Flexible Work, Inflexible Care
When Doug Schifter, a livery driver, killed himself in front of New York’s City Hall—hours after writing a Facebook post describing how “Corporate NY” had “destroyed [his] industry and livelihood”—Mayor de Blasio released a statement downplaying Mr. Schifter’s structural critiques. “Let’s face it,” he said, “for someone to commit suicide there’s an underlying mental health challenge.”
While the mayor has been rightfully excoriated for his tone-deaf response, it has also been valuable in at least one respect: bringing to light the “health challenge” facing American workers like Mr. Schifter. The fact is, had he been suffering from ill-health, he did not receive treatment. This is likely because, for independent workers like Mr. Schifter, the cost of health insurance is insurmountable.
His situation is not uncommon. Academics employ the term “contingent workers” to describe the growing number of people like Mr. Schifter employed in “alternative work arrangements” which do not provide the benefits of traditional employment. Conservative estimates put this group at 15.7% of the workforce, while the Government Accountability Office, using a more liberal definition, found it was 40.4% of all employees in 2010.
We can dispute the exact numbers, but how many of us know people employed by one firm, full-time, through which they receive health care? This a dying breed, a result of the savings reaped by switching to an all-contingent workforce. It’s also not a model in need of resuscitation: surveys find that a higher percentage of independent contractors (57%) are “very satisfied” with
their jobs as opposed for full-timers (45%). The catch is, they’re also less likely to be insured (61% to 80%).
Solutions have been put forth to solve this “false choice” between flexible work and secure health care. These proposals can be broken down into three categories: cracking down on misclassification, organizing contingent labor, and portable benefits plans. Ultimately, each of these band-aids fail to deliver the comprehensive coverage workers deserve. For that, only Medicare for All will do. Here’s why.
One factor aiding the growth of the contingent labor force is misclassification of employees as independent contractors. This is the complaint behind lawsuits against Uber, Handy, and FedEx. The savings gained by misclassification can be 25-30% of labor costs, making it highly desirable. If redressed through the courts, firms would be required to offer standard benefit packages.
The problem with this approach is illustrated by the David Weil, former Obama appointee. Discussing his time as a federal administrator, he writes:
“I was….struck by commentary from leaders at digital platforms in Silicon Valley, as well as our own discussions with executives, venture capital companies, and workers. Most indicated that they viewed an independent contractor status as the default option for employment” (emphasis mine).
Similarly, Denise Chang, an MIT researcher focused on the sharing economy, says “Worker misclassification is going to become weaker and weaker” as more employees move into 1099 work, so it “doesn’t make sense to hinge everything on that.” Agreeing with Weil, she concludes, we shouldn’t be thinking about how to get independent contractors reclassified as employees, but how to secure protections for independent contractors themselves.
Others, like Sharon Block of Harvard’s Labor and Worklife Program, advocate organization. Historically, she argues, “workers have won benefits and income supports through collective action,” not legislative mandate. Rather than regulation, the way to ensure workers a fair shake is through their negotiating it themselves.
But in an increasingly fractured labor market, where every service is outsourced, unions face a difficulty outlined by Nick Hanauer: “Even if [laborers] and their co-workers wanted to organize, against whom would they strike?” Even if they did succeed in obtaining benefits, “the [company which hired the contractor] could always just switch to a cheaper contractor,” leaving them unemployed.
Not only has “contracting out” made labor negotiations fraught with unintended consequences, the very act of organizing is contrary to the lifestyle of highly mobile contingent workers. It would also require a rapid about-face: union membership rates for private sector employees have fallen from 16.8% in 1983 to 6.4% in 2016. As crucial as unions have been for achieving a decent living, they are unlikely to be a fruitful source of progress.
A more likely prospect is “multi-employer plans.” These are agreements under which workers receive benefits traditionally associated with full-time employment, but instead of one entity footing the bill, the costs are split amongst various employers, prorated according to how much work the employer performed for each. The logistics of such a plan would be handled by companies providing “central benefit administration,” acting as the worker’s “employee of record.”
These plans, also termed “portable benefits,” are promising for a couple of reasons. First, they bridge the gap between flexible work and health insurance without attempting to distort either: unlike misclassification cases, they don’t deny labor’s contingency. Second, they are already in use, “often found in industries like construction and mining” and, increasingly, “among some Silicon Valley companies.” While this doesn’t imply scalability, these industries have each developed their own method of caring for their workers: as of 2012, over 15 million workers were participating.
Unfortunately, legislative action has stalled. In 2017, a bill was introduced which would have set aside $20 million for researching the possibilities of scaling portable benefits, only to flounder in committee. As Rep. Suzan DelBene, one of its sponsors, told me: “Congress is playing catchup on issues surrounding our changing economy….our laws are woefully behind.”
Medicare for All
The fragility of our healthcare system is often discussed, and sophisticated policy solutions are churned out with frequency. However, they often miss the forest for the trees by working within the same employee-employer framework which has always been its hallmark. As Mr. Weil makes clear, a fundamental shift is occurring which leaves businesses with little responsibility towards their workers, making this an increasingly awkward arrangement.
In response, we must stop asking these entities to play a part. Their exclusion can be accomplished simply by passage of the Medicare for All bill, currently sponsored by Rep. Keith Ellison and Sen. Bernie Sanders. Over four years, it would gradually expand the current program to cover all Americans. Signalling the importance of this untethering of employment and healthcare, Sen. Sanders loudly affirms that “regardless of income,” “everyone should be able to access the healthcare they need.”