For 8 cents of every dollar they pay in wages, companies like Uber could upgrade their workers’ safety net.
I have a love-hate relationship with ride-sharing services like Uber and Lyft.
I love the convenience and level of service that traditional taxis don’t offer. But I hate what they portend for the future of work with their rapidly expanding business model that pretends regular workers are franchisees.
For one thing, casting employees as entrepreneurs offloads risks, along with the security and benefits that a traditional job used to offer.
Workers toiling in the so-called sharing economy get no paid vacation or sick leave, no company match for a 401(k) retirement plan, and no employer-paid health insurance. They may benefit from greater flexibility that they need for family obligations or even some fun, but these folks are missing out on big swaths of the safety net.
What’s more, the CEOs and investors who are driving this share of our economy can get pretty stingy when it comes to sharing the profits with those who made those profits possible.
That prompted venture capitalist Nick Hanauer — a billionaire who made most of his fortune by investing in start-up technology ventures — to propose a way for workers in these nontraditional employer-employee relationships to have what he calls “shared security.” These kinds of supports would restore more stability to the growing information-age workforce.
“In the old economy, you’d go to work for a company, and it’s entirely possible you’d stay there for your entire career,” Hanauer told me in an interview. “And all of the things that defined a decent and dignified middle-class life were negotiated with that company, probably through a union. But in an economy in which somebody may have as many jobs in a year as their parents had in their lifetime, obviously negotiating these things, employer to employer, job to job, becomes impossible.”
Hanauer has teamed up with David Rolf, vice president of the Service Employees International Union, to spell out his concept of “shared security accounts” and “shared security standards.”
These accounts would encompass “all of the employment benefits traditionally provided by a full-time salaried job,” including health insurance, sick leave, paid vacation, unemployment insurance and workers’ compensation insurance, Hanauer and Rolf explain in the journal Democracy.
“Shared security benefits would be earned and accrued via automatic payroll deductions, regardless of the employment relationship, and, like Social Security, these benefits would be fully prorated, portable, and universal,” they write.
Hanauer, who lives in a Seattle suburb, estimates that the costs would be modest. A company like Uber or TaskRabbit, where people can hire themselves out for domestic work, would only have to pay an additional 8 cents per employee to cover the cost of 20 days of sick and annual leave. But Hanauer sees far greater costs in the uncertainty that is growing amid today’s increasingly contingent, on-demand workforce.
“It makes little sense to pay less for an Uber ride but more in taxes for the poverty programs that that Uber driver now requires,” he says. “This is a very inefficient way of doing business.”
All employers — regardless of the nature of their relationship with a given employee — would be legally required to meet these proposed shared security standards. They include paid sick leave, a living wage, and overtime pay for workers earning less than $69,000.
“In the near term, that means that some of the outsized profits that corporations are currently earning will go to workers, and there will be people who will squawk about that, but in the long run that will be better for everybody,” Hanauer says.
Our national labor standards were built for the industrial era and aren’t meeting the needs of today’s wired economy. The creators of this app-driven world pride themselves on their disruption of the old business order — and sometimes disruption is good. But we can’t keep disrupting the paths to middle-class economic security — and this 1 percenter’s proposal deserves serious attention.