FAIR JOBS FOR CANADIANS: A New Face for the Labour Movement

Monday, March 25, 2013

A New Face for the Labour Movement

Tackling Concerns of Independent Workers

By STEVEN GREENHOUSE,Reprinted from the March 23, 2013 New York Times SOON after landing a job at a Manhattan law firm nearly 20 years ago, Sara Horowitz was shocked to discover that it planned to treat her not as an employee, but as an independent contractor. “I saw right away that something wasn’t kosher,” Ms. Horowitz recalls. Her status meant no health coverage, no pension plan, no paid vacation — nothing but a paycheck. She realized that she was part of a trend in which American employers relied increasingly on independent contractors, temporary workers, contract employees and freelancers to cut costs. Somewhat bewildered, somewhat angry, she and two other young lawyers who were also hired as independent contractors jokingly formed what they called the “Transient Workers Union,” with the facetious motto, “The union makes us not so weak.” Ms. Horowitz’s grandfather was a vice president of the International Ladies’ Garment Workers’ Union, and her father was a labor lawyer. So it was perhaps not surprising that she responded to her rising outrage by deciding to organize a union. What she organized, however, was a newfangled version. The Freelancers Union, with its oxymoronic name, is a motley collection of workers in the fast-evolving freelance economy — whether lawyers, software developers, graphic artists, accountants, consultants, nannies, writers, editors, Web site designers or sellers on Etsy. Today, the Freelancers Union is one of the nation’s fastest-growing labor organizations, with more than 200,000 members, over half of them in New York State. Ms. Horowitz, who has never lacked audacity, says she expects to expand the organization to one million members within three years. For some perspective, the United Automobile Workers union currently has 380,000 members. Of course, while hundreds of thousands of auto jobs have disappeared, the country is awash in freelancers and other independent workers. Studies by the Bureau of Labor Statistics and the Government Accountability Office show that there are more than 20 million of them. Many companies, including The New York Times, employ these workers. The Freelancers Union, which is based in Brooklyn, doesn’t bargain with employers, but it does address what is by far these workers’ No. 1 concern, by providing them with affordable health insurance. Its health insurance company covers 23,000 workers in New York State and has $105 million in annual revenue. Impressed by that success, the Obama administration recently awarded Ms. Horowitz’s group $340 million in low-interest loans to establish cooperatives in New York, New Jersey and Oregon that will provide health coverage to freelancers and tens of thousands of other workers. Having health insurance makes it far easier to be a part of what Ms. Horowitz calls the “gig economy.” But many freelancers would prefer not to participate in that economy at all. They would rather have regular jobs, but companies will often hire them only as independent contractors. Companies find these workers less painful to dismiss and generally less costly because they rarely receive severance pay or benefits like health insurance or paid vacations. “There are some freelancers for whom this is great — they love the flexibility,” Ms. Horowitz said. “And there are some freelancers for whom this is the worst thing in the world.” While being an independent worker allows certain advantages — you can go to yoga class or on vacation whenever you want — it also means economic vulnerability. An internal Freelancers Union survey found that 58 percent of the group’s members earn less than $50,000 a year from freelancing and that 29 percent earn less than $25,000. The survey also found that 12 percent of members, many of them college graduates in their 30s and 40s, received food stamps during the recession. “In today’s economy, there’s a huge chunk of the middle class that’s being pushed down into the working class and working poor,” Ms. Horowitz says, “and freelancers are the first group that’s happening to.” Historically, through the power of collective bargaining, labor unions helped reverse that equation, enabling many unskilled workers to earn middle-class incomes. But as traditional labor unions have steadily declined in size and power, groups like the Freelancers Union, the New York Taxi Workers Alliance and Domestic Workers United have stepped up, trying to give collective voice and power to often-marginalized workers. Some union old-timers argue that the Freelancers Union is more like an association than a union and will not be able to achieve truly significant gains for workers. Its members don’t pay union dues, which means that joining requires no sacrifice, and the Freelancers Union doesn’t negotiate contracts with employers or represent freelancers when they have grievances. (Under the National Labor Relations Act, freelancers are considered independent contractors, not employees, and employers thus have no obligation to bargain with them, even when they form a union.) Ms. Horowitz, 50 and a Brooklyn native, insists that her organization is indeed a labor union because, like other unions, it is a large, influential, self-supporting organization of workers that pushes to advance their interests, although its members work for numerous employers in many industries. “It reminds me of the old guilds” — the precursors of modern-day labor unions — “that focused on workers’ individual