How Policymakers Can Help Workers in the On-Demand, Gig Economy
On-demand workers — also referred to as gig or freelance workers — face many challenges, including a lack of legal protections and barriers to education and training that would help them gain more traditional, full-time jobs, according to a white paper funded by the Annie E. Casey Foundation.
State policymakers and other government leaders can do much to help these on-demand workers — defined broadly in the report to include a range of roles from day laborers to various independent contractors — especially as the COVID-19 pandemic affects many of their roles, the report says.
A growing sector posing challenges for workers
Most surveys estimate that, each year, one in three American adults perform on-demand work, with about one in 10 using such opportunities as their primary sources of income, according to the report, produced by the National Governors Association Center for Best Practices and Institute for Work & the Economy. Data suggests that gig work is growing, too.
Among other challenges they experience, on-demand workers are:
- often not covered by minimum wage laws or the same workplace safety regulations, state workers’ compensation systems and other protections tied to full-time employment;
- often not in a position to control their schedules — not qualifying for overtime but needing to work more than 40 hours a week to provide for themselves;
- less likely to have a bachelor’s degree or to have access to benefits such as paid time off or health insurance compared to people with more traditional, full-time jobs; and
- increasingly bearing the costs of training and education, as employers reduce investments in these areas.
The COVID-19 pandemic underscores the need to examine the opportunities and challenges facing on-demand workers, as many find themselves either out of work or filling frontline roles, such as food delivery drivers or emergency childcare providers, the publication says.
“With the current public-health crisis, new measures to help gig workers — many of whom are young people of color — are more urgent than ever,” says Allison Gerber, a senior associate with the Casey Foundation. “We hope that state and other government leaders view the crisis as an opportunity to review the issues presented by a changing economy — including the growth of the on-demand sector.”
Addressing the needs of on-demand workers
The report presents 11 policy priorities for state government leaders that are based on the experiences of a consortium of nine states focused on the changing nature of work amid the expansion of the gig economy. Among the proposed solutions:
- encourage continued learning for gig workers by creating tax credits for employers investing in training and education — and by allowing state-sponsored college savings programs to provide tax benefits for workers incurring training expenses;
- provide support and incentives that promote entrepreneurship and employee ownership;
- expand employee protections to on-demand workers, such as applying existing minimum-wage requirements to on-demand jobs and creating opportunities for them to receive legal counsel and report questionable workplace activities;
- explore public-private partnerships to increase access to benefits, such as paid time off and disability insurance, to improve workers’ financial stability;
- audit state processes for worker classification to ensure that employees are categorized correctly, and thus protected by relevant laws; and
- require employers to give adequate notice of work schedules, allowing for increased stability and better planning for needs like childcare.
“The policy recommendations in this report provide important, innovative ideas for states to address the evolving needs of the workforce and ensure that the on-demand sector is part of that conversation,” Gerber says. “We hope policymakers see these recommendations as a template for taking action.”