The pandemic proved America's worker benefits are broken. Now is the perfect time to fix systems like unemployment insurance, healthcare, and more.
- The pandemic showed that the benefits systems that workers rely on are outdated and broken.
- Glitchy unemployment insurance, hard to access healthcare, and unequal medical leave — these systems need to be updated.
- The pandemic gives us a chance to change these systems and make the economy more inclusive.
- Michael Froman was US Trade Representative in the Obama Administration and is now Vice Chairman and President of Strategic Growth at Mastercard.
- Visit the Business section of Insider for more stories.
As COVID-19 disrupted American life over the past year, it proved especially damaging to financially vulnerable households and small businesses. Low-wage, non-traditional workers and people of color have been the most severely affected. The need to ensure an inclusive and sustainable economic recovery has never been clearer. Yet, an antiquated patchwork of benefits is leaving workers behind. They simply fail to account for modern realities and the changing nature of work in the digital economy.
Millions seeking federal and state unemployment insurance faced delays and hurdles caused by outdated technology and infrastructure. Financially vulnerable individuals such as those without a bank account or those that had not filed tax returns online, experienced longer delays in accessing stimulus payments via check or direct deposit. One national survey found that for every ten people who filed for unemployment insurance successfully, three to four tried but failed and another two didn’t even try due to the perceived difficulties.
The challenges for individuals with non-traditional work are particularly severe. They often are forced to live without much of a safety net, even in the best of times. A third of our economy is now made up of people who work outside of the traditional employer-employee relationship. This includes everyone from a part-time caregiver to a full-time caterer who runs her own business.
Last year, Congress expanded the types of workers who qualified for unemployment benefits to include those in the gig, contract, and self-employed economies. This decision acknowledged that while the nature of work has drastically changed, our benefits systems have failed to keep up.
There is a pressing need to modernize both public benefits and those coming from employers, so workers can succeed in the digital economy. Today’s workers need access to benefits that move with them. Left unattended, these challenges will become major obstacles to rebuilding an inclusive and sustainable economy. There are three key areas of reform that can help modernize our current benefits system.
Ensure benefits for all
We need to put more benefits squarely in the hands of workers, irrespective of their work arrangement and employment status. Alia, The Black Car Fund, and Catch are just some of the innovative programs in the public, private and nonprofit sectors that are meeting the needs of workers in today’s economy. Now, more than ever, a system of portable benefits which allows workers to access healthcare, retirement, lifelong learning, and other critical benefits must be part of a modern social safety net.
Improve technology infrastructure
The technology that serves as the backbone of our public benefits systems needs to be upgraded. The application, eligibility, verification, and disbursement process need to be streamlined through investments in both technology and training for staff.
Washington state is leading the way by modernizing paid family and medical leave benefits. The state government worked with private sector firms to set up digital accounts for workers, funded by employers and the workers themselves. More than 70,000 Washington residents signed up in just the first three months it was offered. The platform has already been used to disburse over a quarter of a billion dollars in critical paid leave benefits.
Integrate equitable solutions
To ensure that modernization is inclusive, governments at every level need to reimagine how they build benefits technology systems. Emphasis should be placed on expanding access to the most vulnerable populations while still ensuring they keep pace with innovation.
The recovery from the pandemic will be a long road and it requires rethinking how we support workers. To create lasting reform, we should strive towards solutions that are people-centric, interoperable, portable, and inclusive — such an approach would benefit all workers, regardless of their work arrangement.
How can these principles be put into action? Sen. Mark Warner of Virginia lays out a vision that reimagines a more inclusive economy and invests in workers’ needs through the creation of portable lifelong training accounts. Both employers and workers could contribute towards it, helping workers afford the training they need for the jobs they want. Ongoing legislative efforts led by Sens. Ron Wyden of Oregon, Warner, and others to overhaul the technology used to access state unemployment insurance is another crucial step that can help workers more easily access benefits while they look for employment.
We have a unique opportunity to create a sustainable, inclusive digital economy, one that works for everyone, everywhere, and that we come out of this period stronger and more resilient than before. The pandemic has made it clear we now live in an extraordinarily interconnected system. It is in everyone’s interest to equip workers with the support they need to succeed in the modern economy, not just settle for the approaches of the past.
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