Independent workers in ‘08

As presidential candidates roll out new health-care plans that rely on employers and government, they might turn their attention to this fact: Independent workers — which include part-time workers, the self-employed, contractors, temporary workers, leased workers and on-call employees — have emerged as a powerful force in America. Today, they constitute more than 30 percent of the U.S. workforce and are among the most politically and civically active Americans. Despite their growing importance, independent workers are absent from policy debates in Washington and health-care plans announced by presidential campaigns.

America’s 42 million independent workers are valuable assets to our economy and make businesses more efficient. Temporary workers and independent contractors allow employers to manage a workforce based on seasonal demands, fluctuations in workloads and the need for specialized skills without permanent staff. Hiring independent workers also enables a nimble response to structural economic shifts, such as increased international competition that requires businesses to become more efficient. Trends in telecommuting make the use of a flexible workforce more attractive for businesses and the workers themselves

Independent arrangements also benefit workers with a diversity of interesting projects and more time to balance work and family. These arrangements also provide workers with income in industries in which permanent work is not a viable option. Individuals with flexible work can use their time and specialized skills efficiently and not get caught in crippling bureaucracies.

But under our current safety net, working outside traditional employer-employee relationships comes at a steep cost. Since the New Deal, most government and private benefits have come through an employer — including access to heath care, retirement plans and government-sponsored Social Security and unemployment insurance. The tax code also treats independent workers worse than employees, leveling harsh taxes against them in some cases and failing to give them traditional tax breaks in others.

In today’s deregulated, hyper-competitive global economy, many businesses no longer produce the kinds of profits to sustain many of the benefits traditionally offered through an employer-based model. Those days are gone forever, meaning that the ranks of independent workers — and their unique needs — deserve more attention. Employers pay taxes to fund Social Security, Medicaid, unemployment and worker’s compensation. Without an employer, independent workers cannot access most of these social insurance protections.

The results are unsurprising. Almost 40 percent of independent workers surveyed lacked health insurance over the last year, with nearly half not having such insurance for the entire previous year. Buying directly from an insurance provider without access to group rates is too costly. Independent workers are also not effectively preparing for retirement, with one-third saving less than $1,000, half saving less than $10,000 and two-thirds saving less than $30,000. Savings patterns for the old and young alike are not encouraging. Of those with savings, much of it was accumulated when they were full-time employees.

Independent workers are starting to view themselves as a group with common interests. There is universal agreement among them that they need help obtaining health insurance, more equitable taxes, retirement savings options and unemployment insurance. A new association — the Freelancers Union —- has sprung up to advocate on their behalf.

And this is a very active group — 92 percent are registered to vote and 90 percent have voted in a national election in the last 5 years, compared to much lower rates of registration and voting among the population as a whole. Just three percent of independent workers surveyed in 2006 believe elected officials understand their issues, with only 10 percent saying the media helps educate the public about their fate.

New models of governance —- including mutual aid societies and the pooling of freelancers with common work arrangements to increase their collective leverage —- will have to emerge to meet the demands of our new economy. The presidential candidate who can grasp these issues, see the power of this emerging workforce and tailor sensible, market-based policies to help them without overburdening systems will likely increase his stock with nearly one-third of America’s workforce. That is not a bad ticket to enter the primary season.

John M. Bridgeland is CEO of Civic Enterprises. Gary Andres is vice chairman of policy and research at Dutko Worldwide.