A favorite parlour game among the D.C. media is to ponder why Americans seem so angry this election season. Reporters drop themselves into primary states like Marlin Perkins in a Mutual of Omaha’s Wild Kingdom episode, trying to decipher these strange creatures who are so frustrated with the U.S. economy that they’d vote for a faux-populist billionaire or an avowed socialist. Why isn’t everybody satisfied with a status quo of slow-yet-steady economic recovery and a record number of consecutive months of private sector job growth?
But The New York Times’s Neil Irwin might have found an answer last week, when he pointed to eye-opening new research from Princeton’s Alan Krueger and Harvard’s Lawrence Katz on Americans in alternative work arrangements, which they defined as “temporary help agency workers, on-call workers, contract workers, and independent contractors or freelancers.” This cohort of the workforce grew from 10.1 percent in 2005 to 15.8 percent at the end of 2015, representing an increase of 9.4 million workers. That’s all of the growth in the labor market over the past decade.
This does not reflect the “Uber revolution”—Krueger and Katz find that only a small sliver of contract and temp workers got their employment through an online app. What the data show is that companies have succeeded in reducing staff and filling labor needs with temp workers, freelancers, perma-lancers, and the like. This unburdens them from having to supply workers with health and retirement benefits, overtime pay, holidays, sick days, disability, workers compensation—any social insurance, basically. And it puts tremendous stress upon individual workers to finance their safety net themselves.
I should know. I’ve been working in this capacity since about 2002.
Before journalism, I was a gig-to-gig freelancer in television post-production, right up until last year in fact. Staff editing jobs are rare; usually you’re hired to work on a show, and when it ends its run, you’re done. Most of the time employers would withhold taxes and pay into Social Security. The nicer ones even paid overtime. More often they would build overtime into your regular work schedule, a form of wage theft. Several years ago, I started a job, and on the first day, the supervisor asked me to immediately fill out time sheets for the entire twelve-week run, stating eleven-hour days. This meant I could never accrue overtime even if I worked 55 hours a week, though the production company could claim to be nominally complying with overtime laws. And 55 hours a week can be a slow one in post-production. The resultant loss of wages probably came to thousands of dollars.
Meanwhile, in my
time as a freelancer I could never access health-care or pension-benefit plans.
If production took a day off for a holiday, nobody got paid. If you set up a gig
and the production schedule got pushed back a week, so did your opportunity to
earn money. Sick days and personal days didn’t exist. I remember once being sick
but still coming in for a late-night editing shift, taking medication to get me
through the evening. I didn’t notice that the cold medicine I took was Tylenol PM until I fell asleep in my chair. I played loud music with the windows down
on my more-treacherous-than-it-needed-to-be drive home late that night. But I
got paid.
These are sadly typical stories of those disempowered at work, with all the risks put on their shoulders. “Angry” voters may simply be angry workers tossed into the Darwinian world of the modern economy, operating without any fallback support from their employers or their government. This was bound to find its way into our politics, but though solutions for these workers exist, nobody is talking about them.
In most ways my freelance TV experience was an improvement upon my current writing career in the “1099 economy” (a reference to the tax forms businesses issue non-employees). While the New Republic and others I write for are nice to work for, they only pay me per individual story. 1099 workers like me effectively run our own businesses, with one employee. We must pay our own 6.2 percent Social Security tax on the employer and employee sides. And all the other facets of the safety net are on us.
Krueger and Katz’s research shows how this 1099 revolution is spreading. Companies increasingly use contractors to dodge responsibility for the benefit side of total compensation. And they’ve become more sophisticated in doing it. In his book on the 1099 economy, Raw Deal, Steven Hill recounts the story of how pharmaceutical firm Merck sold a Philadelphia antibiotic factory and then contracted with the eventual purchaser to make the exact same drugs with the same employees—only without having to pay them benefits.
The way the 1099 economy is sold, with airy platitudes about freedom and being your own boss, doesn’t correspond to the very real anxiety of this type of arrangement. You’re cut off from any safety net that relies on employers. You have an unpaid, part-time job consisting of getting your next job and making sure you get paid for your last job. Your taxes are a nightmare to unravel. You have no advocates for you in the workplace, and little bargaining power to improve your lot.
The fact that this shift toward the 1099 economy occurred mostly during a terrible labor market suggests it was never a matter of worker choice, but an exercise of employer power. And it’s become a frustration for millions, a confirmation of the rigged economy that places more of a burden on ordinary people. It certainly informs this anti-establishment, anti-business-as-usual political moment.
The answer, which Hill endorses in his book, is to make these workplace benefits simultaneously universal and portable. Employers shouldn’t have the opportunity to shift responsibilities to workers simply because of their job classifications. Workers should be able to participate in multi-employer benefit plans, similar to those that already exist for construction trades, which go with them from job to job.
These operate like insurance plans: Workers pay in a small amount in every week and get health and pension benefits, disability or unemployment insurance, even sick and vacation days. But to make them work, it’s essential that employers also have to contribute a matching portion of a worker’s salary into the plans, regardless of whether the employee is on staff or a contract worker. This way, independent contractors receive the same protections and benefits for doing mostly the same work as everybody else.
This would take the safety net for individuals out of the discretion of the employer, and end the discrimination against the 1099 worker. It could also lead to federalizing the safety net in ways that would widen the pool of workers covered, and lead to greater efficiencies. You could imagine multi-employer plans competing with one another to attract workers, offering extra perks like job training and apprenticeships, childcare, or other worker-linked benefits.
By and large, the issue of the 1099 economy has been absent from the presidential debate. Bernie Sanders has bashed Uber, and last July Hillary Clinton said she would “crack down on bosses who exploit employees by misclassifying them as contractors or even steal their wages.” But fighting job misclassification, while admirable, isn’t nearly as comprehensive a policy as putting 1099 workers and freelancers on the same level as staff workers.
I am not an angry voter, but having lived through an economy that robs workers of their power for a decade and a half, I can understand their frustration. We need to adapt the system to cope with this 1099 economy trend. Otherwise the anger will just continue to percolate.