The Future Of Benefits: A New York Program Might Provide A Model
A newNPR/Marist pollfinds that 1 in 5 jobs in America is held by a worker under contract. Within a decade, contractors and freelancers could make up half of the American workforce. In aweeklong series, NPR explores many aspects of this change.
The way people work is changing, but government policies are slow to adapt. Yet in one case, a program in New York was ahead of its time.
Employment benefits such as paid leave, unemployment insurance and workers' compensation are often available only to those with full-time jobs. But more Americans are working freelance or on contract, and that's creating a need for a different kind of benefits system — one that doesn't rely on having a single, full-time employer.
There are few alternatives. But one, called the Black Car Fund, is often cited as a model for how benefits might function in the future.
The fund is unique to New York state, whose Legislature created it in 1999 to provide workers' compensation benefits for contract drivers injured on the job.
Funded by a 2.5 percent consumer surcharge on each ride, it covers about 125,000 drivers statewide, whether they're contractors for Uber, Lyft or more traditional taxi or limousine services.
Other states, including Washington and New Jersey, are considering bills mandating the collection of fees for all kinds of freelance services, which would then be used to pay for those workers' benefits.
Setting up such a system means wrestling with the logistical challenges: Who pays into it, and how? Who's covered, and for what?
Many experts believe the Black Car Fund offers some answers.
"It's really a first-of-its-kind, innovative model," says Alastair Fitzpayne, director of the Aspen Institute's Future of Work Initiative. Under the current system in the U.S., he says, workers are either employees, eligible for benefits, or contractors, and they're not covered.
"So it's a very black-and-white system that doesn't provide a lot of flexibility in terms of ways that employers can effectively provide benefits," he says.
Fitzpayne says the Black Car Fund circumvents that by creating a different way altogether. He says the fund works because it is mandated by the state, and it enjoys the taxi and limousine industry's support as a fair, equitable way to solve a problem for drivers.
One recent beneficiary is Houchang Golzari, an Iranian immigrant in his 70s, who drives his Town Car for a service in New York City.
Golzari worked as a programmer in the medical industry three decades ago. That's the last time he received health care, unemployment insurance and other benefits through an employer.
"They paid me for everything," he says.
Then it all went away when he was laid off. "They don't need you, and they say, 'Bye, get out.' "
Now, as a contractor, Golzari pays for his own retirement and health insurance.
Last February, an uninsured driver hit him from behind, damaging his car, his neck and his back. He was able to forward his medical and physical therapy bills to the Black Car Fund, which will also compensate him for some of his lost wages. He says having the fund freed him from the financial worries related to the accident.
"It's not my problem," he says. "I have been covered, which I'm very happy. I look at this as my benefits."
This system should exist everywhere, for all kinds of contract workers, he says. "I think they should have [it] all over the country, because this is a good thing."
Ira Goldstein, chief executive of the Black Car Fund, calls it "absolutely the right model." The fund collects payments from those who use the services, and it can be used to cover both part-time and full-time drivers, he says.
The fund is expanding beyond workers' compensation, offering a $50,000 death benefit to the families of drivers, Goldstein says. It also pays drivers to attend defensive driving and wellness seminars, and it plans to offer vision care and telemedicine to encourage drivers to get checkups.
The number of drivers in New York has ballooned in recent years, thanks to the popularity of ride-hailing services, Goldstein notes. Still, the nonprofit fund raised its rates only once in 18 years, he says.
The fund has become increasingly relevant because it addresses changes in how people work, a rarity for a government program. Lawmakers and industry leaders often come to Goldstein seeking advice.
"I think in that way it was so revolutionary and ahead of its time, really," he says. The program was launched in 2000, he notes, "and now we're talking about 2018 and it's now a national issue and it's a national problem that people are trying to find a resolution to."
Rep. Suzan DelBene, D-Wash., who represents the areas north of Seattle, is one of the fund's admirers.
"Our economy is changing, and in many cases our laws and policies have not caught up with the way the economy works today, let alone where it's headed towards the future," she says.
DelBene, along with Virginia Democrat Mark Warner in the U.S. Senate, introduced a proposal that would provide $20 million in seed money to cities, states and nonprofits devising new ways of delivering benefits for freelance workers. Otherwise, DelBene says, many workers are falling through the cracks and moving on to public assistance.
Local and state officials are "feeling some of those pressures and understand how important this issue is today, and how much more important it's going to be going forward," she says.
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