Why Gig Workers Might Have Benefits in Their Future After All

With some 40 percent of U.S. workers in long-term temporary employment, or “gig” jobs, the idea of a “social contract” in which an individual receives benefits over a lifetime working for a single firm seems antiquated. But, says U.S. Senator Mark Warner (D-VA), the proliferation of gig work that doesn’t provide vital employment benefits shows that the concept, in some form, needs revitalizing.

“We need to create a 21st-century social contract so these benefits start accruing from Day One and are portable,” he said in a live-streamed conversation with Washington Post economics correspondent Heather Long on December 3.

Warner, a former wireless entrepreneur, continued: “Companies have decided that anyone who’s not essential gets outsourced. It’s happened to janitorial staff, and to cafeteria workers. Oftentimes they come with no benefits. I think that’s wrong. I think we’ve seen the vulnerabilities of when something like Covid happens.”

Warner proposed an alternative model for benefits, in which gig workers, temporary employees, and contractors have access to health care or health-care subsidies, and accrue retirement benefits, even as they hop to different jobs. He is hoping to include a portable benefits emergency fund for states in a new Covid relief package.

In November, California voters were asked whether gig workers who do flexible, often part-time work for companies such as Uber or DoorDash should be classified as employees, with access to benefits. Fifty-eight percent of voters said they should not.

The passage of the measure, called Proposition 22, defied previous decisions by all three branches of the state’s government, which had deemed illegal the classification of gig workers as temporary, and therefore ineligible for traditional corporate benefits.

Lyft co-founder and president John Zimmer told Long that most of his company’s drivers prefer the ability to set their own schedule, so he believes classifying them as employees wouldn’t have been helpful to them. But, he said, he favors something akin to Warner’s new model of social contract that “provides both independence and benefits” to workers. He cited health care benefits, health-care subsidies, unemployment insurance, and a flexible savings account as benefits gig-economy companies such as Lyft should get behind. Zimmer said he also supports Warner’s model of portable benefits that workers can accrue at any contract job.

In a November statement on Proposition 22, DoorDash CEO Tony Xu offered a similar view, saying, “Now we’re looking ahead and across the country, ready to champion new benefits structures that are portable, proportional, and flexible.”

It’s worth remembering that these companies and their peers, for whom hiring benefit-free contractors rather than employees is baked into their business model, spent roughly $205 million on their campaigns in support of Proposition 22–including streams of television ads, mailings, and even targeted harassment of opponents.