America's social safety net is failing workers in the 'gig economy'
People who lose full-time jobs aren't the only unemployed Americans who need help
The advantages borne of technology and the necessity borne of recession have brought a number of changes to our economy, and there's been no shortage of attempts to apply a name to the results. It's been called the sharing economy, the gig economy, the instant gratification economy — but whatever handle you apply, what we're talking about is a system that (often digitally) connects people who need cash to other people who need something, be it an apartment for the weekend, a ride to the store, their oven cleaned, or their groceries picked up. What gets lost in many of these attempts at cute nomenclature, however, is that this new and growing part of the economy is succeeding because, as Kevin Roose points out in New York, so many people are struggling.
Those hustling to scrape together a living in the gig economy are hardly alone. The long-term unemployment crisis in the United States often seems to have slipped off the general public's radar. But while policymakers like Paul Ryan debut shiny new initiatives to end poverty by pushing the poor to make better plans and set goals (and punishing them if they don't), millions remain involuntarily out of work or only partially employed, and there continue to be more than two people looking for work for each job opening.
As labor economist Heidi Shierholz pointed out in June, "Long-term unemployment is elevated in every age, gender, and racial and ethnic group, and it's elevated in every major occupation, in every major industry, and at all levels of educational attainment."
Meanwhile, unemployment benefits not only haven't kept up, they've been cut back. The sequester forced cuts in federally supported benefits, Congress allowed the federal Emergency Unemployment Compensation Program to expire entirely in December 2013, and some states have taken it upon themselves to slice benefits still more under the mistaken assumption that if people can't put food on the table, they'll find ways to get themselves jobs. Instead, sociologist Peter Frase points out, when unemployment benefits run out and workers are no longer in a system that requires them to look for work, they may end up dropping out of the labor force entirely rather than finding a job. The Economic Policy Institute estimates that this July there were 5,860,000 of these "missing" workers and that the unemployment rate if they were included would be 9.6 percent.
Let's not forget that in the U.S., unemployment benefits don't come close to replacing the wages lost when you lose a full-time job. In New York, where I live, the maximum you can take home each week is $405, while the average price of a one-bedroom apartment in my home borough of Brooklyn is over $2,500. That means that even with the maximum unemployment benefit, the average Brooklyn renter would be $880 short of the rent check at month's end, to say nothing of being able to eat or keep the power on. Brooklyn may be a bad example for the rest of the country, but New York is also one of the more generous states when it comes to unemployment — Arizona pays out $240 a week maximum, and the average one-bedroom apartment rent is over $1,000.
High unemployment also helps keep wages low, and so more people are making ends meet by cobbling together a string of gigs, perhaps using the fancy new tools of the "sharing economy" to find temporary work on the web. According to the Freelancers Union (which admittedly has a horse in that particular race) one in three workers takes part in the freelance or gig economy to some degree. In 2006, the Government Accountability Office reported that about 42.6 million Americans were so-called "contingent" workers, or about 31 percent of the workforce. Since then, there's been no reliable government survey, but a report from Intuit suggests that 40 percent of the workforce will be freelance or gig workers by 2020.
As Saket Soni, the executive director of the National Guestworker Alliance and the New Orleans Workers' Center for Racial Justice, tells me, "We're seeing the promise of long-term employment fade away. It's being replaced by long periods of unemployment that are interrupted by intermittent periods of work, whether that's going to Home Depot to be a day laborer in construction or logging in to TaskRabbit to become a day laborer on an electronic platform rather than a physical day-labor corner."
Yet if you do any of that work while collecting unemployment, you're required to report it, and it gets taken out of your benefit check. How on earth do you pay the rent?
There's been a lot of attention paid in the last few years to the "precariat," the growing group of workers whose existence is defined by their lack of economic security, their moving from job to job, freelance gig to freelance gig. For many of those workers, the idea of collecting unemployment benefits at all is a distant dream. Our unemployment system was constructed back in the 1930s on the premise of a stable, long-term position, not an economy full of "fractional employees," part-timers, and freelancers.
This means that this crucial part of our social safety net is full of holes large enough for all types of workers to slip through. Low-wage workers often have to have two jobs to be able to afford rent or to feed the kids; if one of those jobs disappears, the bills don't get paid but because you're still working, no unemployment for you. Are you a driver for Uber and your rating goes down, so you lose your gig? No unemployment for you, you're an "independent contractor."
As Soni says, the unemployment system is, for a growing number of workers, an anachronism. "Workers are experiencing periods of unemployment that are getting longer and longer, relying on intermittent employment, stringing jobs together to make a living. We need a completely overhauled social safety net."
The Affordable Care Act was constructed in part to provide access to health insurance for people who don't get health insurance through their job, an acknowledgement that this and other benefits are less and less ubiquitous in today's economy. While a full universal single-payer healthcare system would do even more, the ACA has still done part of its job, and allowed some workers more freedom to choose to work less, or to retire early. Despite Republican claims to the contrary, this is a good thing if it frees up jobs for those who need and want them and allows people more power to choose how they will spend their time.
It's time to begin reimagining other parts of the social safety net, building on the momentum created by movements for better access to health care, paid sick leave, and a higher minimum wage. "Fundamental to it would be this idea that as periods of unemployment get longer, the state really has to come in and support workers' transition from one job to another, so they are able to sustain a family during that transition," Soni says, "and make sure that transition involves periods of training to add value to a set of skills that workers have, so that the move workers make can be up a career ladder rather than constantly moving horizontally from one low-paid job to another."
Soni calls attention to the system in Denmark, which replaces 90 percent of a worker's lost wages (up to 2000 euros a month) for a period of years, not weeks. Peter Frase at Jacobin explains it as "a system that protects workers rather than jobs, by providing a robust system of unemployment benefits and training programs to ease the burden of joblessness and the transition between jobs."
In systems like this one, the cost of losing a job is much less devastating, and workers can take the time to find another job that they are well suited for. As Shierholz notes, this should be a crucial point of any unemployment system, which actually has benefits for the boss as well as the worker — if you're forced to take the first available position regardless of whether it's convenient for you or suited to your skills, you're likely to quit as soon as you find a better option.
There has been growing interest in the idea of a universal basic income as a the solution to the problems of precarious work and an outdated social safety net. A basic income would allow people the freedom to leave a job they don't like and make getting fired less devastating; it would allow us to choose work to which we are suited and allow people to exit the workforce entirely if they want to, making room for more people to move into their jobs. Wages might have to rise if employers have to entice workers into their shops, but I see that only as a net positive.
The important point is that, as Soni says, "It is possible through social policy to build the right social safety net under today's workers." At a moment where even conservatives like Ryan feel the need to address poverty and inequality, it's time to call for a safety net that actually supports us all.