Healthcare and Gig Work: The Balancing Act

May 23, 2019
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Author: Tyran Saffold Jr

More than 53 million Americans are now earning income from non-traditional work according to the Monthly Labor Review report on "Freelancing in the U.S. workforce." That boils down to almost 1 out of every 3 workers engaging in freelance or gig work in the United States. In a report by JPMorgan Chase entitled, “Paychecks, Paydays and the Online Platform Economy,” it was found that an estimated 10.3 million Americans earned income through web-based platforms like Uber and Airbnb between 2012 and 2015. That is nearly 6.5 percent of the total US workforce.

Gig work provides an element of freedom that does not come with traditional employment, but the out-of-pocket health care expenses could be the driving factor that leads most back to their day jobs.

Healthcare and Gig Work

The Number Crunch for Gig Work

Millions of American workers are not provided with health insurance through an employer. According to the Bureau of Labor Statistics' measurement on contingent and noncontingent health insurance participation, that applies to three out of four people who work for contract and temporary help agencies as their main job and 10.6 million people who have a primary source of income as an independent contractor.

Freelancers are twice as likely as full-time employees to report that they do not have enough money for health insurance and, in fact, 20 percent of full-time freelancers were reported without health insurance and 54 percent of those who purchased plans on their own paid more than they did the previous year. Two-thirds of freelancers said they would prefer to purchase benefits on their own versus the 34 percent who would prefer receiving a benefits package from an employer or client and taking home less pay.

Increasing Healthcare

The United States spends more on healthcare than any other nation. In 2002, an average of $5,267 per person was spent on healthcare while Switzerland, the second most expensive, was at $3,445 per person - that’s two-thirds of the U.S. amount. Not only does America spend more than any other nation, but continually rising costs are exacerbating the situation.

In 2017, health care costs were $3.5 trillion, in comparison to $27.2 billion in 1960. That translates to an annual health care cost of $10,739 per person in 2017 versus $146 per person in 1960 – a drastic difference. The rising costs could tempt gig economy workers to forgo healthcare, with their fingers crossed, hoping to sidestep every sickness on the way.

Rising health care costs could force talented individuals to resume the search for full-time work if their health care concerns are not resolved. That alone would create a pool of talent for hiring managers and HR reps to choose from to give relief in a tightening labor market.

Solutions are Coming

There are businesses that specialize in providing benefits to freelancers at a low cost. Companies like Trupo, which offers disability insurance on a sliding scale, work to even the playing field between gig and full-time work by creating curated benefits packages in the same way an HR department does for full-time employees. In addition, online labor platforms Postmates and Wonolo have partnered with benefits startups like Stride Health, Zego and Bunker to help freelance and gig workers find low- cost insurance packages.

The National Domestic Workers Alliance, specifically serving the low-income population of in-home service workers, launched a platform called Alia. This platform allows employers to voluntarily add $5 on top of the regular fee they pay for house cleaning. The additional fee would be used for a range of benefits such as paid time off or disability insurance, mirroring the insurance cost-sharing relationship between traditional 9-to-5 employees and employers.

Gig Work is Here to Stay

“The gig economy is about more than just gigs,” said Jeff Wald, Co-Founder, and President of Work Market. “This is about a multi-billion-dollar disruption within the labor market that will fundamentally change how people work. It's about a decades-old system that is in desperate need of modernization, new technology to empower today’s professionals and new labor laws that protect a new generation of workers.”

Although some believe that gig work undermines a century of worker protections, gig workers appreciate the freedom that is afforded through their “no strings attached employment.” With the gig economy set to outpace full-time employment gains, a solution to high healthcare costs for freelancers would serve to put the gig economy on more secure footing.