Haaland Introduces Groundbreaking National Fix for Gig Workers, Social Security
WASHINGTON, D.C. – At a press conference today, Congresswoman Deb Haaland (NM-01), Vice Chair of the Task Force on Poverty and Opportunity, introduced a groundbreaking national fix for gig workers. The Gig Is Up Act would require companies that gross at least $100 million and employ at least 10,000 independent contractors to pay the full cost of both the employer contribution and the worker contribution to Social Security and Medicare, which will serve as an incentive to classify employees appropriately.
"The gig is up. Workers are the backbone of our economy and they deserve fairness, but Uber and other billion dollar multi-national corporations are passing the buck to their workers, increasing financial insecurity for folks who are working hard to put food on the table and keep a roof over their heads.
“We know that ride sharing has improved transportation and is an alternative to drunk driving in New Mexico, but it’s not an excuse to treat workers unfairly. So, I’m introducing a bill that will defend workers' retirement and disability protections, strengthen Social Security, and deter corporations from against taking advantage of workers,” said Congresswoman Deb Haaland.
At today’s press conference, Muneeb Rehman, a New York Driver and Executive Director of Alliance for Independent Workers’ Drivers Unite Moment shared his personal experience in the gig economy, “As a New York Driver of many years now, I’ve seen the promise of the American Dream by the app based companies like Uber and Lyft turn into an American nightmare. CEO’s are making millions on the backs of hard working people who are barely making enough to get by. This is not fair, just, or equitable.”
The Gig Is Up Act has broad progressive support including over 85,000 signature petition of people across the country, the Alliance for Retired American, the American Federation of Teachers, AFL-CIO, Social Security Works, Progressive Change Campaign Committee, People Demanding Action, Just Care USA, Latinos for a Secure Retirement, The Workers Lab, People's Action, and Communication Worker's of America.
"Social Security Works is proud to endorse the Gig is Up Act, which will greatly strengthen workers’ economic security and their retirement security.
“Rep. Haaland's visionary legislation rightfully penalizes exploitative corporations that misclassify their workers as independent contractors. This will ensure that those misclassified workers receive the Social Security and Medicare benefits they have earned," said Alex Lawson, Executive Director of Social Security Works.
The Gig Is Up Act was introduced with broad spectrum of support in Congress including original co-sponsors Representatives Pramila Jayapal (Wash.-07), Jan Schakowsky (Ill.-9), Barbara Lee (Calif.-13), Veronica Escobar (Tex.-16), Jared Huffman (Calif.-02), Rashida Tlaib (Mich.-13), Sheila Jackson Lee (Tex.18), Raúl Grijalva (Ariz.-03), Jerrold Nadler (NY-10), Eleanor Holmes Norton (DC-at large), Ayanna Pressley (Mass.-07), Bonnie Watson Coleman (NJ-12), and Mark Pocan (Wis.-02).
For traditional workers (W-2 employees), employers pay half of Social Security and Medicare contributions. In contrast, independent contractors (1099 employees) are fully responsible for the entire 15.3 percent contribution - both the employer and employee portion.
A large and growing number of American workers are employed as independent contractors (1099 workers). Best estimates are that Uber alone has over a million active drivers in the United States. In 2015, most Uber drivers in the United States were non-white, 26 percent were between the ages of 40 and 49, and 24 percent were aged 50 or older. A 2018 MIT study found that the median hourly income of Uber drivers is between $8 and $10, with a substantial percentage of drivers earning less than the minimum wage in their states.
Those workers lack a variety of protections and benefits accorded to traditional workers (W-2 employees). In that regard, employers contribute to Social Security and Medicare with respect to their W-2 employees; in contrast, 1099 workers are required to pay both the employer and employee portion themselves.
Millions of 1099 workers are misclassified as independent contractors, when they are, in fact, W-2 employees, according to a recent report by the Treasury Inspector General for Tax Administration. Moreover, many may be accurately classified as independent contractors, but are much less able to afford Social Security contributions than the large multinational corporations which employ them. While around half of Uber drivers in the United States make less than the minimum wage, for example, their employer Uber had gross revenue of around $22 billion in just the first two quarters of 2018. Uber’s CEO Dara Khosrowshahi was paid $45 million in 2018, and Uber paid its top five executives $143 million in total compensation last year.
The proposed reform would require Uber, Lyft and other multinational corporations that employ large numbers of independent contractors to pay both the employer and employee portion of the 1099 earnings of those independent contractors. Obviously, this is more than employers of W-2 employees are required to pay.
That is intentional. If the 1099 employees are accurately classified, their multinational corporate employers will still escape paying minimum wage and most of the other employer costs associated with the economic security of W-2 employees. If the 1099 workers have been misclassified and are, in reality, W-2 employees, the companies can avoid the additional cost by accurately classifying them. If they do that, of course, they must extend the other protections that W-2 workers have.
In either event, the economic security of workers will be increased. If they have been misclassified and are reclassified as a result of the proposal, they will be relieved of the employer share of their Social Security contributions and gain other important protections. If they remain as 1099 workers, they will be relieved of the expense of both the employer and employee Social Security and Medicare contributions.