autonomy, trying to build their own careers, with the backing of a collective organization to assist them,” says Janice R. Fine, a professor of employment relations at Rutgers University. “Sara is terrific at adapting old ideas to help today’s work force.” On a recent rainy morning, a half-dozen members of the Freelancers Union met in a large yoga and meditation studio. The studio was inside a 6,000-square-foot health clinic in Downtown Brooklyn that the union opened for its members in November. It is in a century-old loft building, with bright lights and blond-wood floors, its walls covered with the Freelancers Union’s posters featuring its logo of buzzing bees around a hive. The freelancers were there to talk with Ms. Horowitz about how the clinic was doing and how it could be improved. They seemed to like a lot: the on-site nutritionist and acupuncturist; the fact that they rarely had to wait more than 10 minutes to see a doctor; and that they could consult with a doctor from home using Skype if necessary. They also liked that there were no co-pays. Using the clinic is free for those have signed up with the Freelancers Insurance Company; premiums range from $225 to $603 a month — 40 percent less than individual plans available in New York, according to a comparison by the union. “It’s nice to have one place where I can focus on health care,” Dani Simons, a communications and strategic consultant, said at the meeting, “instead of having to go one place to see this doctor and another place for that doctor.” The clinic has an unusual team approach. There are two full-time doctors and eight “health coaches,” who serve as liaisons between patient and doctor. Ms. Horowitz says this focus on primary care will save money over time. By tracking members who have special diets or are taking medications, for example, the health coaches can help patients stay healthy and avoid costly hospital stays for failing to follow a treatment plan. “If we were a for-profit insurance company, we would not be able to provide all these services,” Ms. Horowitz says. “We’re able to steer the profits back into serving the freelancers.” About 2,200 of the insurance company’s policy holders have signed up for the clinic, while the other 21,000, much like members of other insurance plans, see doctors through a network, Empire Blue Cross, with which the Freelancers Union contracts. When Ms. Horowitz started the union, her main concern was the here-today, gone-tomorrow insecurity of freelance jobs. But after listening to many freelancers, she changed her mind. “I saw that their overwhelming concern was the lack of health insurance, even though I hadn’t seen that as a major issue,” she says. To create the Freelancers Insurance Company, Ms. Horowitz needed to persuade investors to put up $17 million. The Rockefeller Foundation and others gave $7 million in grants, and other foundations joined in, agreeing to lend the rest at a 3 percent interest rate. “She saw that labor unions basically haven’t innovated for several generations, and in the meantime the world has changed and there were tremendous needs that weren’t being met,” says Bill Drayton, founder of Ashoka, a nonprofit foundation that invests in social entrepreneurs. The health insurance profits that don’t go toward repaying lenders go into a reserve to strengthen the company’s finances, though some future profits will eventually be recycled into running the daily operations of the Freelancers Union and future projects, like a planned health clinic in Manhattan. The union gets $2 million a year from application and enrollment fees its members pay to get discounted life, dental and disability insurance that the union arranges through an outside insurer. Together, the union and its health insurance company have a staff of 80, and Ms. Horowitz receives a salary of $272,000 for her dual role as head of the union and the insurance company. She notes proudly that while health insurance premiums rose by 5 percent, on average, for Americans this year, the Freelancers Insurance Company is not raising premiums at all for its policy holders. Jo-Ann Mort, who worked for many years in communications for labor unions and foundations, said it was thanks to the new insurance company that she was able to start her own communications and fund-raising firm. “I was scared to go out on my own because I was worried I couldn’t find affordable insurance elsewhere,” she said. “Sara made that possible.” In many ways, Ms. Horowitz operates more like an entrepreneur than an old-style union leader, says Kyle Zimmer, chairwoman of the health care cooperative that the union is forming in Oregon. “She identified that health insurance was a gigantic gaping hole for these workers,” said Ms. Zimmer, who is also president of First Book, a nonprofit group that provides access to books for children in need, “and she stepped into that space, navigated through difficult waters and created a successful insurance company that takes on traditional insurers.” “She did this in a way,” Ms. Zimmer added, “that would make anyone who believes in private enterprise proud.” While the union is praised for helping to deliver health and other benefits to its members, some employment experts question whether it can make real headway in raising incomes of independent workers. “All the self-help they do seems good and creative,” says Gordon Lafer, a professor of labor relations at the University of Oregon. “The question is can they get any leverage to get a fair shake from employers, to get companies to give a fair share of their profits to freelancers? They