Over the past 100 years the labor movement has won a set of workplace protections and benefits that accompanied the “job.” These workplace protections and benefits created a safety net and a package of rights that both white- and blue-collar workers now take for granted. Protections such as workers’ compensation insurance, a guaranteed minimum wage, and, most recently, health insurance have ensured that working Americans can enjoy a certain standard of living and are protected from the financial shocks that used to lead to ruin for many families.
However, for many low-wage workers in the 21st century their labor does not bring them these benefits. From 1995 to 2015, a considerable percentage of net job growth came from contract-based temp positions, which replaced traditional jobs with outside contractors, and on-demand jobs created by the gig economy for companies such as Uber, creating millions of jobs.(1) According to the Bureau of Labor Statistics, 10.1% of workers depend on such alternative arrangements for their primary income. One in four American workers turns to part-time and gig work overall.(2) These positions do not provide the benefits and protections mandated by traditional employment.
For years, labor activists, policy makers, and academics have struggled to find a way to get 1099 workers the benefits and rights they deserve. How can we ensure that all workers receive benefits for the time they spend working?
One solution is to extend benefits to all classes of workers, including 1099 workers, whenever their labor profits another. These workers need a system that isn’t tied to a single company or job since they may work for more than one, often within the same hour. Instead, we could create a system of sector based “portable benefits” that follow workers as they went from job to job.
How would these benefits be paid for?
A sector-based surcharge added on to every transaction could be used to pay for workers’ comp, disability, retirement, and other workplace benefits for 1099 workers within that sector. This would ensure that the benefits can be prorated and portable.
Traditionally, governments require employers to provide benefits like workers’ compensation, and employers pass those costs on to their customers in the price of the product or service. Under this model, the government cuts out the middleman and directly charges the customers through a surcharge. Then, an independent non-profit, working with a labor organization, could provide the benefits to the workers.
Who could be trusted to deliver the benefits workers need most?
In addition to imposing a sector-wide surcharge, a labor-friendly non-profit should be established to administer the funds and provide oversight of how they are spent. This non-profit would have a board of directors representing the workers and companies from the sector. Government officials could also add board members who would represent the consumers. This non-profit would need to partner with a labor advocacy group trusted by the workers to develop and deliver benefits for workers in that industry to better meet the challenges faced by that group of workers.
Case Study: The Fight for Representation and Benefits for NYC’s Independent Drivers
In New York State, there is a working model that policymakers and labor advocates can learn from. In the 1990s, the International Association of Machinists began working with drivers in what is known in New York as the “black car industry.” At the time, this sector was made of approximately 7,000 drivers working for mostly small mom- and pop-shops picking up and dropping off clients such as lawyers and highly paid members of the finance industry. After several years of work, the Machinists union and owners of these black car companies agreed to ask the state government to establish a workers’ compensation fund for drivers funded by a surcharge on each trip. Today that fund, called The Black Car Fund, insures nearly 140,000 drivers across the state, including Uber and Lyft drivers.
In response to the rapid increase in the number of black car drivers created by the app companies, the Machinists Union spun out a guild of independent drivers in 2016 called the Independent Drivers Guild. The Independent Drivers Guild led a successful effort to force Uber to add tipping to their app last year, resulting in added earnings directly in drivers’ pockets. They waged a two year campaign for a livable minimum wage that has established a minimum wage pay floor for app-based drivers in New York City -- the only one in the country.
The Guild also works to get benefits for drivers. In 2018, they worked with The Black Car Fund to launch a new set of benefits related to workers’ compensation - vision and telemedicine - through a joint program called Drivers Benefits, administered by a separate non-profit, called IDG Benefits Fund. IDG Benefits Fund is fully funded by the passenger surcharge originally created to give drivers workers compensation insurance. The Black Car Fund collects 2.5% from passengers on each ride. A portion is used to fund telemedicine, vision, mental health, and wellness classes. IDG Benefits Fund hopes to expand these offerings soon.
Driver Benefits is available to all New York state’s independent drivers who work with black car services, whether through an app-based service like Uber, Lyft, and Juno, or a traditional dispatch base. Most, if not all these drivers are considered 1099 contract workers and do not get any of the healthcare, retirement, disability, and paid-time off benefits that are associated with traditional full time W-2 employment. In New York City it is estimated that there are more than 80,000 drivers who work with app-based services alone. This is a group of workers under deep financial stress. The Independent Drivers Guild found that 73% of drivers saw their financial condition worsen after they began to offer ride-sharing. Many of them work long hours to cover the expenses they take on to work on the rideshare apps.(3) These workers deserve and need access to workplace benefits.
The idea that benefits should be tied to the employer and the W-2 vs. 1099 status of workers, limits these drivers’ access to benefits. All workers deserve benefits for their hard work, and for benefit coverage to be universal they need to be attached to the individual worker in these cases.
The benefits for Uber and Lyft drivers in New York are a proof point of a model that can be used to provide independent workers most of the benefits that traditional employees now take for granted, bringing independent workers’ rights into the 21st century. Benefits such as workers’ compensation insurance, short-term disability insurance, and vision care make our communities safer and healthier for everyone. Cities and states around the country should work with labor organizations to implement this model and make sure all hard-working Americans, whether the company that pays them calls them employees or not, get the benefits they deserve.
Together, we can ensure that the gig economy and other corporations cannot continue to violate the safety net protections workers and their unions spent decades fighting to win and preserve. In New York, the Independent Drivers Guild and the Black Car Fund are showing the way.
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