Just as workers left the plow for the assembly line, they are now leaving the cubicle for the coffee shop. Here's what Washington needs to know--and what it needs to do.
About 150 years ago, American workers began a profound shift from farms to factories. After suffering through poor work conditions, low pay, and no workplace protections, the workers organized and successfully helped build the framework of laws that became known as FDR's New Deal. This landmark legislation from the 1930s protected workers and supported labor unions by limiting the number of hours that could be worked and setting a baseline minimum pay. But from a larger perspective, the New Deal demonstrated that government had acknowledged the shift in the U.S. workforce, heard their voice, and created a new system in which they could thrive.
Now we find ourselves in the middle of an equally large transition: just as workers left the plow for the assembly line, they are now leaving the cubicle for the coffee shop. Welcome to the Gig Economy, where over 42 million Americans are working independently - as freelancers, part-timers, consultants, contractors, and the self-employed. They are simultaneously holding multiple jobs, working for different employers, and mastering diverse skills. They are accountants and fashion designers and website architects. And, they are completely left out of the New Deal, which protects the rest of the workforce.
[Read Horowitz' first column "The Freelance Surge is the Industrial Revolution of Our Time" ]
If the New Deal had evolved to meet the ever-expanding U.S. workforce, then independent workers would have access to unemployment insurance, affordable health insurance, protection from discrimination, and guaranteed payment for their work. Instead, New Deal protections are stuck in the last century, and those basic needs are out of reach for one-third of the workforce. But we can't simply extend the New Deal to include all workers. Instead, the New Deal must be updated to reflect this new reality. A "new" New Deal will require creating a completely new paradigm for worker supports and building completely new systems for those supports.
The New Deal was based on linking all rights to a single job, which made sense for the Manufacturing Era. At that time, people worked for one company for a long time, so attaching protections to the job was the easiest way to cover the majority of workers. The "new" New Deal must be rooted in portability and mobility. The protections and rights must be centered on the individual, not the job, and must move with the individual from gig to gig.
Take the example of health insurance. Large companies benefit from big cost savings because existing laws allow them to group workers together in large risk pools. But as the way we work today becomes more outsourced, open, and flexible, smaller groups that share an affinity outside of work at a large company should be able to group together to share in these same cost savings. Some of health reform's proposed solutions, like creating Consumer Owned and Operated Plans (CO-OPs) are a great start in harnessing the power of smaller groups, but the savings are still tilted toward large companies, not the independent workers of the Gig Economy
Unemployment insurance is another example. If we simply plug freelancers into our unemployment system, the system would quickly go bankrupt since freelancers - who have no certainty of gigs - experience frequent periods of unemployment. Instead, we could allow freelancers to contribute to a pre-tax fund during flush times that they could draw from during lean times.
Coming together in unions is another right attached to a job and not available to independent workers, meaning they can't fully leverage their political power. By evolving this policy to allow freelancers to unionize, seemingly disparate workers would recognize their shared needs and have the ability to come together to get their needs met. (At Freelancers Union, this is what we call "new unionism," where we're bringing independent workers together to create power in politics and power in markets.)
Creating a "new" New Deal is crucial if we want to build economic security for one-third - and growing - of the workforce. Just as government acknowledged the shift from agrarian to industrial work, and thus created the New Deal, it's now time to acknowledge the shift happening today. But this isn't just about evolving our laws - it's about the changing role of government in our society. As government subsidies are declining, it's up to all of us to be entrepreneurial and together build solutions to these problems, something I'll discuss in a future column. For the workers of the Gig Economy, social media, collaborative consumption, and crowdsourcing are tools of the trade. Our "new" New Deal must follow suit and be created - collaboratively - by us.