The idea of a safety net takes its inspiration from a circus act. The net allows performers to leap from one bar to the next knowing that if they fall, they will be caught by the net instead of falling directly to the earth. On top of a regular paycheck, traditional employment comes with a safety net. Workers at traditional jobs have access to a variety of benefits, including some or all of the following: short-term disability insurance, health insurance, tax-advantaged retirement plans, training and development, advanced education support, workers’ compensation, paid vacation time, and sick pay. There are some real perks!
The idea of a portable benefits system is to provide a form of safety net to non-traditional workers (think contractors, freelancers, and on-demand workers) who do not have access to the same benefits aside from what they buy themselves. The premise is that the security of a fallback plan at its best allows for innovation, flexibility, and freedom. In theory, that in turn creates more entrepreneurs, more jobs, and more spending power. According to the Aspen Institute , a portable benefits system “would improve financial security and empower workers to take more control over their own economic future.”
Who pays for portable benefits?
Okay, so who’s going to buy and build this safety net? This, of course, is one of the foundational questions. Proposals vary, but in one option, workers, the government, and companies all contribute to a portable benefits account. The fund then covers medical insurance, workers’ pension, training and development, paid leave, and employment insurance. Such a system requires heavy government involvement, which has its critics. Another option would be for companies to contribute to a pool of money for non-traditional workers. That money would then be distributed to the workers through intermediaries or by the employers directly.
While some say both workers and employers can benefit, it could be a tough pill to swallow for employers, who may have to pay more, pass on costs to consumers, or limit the number of contractors they take on.
What’s ahead?
There are a lot of dogs in this fight. Uber (which has come under fire for their handling of employee classification) has provided what it calls guiding principles for a system and asked for a collaborative effort from lawmakers. For their part, lawmakers in Washington, California, New Jersey, New York and beyond have made proposals to address the subject. Even our neighbors to the north are wrestling with the options.
All this points to the fact that this subject is very much on the radar. All parties will continue searching for answers. Employers and the government will wonder who should pay for/administer such benefits and what level of involvement (if any) the government should have. No matter where the evolution takes us, it’s a hot topic and it pays to pay attention. And one question might be on workers’ minds above others: If benefits follow them, how far might they go?
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