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Business Forward Solutions 2020 Policy Working Group

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On Tuesday, June 25, Business Forward will welcome Al Fitzpayne, Executive Director of the Aspen Institute Future of Work Initiative, and Massachusetts State Senator Eric Lesser, for a Solutions 2020 Policy Working Group call on the future of work.

This is the second of the Solutions 2020 Future of Work Policy Working Group series. On this working group call, policy experts and business leaders will outline the future of work challenges facing our country and begin discussing policy solutions. This webinar will focus on designing portable benefits to bring financial security to workers in a changing economy.

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Business Forward Solutions 2020 Policy Working Group

  1. 1. FUTURE OF WORK: PORTABLE BENEFITS ISSUE BRIEF : JUNE 2019 ALASTAIR FITZPAYNE, EXECUTIVE DIRECTOR, FUTURE OF WORK INITIATIVE AT THE ASPEN INSTITUTE ERIC LESSER, MASSACHUSETTS STATE SENATOR
  2. 2. 2 EXECUTIVE SUMMARY Millions of workers today lack benefits that are essential to financial security. Portable benefits promise to address this problem, improve the lives of workers, and strengthen the American economy. Our System of Workplace Benefits Is Outdated and Inadequate Benefits—including health care, retirement, workers’ compensation, and paid time off—are critical to household financial security. Through the 20th century, many U.S. workers received benefits coverage through their employers. This system evolved over time, a product of action, struggle and compromise between government, business, and labor leaders. As globalization, technology, and short-term financial pressures have transformed the economy, workers have been left behind. Portable Benefits Promise to Bring Essential Benefits to More Workers As a complement to the employer-provided benefits system, portable benefits are suited to today’s economy, and promise to extend benefits to more workers. Effective portable benefits models share three main characteristics: they are portable, prorated, and universal. These benefits make up one part of a comprehensive solution to address the insecurity facing workers in America. Policymakers Have a Path Forward In order to develop effective portable benefits solutions, policymakers need to answer key design questions. There are a wide range of models, and the solution that is most feasible and effective in each case likely differs. Policymakers have two options in pursuing policy change in this area: creating entirely new portable benefits models, or expanding eligibility for existing or emerging benefits to more workers, including non-traditional workers. Policymakers can move forward immediately; programs proposed and underway offer examples of concrete policy solutions.
  3. 3. 3 PORTABLE BENEFITS FOR THE FUTURE OF WORK 1 2 3 NON-TRADITIONAL WORK: WHO, WHAT, WHERE, WHY – AND SO WHAT? PORTABLE BENEFITS: DEFINITION AND EXISTING MODELS THE CASE FOR PORTABLE BENEFITS POLICY
