Benefits for the rest of us: the growing ranks of contingent workers need a new deal.

• Author: Hill, Steven

The safety net for American workers and their families, which in the post-World War II era has been a cornerstone of the middle class, is under assault. Though the economy is growing, for most Americans it feels more like a recession than a boom. That's because the U.S. workforce, which historically has been one of the most productive and wealthiest in the world, is undergoing an alarming transformation. Increasing numbers of jobs, even full-time ones, lack safety net protections or a sense of security, and increasing numbers of workers find themselves on shaky ground, turned into freelancers, temps, contractors, gig workers, and part-timers. This has been occurring alongside the development of digital, app- and web-based labor platforms that are transforming how labor markets function and have the potential to revolutionize the nature of work--in both beneficial and adverse ways.

The new ways of work are efficient at matching workers with jobs and providing a flexible way for under-employed workers to supplement their incomes. But in this still-early stage of their evolution, these platforms are turning far too many workers into little better than day laborers, with little to no safety net benefits and minimal stability. They provide scant relief from the ongoing deterioration of the traditional economy, which has seen middle-class wages fall flat for more than two decades, a decline in unionization rates, an increase in part-time employment, and a rise in disposable workers. We've seen messy lawsuits as courts and regulators attempt to crack down on companies that misclassify workers as contractors--an arduous, expensive, and years-long process that seems unlikely to fix the full problem anytime soon. Some have even proposed creating a new category of worker, to be called "dependent contractor," which would require different rights and obligations than exist for independent contractors or regular employees. Simpler ways must be found to reinforce and expand existing safety net structures without getting bogged down in whether a worker is classified as a regular, full-time employee, a contractor (whether independent or dependent), a temp, or something else. The best method would be to enact a system of "portable benefits" that can cover the nearly 150 million employed Americans, regardless of how they work or for whom.

Consider Chris Young, an assembly-line worker at Nissan's manufacturing plant in Smyrna, Tennessee. Chris works alongside dozens of other employees, with everybody doing more or less the same job. But Chris doesn't get to wear the coveted Nissan jersey that many of his fellow workers wear--because he doesn't work for Nissan. He works for Yates Services, a private contractor that now provides a majority of Nissan's workers. Chris told the Washington Post, "I build the same Infiniti SUV" as the Nissan workers, but he and other Yates employees receive half the salary, less job security, and way fewer safety net benefits.

Auto manufacturers increasingly rely on a two-tiered system, using both regular and temporary employees. While Chris is covered by workers' comp and Social Security Disability Insurance, being in the temp tier means he can't say no to overtime, doesn't get paid sick leave, doesn't receive long-term disability, and sometimes has to work seven days a week, with ten-hour shifts on Saturdays and Sundays. Nationwide, the temp sector has provided nearly a fifth of the total job growth since the recession ended. With the economy continuing to drag along unevenly, temp work has galloped back ten times faster than private-sector employment. And, increasingly, the temps aren't very temporary. Some have been employed at the same company for as long as eleven years, resulting in the term "permatemps." (Chris Young is a permatemp.) In 2000, Microsoft had to pay $97 million to settle a lawsuit for improperly denying benefits to more than 8,000 permatemps.

It's not just temps, either--the deployment of "independent contractors" began in a handful of occupations, such as janitors and security guards, but now it has become pervasive. Companies that can get away with classifying employees as independent contractors avoid paying Social Security and Medicare payroll taxes, overtime, unemployment, workers' compensation, and other safety net benefits for those workers. That amounts to paying up to 30 percent less on labor, which means a lot more profit for the company. Evidence is rampant that many employers are misclassifying regular employees as independent contractors. David Weil, author of The Fissured Workplace: Why Work Became So Bad for So Many and What Can Be Done to Improve It, and who was appointed by President Barack Obama to run the Department of Labor's Wage and Hour Division, says, "There still are violations of our standard labor laws that are almost jaw-dropping," particularly in the area of misclassification of workers. "There are companies out there that aren't complying because they don't want to or don't feel they need to."

One federal study concluded that employers illegally "disguised" 3.4 million regular workers as contractors, while the U.S. Department of Labor estimates that up to 30 percent of companies misclassify employees. The incentive for employers to engage in this illegal activity is clear: a huge savings in labor costs. And once enough businesses engage in this kind of practice, it unleashes a race to the bottom, putting pressure on all businesses to adopt the strategy to compete. These tactics are what I call the "performance steroids" of the new economy.

While so-called sharing-economy companies like Uber, Airbnb, Instacart, Upwork, and TaskRabbit are allegedly helping workers become the "CEOs of their own businesses," those workers are contractors, with no safety net benefits or job security. They hire themselves out for ever-smaller jobs and wages while the companies profit. The professional class is far from exempt. Meet Frederic Larson, who enjoyed a successful thirty-year career as a staff photographer with the San Francisco Chronicle, during which time he won numerous awards, including being a Pulitzer Prize finalist. As Forbes reports, he got downsized in the aftermath of the recession, and, needing income, he "monetized his assets," to use one of the gig economy gurus' favorite phrases. Which means he turned his house into an Airbnb hotel and his spiffy Prius into a Lyft taxi. Now for twelve nights per month--40 percent of his life--he shutters himself in a rabbit hole inside his own home and showers at the local gym while complete strangers have the run of his place. This award-winning professional photographer has been turned into an innkeeper in his own house, and a taxi driver in his own car.

All of these workers in the gig economy are classified as independent contractors. As such, they only receive a wage from the business they contract with: they don't receive the...