Gigs, With Benefits

There’s no question the way people work is changing.

As more people flock to the gig economy, there are increasing challenges around developing and supporting benefits and/or benefits programs for these workers. Traditionally, the responsibility of providing benefits, such as health insurance, 401K investments, pensions, etc., have fallen squarely on the shoulders of employers.

But in this new world of marketplaces and platforms facilitating work for employees who are typically considered to be just independent contractors, the attainment of benefits has become a hot topic.

The gig economy doesn’t have an infrastructure in place that supports these types of benefits, which begs the question: Whose job is it to make this a reality?

For those who rely on the gig economy for full-time employment, is it that person’s responsibility to ensure they make enough money to purchase their own benefits, such as health care? Or is it time for a third party to help provide such a service?

That’s the conundrum Michael Ting, SVP of digital markets at Hyperwallet, recently joined Karen Webster to discuss — if it’s the responsibility of the industry to ensure gig workers have access to health care, then who is going to step up and make it happen?

Bringing Benefits to Scale

While many people today turn to the gig economy for supplemental income, soon enough a growing number of workers will earn their necessary household income exclusively through a sort of independent economy.

The PYMNTS.com Gig Economy Index, a Hyperwallet collaboration, highlights how influential this new face of employment has become, with the expectation that gig workers represent a powerful potential force for employers and that those employers will have to change their business models in order to suit the needs of this growing sector of employees.

When it comes to benefits specifically, the traditional form of employment ties the availability of those benefits to employment status and calculates them as part of a person’s total compensation. But things are very different for gig workers and independent contractors, who historically have had to shop for their benefits on an individual basis.

However, Ting noted that gig platforms and marketplaces have become sources of data and worker pools, a phenomenon that has helped gig workers to no longer be as fragmented as they once were.

“They’re actually now aggregating on these marketplaces, so now it’s the job of somebody to get that data from these aggregation points and identify pools of workers based on their demographics, earnings and location and try to mimic what’s been done in the traditional employment side as far as benefits are concerned,” he explained.

The Role of Regulators

There are signs that regulators are making an effort to ensure the requirements or mandates put in place across the gig economy are actually appropriate for the industry stakeholders involved.

The sector of RegTech — pulling in the regulatory and compliance elements of the ecosystem to figure out ways to drive more efficiency and automation through technology — is on the rise and aiming to solve problems facing quickly evolving industries such as the gig economy.

Ting noted that the problem is not always the regulators themselves, but the fact that they typically add friction and inefficiency to the process because they don’t really match or align with the modern businesses.

But he pointed out that there are discussions taking place now on how to make the regulatory compliance elements of the ecosystem more synergistic with the pace and the technology of modern companies.

“I think with new technologies and all the machine learning that can source and analyze orders of magnitude and more data than has traditionally been available, we’ll start to see more automation and hopefully more symbiotic rather than adversarial relationship between the regulatory environment and the companies that they are intended to govern,” he added.

Ting, who recently attended the Future of Work Forum in D.C., also said that policymakers and regulators at the event admitted the challenges they face in keeping up with innovation in the market.

As a matter of efficiency, they often try to cast the widest net by coming up with policies and regulations that they hope will cover a wide enough range. Unfortunately, because many different types of businesses are grouped under a single net, sometimes those regulations do not fit — they are either too restrictive or not directly applicable to the business models represented.

There’s no one-size-fits-all when it comes to governing the growing number of new business models entering the gig economy environment, which has brought about an added pressure when attempting to evaluate and comprehend these new models and their implications, good or bad.

Gig’s Promising Future

While there are still challenges to overcome and questions to address as the gig economy continues to evolve, Ting said he is excited about the innovation growing alongside these changes.

He said he is particularly excited about the innovation around putting more people to work, enabling people who are already in the workforce to leverage other skills they may have and making it easier for businesses to find these workers.

But as the space continues to grow and change, one of the issues marketplaces must continue to stay vigilant about is liability.

Ting describes this as an ever-present risk, which will require companies to get better at setting the expectations among whoever it is earning or getting jobs on their platform. Unfortunately, the reality is that it often takes a bad event or experience for businesses to start looking at things through this lens, because it is still unchartered territory.

While Ting explained that there’s no blueprint in place on how to govern liability in the gig economy space, companies can improve how much they rely on feedback data in order to ensure the quality of people within their networks.

“It’s a very fine line, and it’s very fuzzy,” he said. “I don’t think that there’s a black-and-white answer for that.”

Like so many other verticals or situations within payments, the industry will continue to watch the future of the gig economy happen in real time, one day at a time, with the goal of addressing the challenges that arise in the most efficient way possible.

It’s surely an exciting time to bear witness to how the gig economy is shaping the future of the work environment.