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For the past 100 years, our economy has been built on the back of traditional employment. The reasons people favor traditional employment vary: Some want a steady income, health care benefits or paid vacation days, whereas others might want to boost their likelihood of being granted home or car loans.
As the founder and CEO of a company that helps business leaders support their independent contractors, the potential of freelance work excites me and my team. These roles include an array of jobs, such as freelance writing or Uber driving. The gig economy attracts people from all walks of life for a number of reasons, including earning extra spending money, paying off a debt or saving for retirement. Gigging can offer freedom and optionality for workers who want to be their own boss.
But what about those other benefits — the ones you get with traditional employment? For gig contractors, these benefits aren’t always an option, but I believe help is on the way through health insurance, retirement plans and equity.
With health insurance being tied to employment for the majority of insured Americans, there haven’t been many obvious solutions for workers in the gig economy in the past. Similar to how companies started offering health insurance to compete for talent in the 1940s, we are now seeing businesses that offer access to health benefits for contractors as a benefit.
Modern technology and market innovation are racing to meet the demand by providing simple alternatives, including stand-alone companies using technology and data to better understand and underwrite workers. There are also associations and groups coming together to collectively purchase health insurance, providing volume discounts and more accessibility.
Austin-based insurance agency KindHealth is an example of one of these companies: It combines smart-matching with a human advocate to help customers navigate the complicated world of private insurance.
In the future, I believe we are moving toward trends that provide affordable health insurance plans to the gig economy, such as portable benefits. For benefits such as these to work, they need to be flexible and fluid. The major shift will occur as benefits become tied to people and not employment. Contractors will be able to take benefits with them from one project or contract to the next, which could help support gig workers’ financial security and empower them with a sense of safety and stability.
Because some workers rely entirely on freelancing, we need to consider new strategies and possibilities for retiring. Even traditionally employed workers have concerns about retirement, so it makes sense to consider retirement strategies for gig workers.
Contracted work has been viewed as a means to supplement traditional retirement savings. The No. 1 reason one-third of side-hustlers have second jobs is that they lack savings for retirement, according to Betterment’s 2018 report on the gig economy and retirement.
I believe the future of saving for retirement will be powered by technology. Artificial intelligence, for example, could improve the way people save while making saving more accessible. This type of technology is a great start, but there is more to be done. As we continue to see technological advancements and new startups attack retirement issues, I believe we will start to see a combination of technology and people working together to help plan and execute retirement strategies. In my opinion, both will be necessary because multiple generations participate in the gig economy, and their needs will have to be addressed differently.
While stock options and grants are relatively common benefits among the traditionally employed, they have been nonexistent within the gig economy.
However, 2019 might see changes that will continue to make the gig economy more competitive to business owners and skilled workers alike. Major players in the gig market, such as Airbnb, Uber and Postmates, are seeking to allow contractors the opportunity to become shareholders as a part of their agreements (pending approval by the Securities and Exchange Commission). This represents another benefit granted to traditional employees that could become nonexclusive in the job market moving forward.
I believe the approach and intentions are good, but in practice, it might be hard to execute and justify. Ultimately, some version of providing ownership opportunities will eventually exist for gig workers, but I don’t think anyone knows what that will look like just yet.
The Bottom Line
The gig economy has been an innovation driven by its necessity in the modern business climate, but it hasn’t come without its challenges and criticism.
These challenges are being met with modern solutions. Moving forward, I believe the future looks bright for the “general economy,” thanks to the gig economy using technology to provide greater efficiency for consumers and businesses with more benefits to contract workers.
January 28, 2019 at 08:21AM
Forbes – Entrepreneurs