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An estimated one-quarter of American workers perform some form of “gig work,” (roughly 42 million) and some economists believe the number of US gig workers may be much higher.
This type of temporary or freelance work has caught hold of American workers who are drawn to the flexibility that comes with contracting for platforms like Uber or Instacart. But there are downsides to gig jobs as well—namely the fact that they don’t typically come with benefits such as healthcare or paid time off.
“The way that our current system in the United States is set up is that all benefits and protections are tied to employment status,” said Regan Parker, chief legal and public affairs officer for ShiftKey, a platform that supports contract workers in the healthcare industry. While workers may value the flexibility and independence that comes along with contract work, they struggle with “no social safety net,” Parker added.
Some companies are seeking to change this dynamic by offering so-called “portable benefits,” which allow independent contractors to access healthcare or retirement savings without being tied to a full-time employer. One such company, DoorDash, recently released promising results from a pilot program offering portable benefits to workers in Pennsylvania.
What the DoorDash program did. In April of last year, DoorDash announced it was partnering with Stride Health to give workers in Pennsylvania savings accounts that could be used to fund retirement savings, health insurance, or time off, among other things.
Workers with the food delivery app who earned at least $1,000 before tips in the second quarter were eligible to participate in the pilot program, and DoorDash agreed to contribute 4% of participants’ pre-tip earnings to the accounts each month, HR Brew previously reported.
Over the course of the year-long program, nearly two-thirds (66%) of participants “who didn’t already have access to all the benefits they wanted or needed gained access to benefits they would not otherwise have,” according to a survey DoorDash commissioned from ndp analytics, a research firm based in Washington, DC.
The most common reason participants tapped into their portable benefits accounts was to take time off from work, with 35% of respondents saying they used their account for this purpose. Twenty-one percent of respondents used the funds for emergency savings, while 9% used them for health insurance, and 3% used the account for retirement.
Though the share of respondents using the accounts for healthcare might seem low, Parker pointed out that gig workers may receive insurance through a partner or the Affordable Care Act.
“Often what we’re hearing is that they want an emergency fund or that paid time off,” she said, citing a survey that ShiftKey conducted last year which found missing major life events such as holidays, graduations, or funerals was a major contributor to burnout for nurses and other healthcare workers.
Policies for portable benefits. Recognizing that gig work is popular but precarious, some policymakers are advocating for legislation that would make it easier for independent contractors to access benefits.
Utah was the first state to pass a law allowing employers to give workers portable benefits while keeping them classified as independent contractors. Since Utah legislators passed that law in 2023, other states—including Alabama, Tennessee, and Wisconsin—have followed suit.
The issue has also caught the attention of lawmakers at the federal level as Republican senators released a series of proposals in July aimed at creating more pathways for portable benefits. One such bill that Sen. Bill Cassidy introduced would give safe harbor to employers who want to contribute to benefits on behalf of independent contractors.
Such proposals have their critics, though. Employers are drawn to hiring contractors in part because they don’t have to contribute to benefits on their behalf, and Jeff Worthington, president of Utah’s AFL-CIO, expressed skepticism that the state’s law would spur more businesses to contribute.
During a recent Senate hearing about portable benefits, Sen. Bernie Sanders argued the Republican-sponsored legislation would not be as effective as programs ensuring universal healthcare or defined benefit pension plans for all workers. The Republican proposals, he argued, would “make it easier for large corporations to misclassify workers as independent contractors in order to avoid paying them decent wages and decent benefits.”