Unemployment Insurance Reform and Non-Standard Labor By Andrew Krantz
Executive Summary Non-standard work arrangements represent a large and growing portion of the U.S. labor force, yet they often lack the protections and benefits offered by standard work arrangements. Independent contractors and workers in the “gig economy” are categorically ineligible for unemployment insurance (UI) benefits under standard eligibility requirements. The CARES Act extended UI benefits to these workers for the first time but offered no plans to cover these workers for the long term. Any comprehensive reform of unemployment insurance will need to include coverage for this crucial group of workers. This brief will examine proposals to extend coverage to workers in non-standard labor arrangements, including a new policy proposal to expand self-employment (SE) income taxes.
Non-Standard Labor Labor relationships in the U.S. have historically involved a clear relationship between employer and employee, characterized by long-term employment, consistent labor hours, regular pay, and access to benefits. However, large portions of the labor force operate outside of these “standard labor” relationships, and instead engage in what can be referred to as “non-standard labor”. While attempting to define non-standard labor can prove difficult, scholars have attempted to classify non-standard labor as including any contract work, temporary employment, and part-time work.1 A recent and unique example of non-standard labor is that of “gig work,” or work in the “gig economy.” Gig work is often facilitated by internet-based platforms that connect workers with tasks or “gigs.” Definitions of gig work vary, but recent scholarship has sought to define gig work as “short term, requiring completion of finite assignments, and allowing loose boundaries for when and where people must work.”2 While not all non-standard labor constitutes gig work, gig work’s in20
creasing prevalence is representative of a larger trend of standard labor’s declining market share.
Prevalence of Non-Standard Labor Changes in technology and labor relations have led to a dramatic increase in non-standard labor arrangements. Economists have estimated that growth in non-standard labor arrangements since the Great Recession has accounted for all net job growth in the US.3 A 2015 estimate of self-employment placed the number of self-employed workers at around 15 million, or roughly 10% of the labor force.4 However, research has found that 10-30% of employers misclassify their employees as independent contractors to avoid UI payroll taxes, meaning that the estimates of the proportion of self-employed workers may be inflated.5 While there are disputes over the size of this section of the labor force, a more recent estimate found that, as of 2019, 28% of the labor force identified as self-employed at some point during the week, and that 22% of all workers work multiple jobs.6 It is important to note that measuring non-standard labor can be difficult, especially when trying to isolate workers who subsist solely on the gig economy. However, some estimates place the proportion of workers who rely on gig work as their main source of income as high as 10%.7 Despite the discrepancies in estimates, it seems that at least 25% of the labor force is now engaged in some form of non-standard labor arrangement. Indeed, research from the Government Accountability Office estimates that roughly 37 million workers are currently in non-standard labor arrangements.8
Access to UI Benefits Non-standard labor faces difficulties in accessing UI benefits due to categorical eligibility requirements and labor definitions. The key eligibility requirement for UI benefits across all states is that a worker