may need to be more creative to do that.” The freelancers assembled in the yoga studio had plenty of suggestions, large and small, for Ms. Horowitz. Why schedule yoga classes on Monday mornings when people are already feeling mellow from the weekend? Shouldn’t the doctors have a checklist when they see patients? Why can’t freelancers who shun junk food and alcohol pay lower premiums? Can the Freelancers Union build affordable housing for financially squeezed freelancers? “It would be great if there were a network of clinics like this in big cities around the country,” said Ms. Simons, the communications consultant. “It would be really cool. We often have to travel to other cities.” Ms. Horowitz, her hands folded, listened. On the wall in front of Ms. Horowitz’s desk is a dusty, decades-old photo of Sidney Hillman. The head of the Amalgamated Clothing Workers of America from 1914 to 1946, Hillman is the model for an idea Ms. Horowitz is talking about a lot these days, something she calls “the new mutualism.” Hillman was an influential adviser to Franklin D. Roosevelt and spent much of his life translating his mutualist vision into reality. He built low-cost housing and a health clinic for garment workers as well as a union-owned bank and insurance company. “How did Sidney Hillman know to do housing and insurance?” asks Ms. Horowitz, who has a degree in labor relations from Cornell. “He just listened to people and helped solve their problems.” Ms. Horowitz’s new mutualism is based on a simple premise: freelancers should band together to set up social-purpose institutions to serve their mutual needs. That, she says, would be far better than relying on corporations and private investors who might have different priorities, not to mention a desire for substantial profits. This idea, she acknowledges, is not new. But with the changing economy, the decline of organized labor, the end of paternalism among employers and the shrinking role of government, she says, the conditions are ripe for embracing mutual aid societies anew. “The social unionism of the 1920s had it right,” she says. “They said: ‘We serve workers 360 degrees. It’s not just about their work. It’s about their whole life.’ We view things the same way.” “Whether you like it or don’t like it, it’s unlikely we’re going to see growth in government over the next few years,” she says. “But we’re not going to see any reduction in social needs for workers. And we need these social-purpose institutions in place to serve their growing social needs.” Her ideas have gained traction beyond the usual worker-advocacy crowd. She received a “genius” grant from the MacArthur Foundation in 1999. She has been invited to speak at the World Economic Forum in Davos, Switzerland, the Aspen Institute and the Harvard Business School. She was recently appointed to the board of the Federal Reserve Bank of New York. Ms. Horowitz’s new mutualism also benefits from her political connections. She has close ties to Senator Kirsten E. Gillibrand of New York, and to Sheldon Silver, speaker of the New York State Assembly. Senator Gillibrand, for instance, at Ms. Horowitz’s request, is pushing to have the Bureau of Labor Statistics count the number of independent contractors and freelancers nationwide. And the State Assembly, though not the Senate, passed a bill that would authorize the State Labor Department to crack down on companies that fail to pay freelancers as promised. A few years ago, the union persuaded New York City to eliminate the unincorporated business tax for independent workers who earn less than $100,000 a year — a move that saves freelancers up to $3,400 annually. (Mayor Michael R. Bloomberg said later that he had “successfully advocated for reducing or eliminating the unincorporated business tax” for “freeloaders and contractors,” a verbal stumble that Ms. Horowitz found hilarious.) MS. HOROWITZ has seen how the post-New Deal model of employers providing health insurance, pensions and other benefits is breaking down. More and more workers, and not just freelancers, have been left to fend for themselves in dealing with sickness, accidents and old age. One result, she says, is that many workers feel trapped, hesitant to change jobs or start a business for fear of losing health insurance or other benefits. “We want people to have meaningful independence,” Ms. Horowitz says. “And that means freeing them of this insecurity to give them the ability to take risks because somebody has your back. That’s what this is about. That’s what the new mutualism is.” In this new mutualism, she sees another, largely unrecognized benefit for freelancers, those supposedly pajama-clad workers who often spend their days toiling at home alone. “People feel mentally and physically better when they feel connected to each other,” she says. “What we’re doing brings people together without them losing any individual aspects of themselves.” At times, she has been accused of arrogance, and that perhaps stems from her often speaking with self-certainty. “What I’m good at is intuition,” she says. “I have a sense of what’s going to work and what’s not going to work.” In discussing her family’s labor legacy, Ms. Horowitz noted that her daughter was born on the birthday of Samuel Gompers — the father of the modern American labor movement. Ms. Horowitz sees him, too, as a role model. “If Gompers were alive today,” she says, “he’d be trying to figure out what the next models are for today’s workers.”

Monday, March 25, 2013

A New Face for the Labour Movement

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