  4. 4. 4 OFFICE CLERK MACHINE OPERATOR PHYSICIAN ASSISTANT FLIGHT ATTENDANT NON-TRADITIONAL WORK LANDSCAPE EMPLOYMENT CLASSIFICATION IRS DESIGNATION BUREAU OF LABOR STATISTICS DESIGNATION ACCESS TO BENEFITS DOES WORKSITE ENTITY PAY WORKER? NATURE OF WORK ARRANGEMENT REPRESENTATIVE OCCUPATIONS EMPLOYEE INDEPENDENT CONTRACTOR 1099 VARIES INDEPENDENT CONTRACTOR CONTRACT FIRM TEMPORARY HELP AGENCY ON-CALLPART-TIMEFULL-TIME A RANGE OF BENEFITS MANDATED BY LAW; OTHERS VOLUNTARILY PROVIDED FEW BENEFITS MANDATED BY LAW OR VOLUNTARILY PROVIDED SOME BENEFITS MANDATED BY LAW; FEW BENEFITS TYPICALLY VOLUNTARILY PROVIDED BY EMPLOYERS W-2 YES, WORKER PAID DIRECTLY TRADITIONAL WORKER NO, WORKER EMPLOYED AND PAID BY AN INTERMEDIARY NON-TRADITIONAL WORKER SUBSTITUTE TEACHER FARM LABORER CONSTRUCTION WORKER RECEPTIONIST WAREHOUSE ASSOCIATE HR SPECIALIST SECURITY GUARD JANITOR SOFTWARE DEVELOPER HOTEL HOUSEKEEPER REAL ESTATE AGENT MASSAGE THERAPIST RIDESHARE DRIVER MUSICIAN HAIR STYLIST NOTE: REFLECTS FORMAL WORK ARRANGEMENTS RETAIL CASHIER BARTENDER ADJUNCT PROFESSOR FITNESS INSTRUCTOR
  5. 5. 5 HOW MANY NON-TRADITIONAL WORKERS ARE THERE? ENGAGED IN ANY CAPACITY PRIMARY AND SUPPLEMENTARY WORK AS MAIN JOB NON-TRADITIONAL WORK IS PRIMARY ONLINE PLATFORMS UBER, LYFT, TASKRABBIT, AND OTHERS TOTAL U.S. WORKFORCE ABOUT 1 IN 3 ABOUT 1 IN 10 ROUGHLY 1 IN 100
  6. 6. 6 SIDE HUSTLES SOURCE: THE RISE OF ALTERNATIVE WORK ARRANGEMENTS: EVIDENCE AND IMPLICATIONS FOR TAX FILING AND BENEFIT COVERAGE, U.S. DEPARTMENT OF THE TREASURY, 2017 NOTE: SCHEDULE SE AND SCHEDULE C FILINGS ARE USED TO REPORT SELF-EMPLOYMENT INCOME AND SOLE-PROPRIETORSHIPS. THIS COUNT INCLUDES ONLY SELF-EMPLOYED WORKERS, AND SO EXCLUDES MANY OTHER INDEPENDENT ARRANGEMENTS, LIKE TEMP-AGENCY, ON-CALL, AND CONTRACT-COMPANY WORK. IN ADDITION, ALTHOUGH IT CONSIDERS COMPREHENSIVELY ALL TAX RETURNS FILED, WORKERS MAY NOT ALWAYS BE FILING THE APPROPRIATE FORMS. SCHEDULE SE SCHEDULE C PERCENTOFWORKERSFILING 13% 2000 2002 2004 2006 2008 2010 2012 2014 12% 11% 10% 9% 8% Tax and other administrative data show steady increases in the number of people engaged in independent work.
  7. 7. 7 TODAY: ONLINE PLATFORM ECONOMY SOURCE: JP MORGAN CHASE The online platform economy has continued to grow – now accounting for roughly 1.6 percent of the workforce (based on sample). OCT ’12 AUG ’13 JUN ’14 APR ’15 FEB ’16 DEC ’16 OCT ’17 2.0% 1.5% 1.6% 4.5% 1.0% 1.6% .4% .2% .1% 1.0% 0.5% 0.0% FRACTION OF THE SAMPLE GENERATING INCOME FROM PLATFORMS IN EACH MONTH ALL LEASING TRANSPORTATION NON-TRANSPORT WORK SELLING SEP ’13 MAR ’14 SEP ’14 MAR ’15 SEP ’15 MAR ’16 SEP ’16 SEP ’17 MAR ’17 MAR ’18 5% 4% 3% 2% 1% 0% FRACTION OF SAMPLE GENERATING INCOME PLATFORM INCOME THIS PAST YEAR PLATFORM INCOME THIS MONTH
  8. 8. 8 INDUSTRY SPOTLIGHT: FILM LONG STANDING EXAMPLE OF GIG WORK - Most work done by independent contractors on a temporary basis BENEFITS ACCESS THROUGH GUILDS - All workers (union and non-union) accrue benefits funded by production companies but managed by guilds WORK MAY BE INTERMITTENT BUT COVERAGE IS CONTINUOUS - Benefits follow workers from job to job
  9. 9. 9 OUR SYSTEM OF BENEFITS IS INADEQUATE Need new ways to invest in workers that match the realities of today’s economy Are unable to move jobs, explore new opportunities, or become entrepreneurs Have increased insecurity at a time when it’s needed more than ever BUSINESSES WORKERS
  10. 10. 10 NON-TRADITIONAL WORKERS LACK BENEFITS COVERAGE SOURCE: 2017 CONTINGENT WORKER SUPPLEMENT, MAY 2017 CURRENT POPULATION SURVEY, BUREAU OF LABOR STATISTICS EMPLOYER-SPONSORED HEALTH INSURANCE NON-TRADITIONAL WORKERS NON-TRADITIONAL WORKERS TRADITIONAL WORKERS TRADITIONAL WORKERS EMPLOYER-SPONSORED RETIREMENT PLANS 8% 53% 8% 46%
  11. 11. 11 PORTABLE BENEFITS FOR THE FUTURE OF WORK 1 2 3 NON-TRADITIONAL WORK: WHO, WHAT, WHERE, WHY – AND SO WHAT? PORTABLE BENEFITS: DEFINITION AND EXISTING MODELS THE CASE FOR PORTABLE BENEFITS POLICY
