Uber for welfare
In this presidential cycle, the “gig economy” has been under attack, notably from Democrats like Hillary Clinton, who said that it is “raising hard questions about workplace protections and what a good job will look like in the future.”
But far from being the labor problem of our era, the gig economy is actually a solution — one with power to change things far beyond car-sharing and odd jobs. It could help transform not just the private sector, but government as well, adding flexibility to unemployment programs and decreasing dependence on a welfare system getting out of control.
Reforming our safety net is back at the forefront of the Republican Party agenda, as evidenced by the recent Kemp Foundation forum on poverty hosted by Sen. Tim Scott, R-S.C., and House Speaker Paul Ryan, R-Wis. And if conservatives are imaginative about their solutions, they’ll realize the huge changes in the economy in the past decade actually give us new tools to solve some of these problems. The current safety net is outdated, designed for an era when work was a 9-to-5 ritual that required interviews and a résumé. The modern economy is much more complex and the gig economy, in particular, has dramatically reduced the barriers to finding work.
Social-science data are clear that keeping safety-net beneficiaries working is better for their careers and long-term economic well-being. The value of work cannot be overstated and the 1996 welfare reform embraced this principle by transitioning welfare to a system of so-called “workfare,” with able-bodied individuals who receive government benefits being required to work in some capacity.
Since then, Washington’s commitment to workfare has been dwindling. While the 1996 law required work participation to receive welfare and food stamps, in 2012, the Obama administration announced it would issue waivers exempting state governments from those work requirements. And as part of the stimulus in 2009, states were given new abilities to waive work requirements for food stamps.
Other parts of the safety net contain no work requirements at all, including Social Security disability benefits, a $140 billion federal entitlement (SSDI is a program for those who are considered disabled such that they are unable to work); the Section 8 Housing Choice Voucher Program; Medicaid, which some lawyers believe cannot have work requirements because the Medicaid Act requires states to provide assistance to all individuals who qualify under federal law; and unemployment benefits, which are designed for those unable to find work.
Historically, some opponents of workfare have argued that work requirements are untenable because the government cannot find a job for every welfare beneficiary. That may have been true years ago, when a “job” was full time and whether one had a job was a binary question. Today, the gig economy offers the solution: It can easily and quickly put millions of people back to work, allowing almost anyone to find a job with hours that are flexible, with virtual locations anywhere. Much of this work is well-above minimum wage and can further the careers of workers, as well. With a wide array of employment options, workers can choose jobs better tailored to their skill-sets and upgrade their skills, which can advance their careers.
What do these jobs look like? For those willing and able to drive, Uber and Lyft enlist anyone to be a driver — assuming they pass a background check — and offer special financing or rental discounts for vehicles. Currently, the average Uber driver makes about $19 an hour. In cities like Los Angeles and New York, their earnings are even higher.
For those who don’t drive, the options are nearly endless. They could deliver goods and groceries for Postmates and Instacart, assemble furniture on TaskRabbit or mow lawns and plow driveways with PLOWZ & MOWZ. Or if they have the know-how, they could offer photo shoots, voice lessons, mural painting, tennis lessons or house-painting on Thumbtack. Amazon’s MechanicalTurk, Fiver and other companies pay for general tasks that can usually be done on a computer or phone anywhere across the country. Those with particular skill-sets have other platforms available: Coders can do freelance work on Elance, Upwork and Scalable Path; house cleaners can list themselves on Handy; graphics designers can submit bids and graphics on 99 Designs; and lawyers can draft legal contracts on UpCounsel. People with general interpersonal skills could be a virtual personal assistant on Zirtual.com. There’s an easily available job for just about everyone in the gig economy.
The government should expect that able-bodied safety-net beneficiaries be willing to engage in the gig economy before collecting benefits. But transitioning to such a system requires policymakers to rethink the entire safety net, affecting nearly every federal entitlement program, so that it is oriented around the gig economy. That’s no easy task, but there are some important decisions that lawmakers can make to move in that direction.
First, Congress must take the lesson from the 1996 round of welfare reform and apply work requirements to the rest of the safety net. To do so, it should strengthen the Temporary Assistance for Needy Families program — commonly known as welfare— to clearly prohibit any president from essentially waiving its work requirements. Lawmakers also should restore work requirements for food stamps and impose them for federal housing assistance. Other federal safety-net programs should be transferred to the states, as has been proposed by Speaker Ryan and Sen. Marco Rubio, R-Fla.), and Congress should clarify that states are allowed to implement work requirements for adults on Medicaid.
These work requirements should ensure that everyone who is capable of performing a job in the gig economy does so. To do that, the next president should direct the relevant agencies, or Congress, to redefine what it means to be unable “to engage in substantial gainful activity”— the standard required to determine who is exempt from work requirements — in light of the rise of the gig economy. Many people who qualify under the current definition of “disabled” may be fantastic candidates for more flexible gig economy jobs.
Work requirements, however, should not unfairly punish people who are physically or mentally unable to complete gig-economy jobs. The gig economy can often provide flexible work for those previously considered unable to work, but exemptions would still be available, as needed. For everyone else, safety-net benefits should be conditional upon the recipients providing proof that they are taking gig-economy jobs or meaningfully attempting to engage in the gig economy (such as by listing available services, but not receiving contract work).
We also recognize that not everyone is well-versed in the gig economy — if Congress barely understands technology, we don’t assume that safety-net beneficiaries are any more adept. Therefore, government offices administering safety-net benefits should develop expertise through a public-private partnership to help individuals find and undertake jobs in the gig economy, including, for instance, keeping an updated directory of available gig-economy jobs in the area and providing information on how lower-skilled workers can become higher-skilled workers in the gig economy. This directory should be available online and government offices should help beneficiaries navigate the gig economy, just as they already do in finding conventional 9-to-5 jobs.
In addition, many gig-economy jobs, especially remote jobs, require a computer — something many unemployed Americans may not be able to access. In such cases, safety-net services should facilitate access to computer terminals or help utilize available resources, such as laptops at a local library. A portion of unemployment compensation funds should also be granted to beneficiaries as a voucher that they can use to purchase items necessary for gig economy jobs — laptops and cellphones, for example.
Lastly, we are mindful that, while many of the jobs in the gig economy pay well — such as Lyft and Uber drivers — other positions may not necessarily provide enough. In such cases, qualified individuals should still receive safety-net benefits, structured in a way to encourage work. To that end, the federal government should also expand the Earned Income Tax Credit to include low-income single workers.
Polls show that 83 percent of Americans favor work requirements for welfare. But just as the gig economy has made workfare significantly easier to implement, thanks to an abundance of readily available jobs, Washington has undermined work requirements throughout the safety net. Now, the government has the perfect opportunity to reorient our safety net around work. As long as Uber and Lyft will hire anyone who can pass a background check, we can’t just give away a free check to anyone who chooses not to work.
Ultimately, this approach would help the neediest Americans get out of the cycle of poverty and save money, so that the safety net remains available for those who are truly needy. As Republicans turn their attention to the next round of welfare reform, they should look to the gig economy to lead the way.