Startups in the sharing economy need a big government social safety net to succeed

Simon Rothman, a partner at venture capital firm Greylock, said something really interesting in regards to workers and worker benefits in the new tech economy.

He floated the idea of a new class of worker.

“I think this new class of worker has to reflect this new type of work that’s being done,” Rothman said. “If you decouple the benefits, if you decouple the pension so it’s not tied with you, think about the control you can have, going out of the networks as you wish, controlling the what and when of your job.”

Rothman is an investor in Sprig, a meal delivery app that uses independent contractors — who don’t get benefits like health insurance from the company — rather than employing them directly. This is a characteristic of many businesses in the sharing economy. The future of these companies, however, is in danger thanks to several lawsuits currently working their way through the courts, which allege that the use of these “1099 workers” is illegal, because they are treated like employees.

Rothman thinks there needs to be a new kind of worker, unlike the “1099” independent contractor with no benefits and unlike the full-time worker collecting benefits from their employer. This worker would get her benefits like healthcare and retirement savings from somewhere else, besides her employer, freeing her up to be secure in her quest to work for lots of different companies doing lots of different things in the new tech economy.

This is a major point. There really isn’t any reason that benefits should be tied to a person’s employer. The only reason we have the current system in the US is because back in the 1940s, providing health insurance for an employee was a good way to get around the World War II-era government limits on wages.

But if an employer doesn’t provide these benefits, who will?

It seems like we need a large, national entity that is capable of broad-based collection of revenues, and the distribution of those revenues in the form of benefits like healthcare and retirement funds.

Silicon Valley might be able to create that entity. Why? Because we already have it. It’s called the government, and it has the added benefit of never having the possibility of going bankrupt. Take the Affordable Care Act, which now allows people to maintain health care coverage without being tied to an employer. Uber’s Travis Kalanick previously told BuzzFeed that Obamacare was “huge” for his company and the growth of the sharing economy.

What Silicon Valley seems to be after here is a good, old-fashioned social safety net. The key to the riches of the sharing economy might just be big government.

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