  12. 12. 12 PORTABLE BENEFITS: KEY OBJECTIVES IMPROVE INDIVIDUAL AND HOUSEHOLD FINANCIAL SECURITY BY CREATING A BETTER SYSTEM OF BENEFITS - Portable benefits models aim to extend essential benefits to more workers. CREATE EQUITY BETWEEN TRADITIONAL AND NON-TRADITIONAL WORKERS - Many companies currently have a strong financial incentive to hire workers as independent contractors, for whom they are not required to provide benefits. FUEL A DYNAMIC LABOR MARKET - With benefits that are portable across work arrangements, individuals have the protection they need to make a job change or take on an entrepreneurial endeavor.
  13. 13. 13 PORTABLE BENEFITS FOR THE FUTURE OF WORK 1 2 3 NON-TRADITIONAL WORK: WHO, WHAT, WHERE, WHY – AND SO WHAT? PORTABLE BENEFITS: DEFINITION AND EXISTING MODELS THE CASE FOR PORTABLE BENEFITS POLICY
  14. 14. 14 MODELS SHARE THREE KEY ATTRIBUTES PORTABLE Benefits are connected to an individual, rather than a single employer, and can be taken from job to job without interruption in coverage or loss of funding 1. 2. 3. Benefits can be funded by contributions from a variety of sources - including employers, customers, government, and workers - either simultaneously or sequentially Contributions can be allocated in proportion to hours worked or other relevant units of labor Benefits are accessible to all workers, regardless of hours worked or type of work arrangement PRORATED UNIVERSAL
  15. 15. 15 EXISTING MODELS: PRIVATE / NONPROFIT Tax withholding, short term savings, retirement and life insurance Platform to search, compare and purchase benefits, including: health coverage, tax-related mileage and expense tracking; dental, vision, accident, term life and disability insurance; and Health Savings Accounts and other short and long-term savings options Partners with online platform companies and traditional employers Created one of the first benefits offerings for freelancers Individuals may purchase benefits at rates negotiated by Freelancers Union, including: health, dental, disability, term life, liability, and retirement
  16. 16. 16 UPDATE / EXPAND POLICY MODELS MODERNIZE UNEMPLOYMENT INSURANCE EXAMPLE: Self-Employment Assistance Program Allows unemployed workers to continue receiving UI benefits while starting a business Implemented in Mississippi and eight other states MAKE EDUCATION AND TRAINING MORE PORTABLE EXAMPLE: Lifelong Learning and Training Accounts Portable accounts funded by workers, employers, and government, and could be used by workers to pay for education and training opportunities over the course of their career Proposed at Federal level, in two states, and two cities EXPAND PAID FAMILY AND MEDICAL LEAVE EXAMPLE: Provide opt-in for self-employed workers Consider multiple income earners Washington and Massachusetts have launched portable PFML programs
  17. 17. 17 PORTABLE BENEFIT LEGISLATION: STATE EXAMPLES Legislatively created in 1999; expanded in 2017 Workers’ compensation insurance for independent contractor for-hire and rideshare drivers Funded by 2.5% customer surcharge Applies to any company that connects workers with clients, online or offline Requires company contribution to worker benefits fund; fee can be passed through to consumer Includes “hold harmless” provision Legislation introduced to establish a state portable benefits innovation fund and grant program NEW YORK BLACK CAR FUND WASHINGTON MASSACHUSETTS
  18. 18. INFO@BUSINESSFWD.ORG BUSINESSFWD.ORG 1155 CONNECTICUT AVENUE NW SUITE 1000 WASHINGTON, D.C. 20036 202.861.1270

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