Etsy, the online craft community and sales platform recognizes the problems facing many of their suppliers (site users who maintain online storefronts to sell their handmade wares). Etsy’s suppliers are properly classified as independent contractors and, like most ICs, lack reliable access to benefits like healthcare and retirement planning. Etsy took the forward thinking step of publishing a white paper illustrating how their platform can support greater access to benefits and retirement planning for independent contractors.
Etsy’s policy proposals were authored by their Senior Director of Advocacy and Public policy with help from a well-regarded public policy analyst. You can download and review the white paper, which is being shared publicly by Etsy to raise awareness of the challenges facing ICs and also to spark debate that they hope will spur others to reformative action.
The Etsy paper has proposed development of a federal benefits portal, where all contractors can pool together, accessing benefits as a group. Funding for these benefits would ostensibly come from a universal tax withholding to which all participants would agree. Current state W2 employees have withholding for Social Security and Medicare completed through their payroll. Etsy suggests they could expand that practice universally to Independent Contractors working as 1099s as well, but only if the worker asks them to do so.
One of the authors of the paper noted in an interview that achieving this new withholding would not represent a major imposition for companies, especially when using the workforce management software tools and products many organizations have already implemented to streamline these processes for their W2 workers. The paper also suggests combining all tax-advantaged savings accounts into a single flexible account, which anyone could use to manage fluctuations in workers’ income whether their engagements were short or long term. The authors further suggest that significant fluctuations could be managed through expansion of the Earned Income Tax Credit (EITC), which would allow for quarterly administration.
These proposals are not entirely without historical context. Take for example the “benefit banks” concept that has already been explored and championed by Senators Sherrod Brown (D-OH) and Elizabeth Warren (D-MA).
Throughout their white paper, the authors provide statistics on the Etsy workforce, which provides an up close and unique perspective for how such a proposal could be actualized. They further acknowledge that their workforce differs from other service sector, gig-economy organizations like those that provide rides or rely on resources paid by the hour. Nevertheless, the statistics they published are interesting and worthy of greater examination.
Etsy’s workforce is comprised of 1.7 million workers. Of those, 51% work independently, meaning either they run their creative businesses full-time, are self-employed, or work part-time in addition to their Etsy businesses. 86% of these workers are women, and 30% list Etsy as their sole occupation. 65% use the platform as a way to supplement their income, but on average, the revenue earned from Etsy contributes to 15% of their household income. Etsy company leaders, along with some of the Etsy workforce/sellers were in Washington D.C. a couple of weeks ago to advance support for these proposals. With a workforce of 1.7 million, publishing these innovative and affirmative ideas succeeds in propelling this discourse on providing better contingent workforce benefits forward.