The gig economy has a problem. Freelancing is increasingly common, but it’s still difficult and costly to access benefits without a 9-to-5 job. For the lowest-paid workers, it can be close to impossible.
In the past few years, many have seized on the idea of “portable benefits”: insurance and paid time off not bound to a single employer. In 2015, dozens of academics, entrepreneurs, and CEOs—including the cofounders and CEOs of Lyft, Handy, and Instacart—signed a manifesto calling for such a system. Last year, Senator Mark Warner (D-Virginia) introduced legislation that would offer grants to states, cities, and community groups to create pilot programs of portable benefits. In February, representatives in Washington state reintroduced a bill to create a state portable benefits system; soon after, Uber CEO Dara Khosrowshahi cosigned a public letter affirming the need for such a system. But for all the talk, there’s been little action.
That’s beginning to change. Since March, Fair Care Labs—the innovation arm of the National Domestic Workers Alliance, which organizes and advocates for domestic workers—has been quietly testing a portable benefits tool, developed with the help of a grant from Google.org. Domestic workers have long grappled with many of the issues plaguing the gig economy today. The Fair Labor Standards Act of 1938, which created the right to a minimum wage and overtime pay, initially excluded domestic workers; in the 1970s, the law expanded to include some domestic workers, but it still excludes babysitters and companions to the elderly. Domestic workers, like all independent contractors, cannot unionize or bargain collectively.
Over the past several years, states including California, New York, and Massachusetts have enacted laws granting domestic workers rights to overtime pay and paid time off; however, those laws are challenging to enforce, and there are still few federal protections. According to a 2017 study conducted in part by the NDWA, 23 percent of domestic workers are paid below their state’s minimum wage, and 70 percent earn less than $13 per hour. Like workers in the gig economy, most domestic workers are paid by multiple employers, none of whom is incentivized to offer benefits. In other words, the workforce is the perfect proving ground for a portable benefits system that could have broader applications.
Fair Care Labs’ tool, dubbed Alia, is initially designed for use by house cleaners, who typically work for a number of clients. Alia pools voluntary contributions from those clients, who each contribute at least $5 per cleaning; each cleaner can then use her pool of funds to redeem various benefits. Fair Care Labs has partnered with insurance company Colonial Life to offer life insurance, disability insurance, and accident and critical illness insurance. Workers can also redeem paid time off, at $120 per day.
In developing Alia, project lead Sam Witherbee spoke with dozens of cleaners, some who worked independently and others who worked through platforms such as Handy and Homejoy (before it shut down in 2015). They shared their stories about living without basic benefits like paid time off. He also spoke with people who hire cleaners—and learned that for the most part, they wanted to do the right thing. They just didn’t know where to begin. “If you make it easy, they’ll jump on it,” says Palak Shah, the founding director of Fair Care Labs and social innovations director at NDWA.
Workers using Alia describe the relief of having some sort of safety net, if small. Instead of continuing to work when they’re sick or delaying medical care, even workers without savings can take time off and see a doctor. “I wanted to have a backup plan, if something ever happened to me,” says Olivia Mejia, who has worked as a cleaner for 10 years and supports three children. With Alia in place, Mejia says, she was able to attend her daughter’s high school graduation this spring, which conflicted with her work schedule. In the past, she would have had to weigh the costs of missing a milestone event or missing a day’s pay.
Beyond domestic workers, such a tool could be used by any worker who receives income from multiple sources and does not have a primary employer that offers benefits. Indeed, even some clients of cleaners have found themselves eyeing the tool with their own affairs in mind. “I belong to a kind of professional class where I can afford to charge enough money to pay for” benefits, says Gretchen Hildebran, a freelance documentary filmmaker who contributes to a domestic worker’s benefits fund through Alia. “But it is very precarious, and it’s actually a huge amount of work to constantly be figuring them out for myself from month to month. To have something that was more stable and long-term would be amazing. I feel like it should be standard practice.”
Alia does not solve all the challenges faced by nontraditional workers. It notably does not offer health insurance, beyond critical illness insurance; the NDWA hopes to add a health-insurance option, but it’s proved a difficult nut to crack, and there hasn’t been huge demand for it from workers so far. And then there’s the fact that clients don’t have to contribute to the system. “A mandatory system would be better,” says Libby Reder, a fellow for the Aspen Institute’s Future of Work Initiative. She says requiring contributions would create “a lot more certainty and sustainability.”
A federal law of that sort may be a long way off, given the current Republican-dominated Congress. The bill reintroduced in Washington state this winter would mandate employer contributions to a portable benefits system, but it is stuck in committee. Similarly, Warner’s attempt to fund pilot programs for portable benefits has been stalled since last year, though it recently won two bipartisan cosponsors.
A tool like Alia could be significant for freelancers beyond just those working as home cleaners—“basically anyone working in different arrangements from the traditional 9-to-5 single employer,” Shah says. A freelance filmmaker like Hildebran could sign up clients to contribute an extra amount per project; an Uber or Lyft driver could theoretically sign up passengers mid-ride. Alia’s mere existence “makes it more difficult for people to say, ‘Ah, well, we just can’t figure out how to do it,’” says Elaine Waxman, a senior fellow in the Income and Benefits Policy Center at the Urban Institute.