of the 2010s and have continued to increase since.

Many of the gig economy workers are there by choice: They prefer the flexibility and freedom of being independent contractors. Others welcome the opportunity that the gig economy provides to augment their incomes. Small businesses often say they could not get by without them, as the costs and legal liabilities for official employees can be prohibitive, and even larger businesses rely on the flexibility of gig economy workers to be competitive.

Yet there is a darker side to the gig economy. Because they must cover their own expenses, those who rely on the gig economy as their main source of income can struggle to even earn minimum wage. Usually, they have no access to health coverage, pensions, workers' compensation, or unemployment insurance. Because at times they offer employers a lower-cost alternative to traditional employees, they can undercut wages and undermine labor unions.

Some contend that the gig economy threatens the grand bargain of the 20th century between labor and capital, which depended on labor unions to press for a robust share of industrial profits and a strong social safety net.

The gig economy has hastened the widening of the gap between the haves and the have-nots, which threatens the stability of our democracy. But there are several things we can do to strengthen the position of gig workers in 2024. Here are three strategies.

The first involves "workforce intermediaries" that can fill the benefit gaps. The Black Car Fund is perhaps the most well-known example of such an intermediary operating today. Established by the state of New York and operating since 2000, it provides workers' compensation at no cost to drivers who are independent contractors through a surcharge on each ride. It also offers independent drivers a suite of benefits at low cost: dental insurance, vision coverage, and disability insurance.

Other non-profit intermediaries such as the Freelancers Union and for-profit intermediaries such as Trupo, Steady, and GreenLight, are driving innovation in affordable health care, disability insurance, and financial management products for gig economy workers. But these intermediaries are fighting an uphill battle given today's skyrocketing health care and benefit costs. Assisting the gig economy intermediaries should be part of the broader government mandate in 2024 of reducing health care and benefit costs.

A second more systemic strategy is to move away from the current, outdated binary worker classification system that divides workers into two categories: employee or independent contractor. The system is the remnant of the post-WWII economy. It fails to recognize how the economy has evolved. The fact that so many workers fall into a gray area—the source of much litigation with state tax departments and the IRS—indicates that further classifications may be needed.

Canada and a number of European countries, for example, have a "dependent contractor" classification. Dependent contractors offer their services to multiple companies, as do independent contractors. However, the dependent contractor receives more than 50 percent of their income from a single company, which triggers certain protections (providing notice of termination) as well as certain benefits.

The dependent contractor is not necessarily the answer in the American economy. Different state governments, in partnership with business, labor, and other stakeholders, will want to experiment with variations. The basic principle should be to tie benefits to the degree to which the worker and company are economically connected.

A third way to support gig economy workers is through some form of universal health insurance, such as some form of Medicare for All. It's unfair to ask companies to choose standard employees over contract labor when they must pay enormous health insurance benefits for the former but not the latter. Subsidizing health insurance for all would reduce labor costs significantly in the U.S., make our nation more competitive, support gig economy workers, and simultaneously support regular employees by reducing the incentive to outsource.

The gig economy is not going away. However, a better deal for workers can be achieved in 2024 by maintaining the flexibility of the gig economy, while improving worker wages and protections.

(Robert F. Kennedy, Jr. is an independent candidate for President of the United States. Michael Bernick is the former director of the California Department of Labor. The views expressed in this article are the writers' own and not those of CItyWatchLA.com.). Photo: MARK RALSTON/AFP via Getty Images