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Hearing Recap: Portable Benefits Edition

WASHINGTON, D.C., April 11, 2024
Today, the Workforce Protections Subcommittee held a hearing that covered potential ways to expand access to benefits to every American worker—not just those classified as employees. 
Nontraditional, independent work is exploding as a sector of the U.S. economy and is expected to constitute half of the workforce by 2027. However, under current law, nontraditional workers— those who do not receive a W-2 each year—cannot access the same type of benefits as their employee-classified peers.

Chairman Kevin Kiley (R-CA) opened the hearing by extolling independent contracting as a career choice. He then identified a promising solution to the benefits gap: making benefits portable.

“Portable benefits are the solution. By attaching benefits to the worker, portable benefits will build the bridge from traditional employment to the modern workforce without putting families at risk,” said Chairman Kiley.

Experts on the witness panel shared Chairman Kiley’s enthusiasm and emphasized the need for a better benefit model. Witnesses included Ms. Kristin Sharp, Chief Executive Officer of the Flex Association; Ms. Gabriella Hoffman, Senior Policy Analyst at the Independent Women's Forum Center for Economic Opportunity; and Dr. Liya Palagashvili, Senior Research Fellow at the Mercatus Center at George Mason University.

In her opening statement, Ms. Hoffman drew on her personal experience navigating benefit options as a freelancer as well as her expertise as a policy analyst. She remarked, “Policymakers must bring labor and tax law into the 21st century to ensure all workers, not just employees, can have access to and pay into a benefits program should they choose.”

Committee Members resonated with Ms. Hoffman’s vision of allowing the independent workforce to be flexible and secure. Noting the millions of DoorDash, Uber, Lyft, and other gig economy workers that stand to benefit from greater benefits access, Rep. Glenn Grothman (R-WI) asked, “How would they view the ability to get portable benefits?”

“I think they’d view it as the best of both worlds, sir,” responded Ms. Sharp. “They would be able to maintain their flexibility and freedom and independence, and they would be able to at the same time accrue benefits of their choosing from more than one income source.”

An exchange between Ms. Hoffman and Rep. Mary Miller (R-IL) highlighted the value of independent contracting, especially for women. "You're empowered, you're in control of your work," said Ms. Hoffman.

Chairwoman Virginia Foxx (R-NC) zeroed in on specific policy proposals. She asked, “Could you discuss state efforts to remove barriers for workers to access flexible or portable benefits?”

“The key thing is that independent contractors can’t legally access benefits without there being a tax or legal reclassification risk,” responded Dr. Palagashvili. 
She then elaborated on state policies, such as Utah’s, which remove benefits as a determining factor for worker reclassification. Although some states are taking the initiative to expand access to portable benefits, major hurdles still exist without federal reforms that remove the legal risks.

Later came the most shocking exchange of the day, in which Chairman Kiley pressed Democrat-invited witness Dr. Katie Wells, Postdoctoral Fritz Fellow at Georgetown University.

He posed the question: “Do you support reclassifying independent contractors as employees against their will?”

She replied: “For those workers that work in the gig economy, absolutely.”

The response stunned Chairman Kiley and the rest of the room, as witnesses usually take more care not to admit, explicitly, they want to force people to do things “against their will.” For Democrats on labor policy, this was just a classic case of saying the quiet part out loud.

After the fireworks, Chairman Kiley closed the hearing on a bipartisan note. He ended saying, “I think there is a lot of common ground …. I am excited about the opportunity we have to support both the freedom of workers to direct their own career paths and the security to be able to support themselves and their family.”

Bottom Line: Committee Members are working hard to ensure benefits are available to all American workers, regardless of how they chose to participate in the economy. 
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