As more and more individuals transition to work in the “gig economy,” traditional options to save for retirement are appearing to become less practical for modern workers. U.S. Senator Mike Enzi, R-Wyo., held a Senate roundtable today with a panel of experts in order to discuss what these changes in the labor market mean for retirement security and what retirement savings options are — or should be — available to those in the “gig economy.”
“Gig economy” generally refers to project-based and temporary work arrangements, or gigs, that individuals rely on for earnings, and are often app-based, such as Uber or Postmates.
“We often hear that there is a retirement security crisis in the United States, and while the extent of the crisis may be disputed, few dispute that Americans should save more and earlier for retirement,” Enzi said. “So if it is true that more and more jobs will be gig jobs moving forward, this is a critical and timely discussion.”
The panel of experts at the roundtable included Casper resident Vikki Nunn, one of the owners of Porter, Muirhead, Cornia & Howard, an accounting firm. Nunn’s company recently purchased a wealth management practice for the primary purpose of being able to offer their clients single participant 401(k) plans, or Solo(k), which can offer a retirement solution for contract employees.
Nunn noted that while Wyoming does not have the same exposure to the “gig economy” that other states have faced, the recent economic downturn in the states have forced many employees to find work as consultants instead of being full-time employees. Nunn said her company has also seen full-time employees with one or more side businesses that do not offer traditional retirement savings options.
Panelists also proposed allowing contractors to join Open Multiple Employer Plans (MEPs). In an Open MEP, contractors would be able to join together and rely on an experienced and qualified retirement plan professional to take on the administrative burdens and responsibilities of managing a retirement plan. This would reduce costs for those businesses and ensure that individuals do not need to be a financial expert to create a retirement plan.
Enzi emphasized that a key characteristic of these app-based services is that, just like customers, workers are users of the platforms and not employees. They are independent contractors that are paid for services rendered, often with a service charge deducted, and they do not receive all of the benefits required in traditional employment relationships.
But according to Enzi, for many participants, their freelance or contracting status is an attractive benefit, providing them with far greater flexibility in choosing projects or determining when they will work.
“Regardless of how you view these changes in our economy, they are occurring,” Enzi said. “These developments in the workforce have been fast moving, so it is important to ensure that as we consider any federal actions to address the gig economy, we understand the scope of the gig economy and the motivations of those participating in it.”