Is gig work threat­en­ing work­ers’ fi­nan­cial fu­tures?

Employee Benefit News - - CONTENTS - BY AMANDA EISEN­BERG

The em­ploy­ment model’s lack of ben­e­fits will af­fect per­sonal se­cu­rity for mil­lions of Amer­i­cans work­ing as in­de­pen­dent con­trac­tors, new re­search finds.

THE GIG ECON­OMY, THE EM­PLOY­MENT model where work­ers act as in­de­pen­dent con­trac­tors rather than em­ploy­ees, is ex­pected to have a desta­bi­liz­ing ef­fect on per­sonal fi­nan­cial se­cu­rity, ac­cord­ing to a new re­port from Pru­den­tial Fi­nan­cial.

Gig econ­omy work­ers do not re­ceive em­ployee ben­e­fits, lead­ing to a ma­jor gap in cover­age for short- and long-term dis­abil­ity, life in­sur­ance and em­ployer-spon­sored re­tire­ment plans, ac­cord­ing to the re­search.

For ex­am­ple, only 16% of gig econ­omy-only work­ers — those with­out ac­cess to em­ployer-spon­sored ben­e­fits — have ac­cess to a re­tire­ment sav­ings ac­count, com­pared to 52% of full­time em­ploy­ees.

“The money made by gig work may con­trib­ute to re­duc­ing the na­tional in­come gap, but the de­cline in em­ployer-spon­sored sav­ings and in­sur­ance plans is do­ing lit­tle to ad­dress the wealth gap,” says Andy Sul­li­van, pres­i­dent of group in­sur­ance at Pru­den­tial. “With­out ben­e­fit pro­tec­tions, many gig work­ers are left fi­nan­cially vul­ner­a­ble. While work­ing in­de­pen­dently has its re­wards, the un­cer­tainty of gig in­come makes it dif­fi­cult for peo­ple to pre­pare for emer­gen­cies or save and in­vest to­ward achiev­ing im­por­tant fi­nan­cial goals.”

Seven in 10 mil­len­nial gig-only work­ers, have no ac­cess to ben­e­fits, com­pared to 44% of gig-only work­ers over the age of 55, ac­cord­ing to Pru­den­tial’s re­search, which polled nearly 1,500 work­ers.

The im­pli­ca­tions of an en­tire gen­er­a­tion with­out re­tire­ment sav­ings can be detri­men­tal, says Snezana Zlatar, se­nior vice pres­i­dent of full ser­vice so­lu­tions, prod­uct and fi­nan­cial well­ness, at Pru­den­tial Re­tire­ment. “With­out a siz­able sav­ings for health­care and other ba­sic ser­vices past re­tire­ment age, the num­ber of Medi­care en­rollees could sky­rocket.

“That should be one of the main in­cen­tives to en­cour­age the pub­lic sec­tor and pri­vate sec­tor to seek so­lu­tions,” she says. “It’s not just about the well­ness ef­fect for in­di­vid­u­als. It’s about re­duc­ing fu­ture re­liance on gov­ern­ment pro­grams.”

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