America has changed. We live in a country where every city is only a short flight away. Where machines connect friends in Dallas to friends in San Francisco, and people live longer, healthier lives. But we also live in a country where complacency, idleness, and policies of the past, are hurting people of the present.
Last week, the Small Business Committee held a hearing titled “Millennials and the Gig Economy.” The gig economy employs independent workers who work short-term, often temporary, engagements. Some examples are Uber, Lyft, Wag, and Rover. According to Prudential, some 24% of the millennial generation works as independent contractors or freelancers in the gig economy, while only 15% of gen xers and just 9% of boomers participate. A recent Bureau of Labor Statistics study found that young Americans (age 16-25) were more than twice as likely to be in contingent (non-traditional) jobs.
While the freedom and flexibility of jobs in the gig economy positively impacts how this generation lives, works, and plays, it also has its faults. “More and more workers, as it happens, are finding that their work in an increasingly “contingent” economy leaves them without the array of benefits that have historically come from traditional employment,” says Brookings.
Millennials and those generations that come after could be increasingly dependent on these kinds of roles in the future. But without traditional benefits, millennials are finding it harder to afford health care and save for retirement. The National Institute on Retirement Security found that “66 percent of working Millennials have nothing saved for retirement.” Even among those that do have access to employer-sponsored retirement plans (66 percent), only half of those eligible choose to participate (though 90 percent participate in plans that they are auto-enrolled into). Further, there is massive discrimination in the tax code for those who don’t receive health insurance through their employer. These two elements serve to put gig workers at a disadvantage in the most costly aspects of their lives, health and retirement.
Millennials will need to save more than previous generations too, “[d]ue to the trend that millennials will likely have lower income replacement from Social Security, less likely to have traditional pensions, and will have higher life expectancies,” says Steven Olikara of the Millennial Action Project. Long gone are the days where companies felt a responsibility to take care of their employees’ retirement through pensions. Now, the pendulum has swung towards the responsibility of the individual to save for retirement and pay for their own health care.
Policies of the past bolstered traditional employment, awarding corporations special retirement and health care carve-outs. But with a shifting employment landscape, Congress is not only failing to solve these problems, they are actually making them worse. In addition to young workers bearing a larger burden for their own health and retirement programs (not to mention mountains of student loan debt), Congress is putting us on the hook for $100 trillion in shortfalls for safety net programs and a national debt of over $21 trillion. Millennials have quite the storm brewing over them.
Despite this more than gloomy outlook and Congressional malfeasance, millennials have some reason to be optimistic about the future. Some states are close to passing laws that would make benefits portable and would further revolutionize the traditional benefit system we have today. As Congress holds further hearings on the gig economy and the role it will play in America’s economy, they should take cues from these innovations. Millennials also need to be aware of what’s at stake for their financial futures, not only by saving more for retirement, but paying close attention to which politicians are bankrupting their future.