Benefits gap exacerbated by limited access for nontraditional workers
The gap in receiving benefits contributions was most pronounced among 1099 workers.
Limited access to benefits offerings is a concern for employees across all types of jobs, including gig workers, full-time independent workers, and part-time and full-time W2 employees. A more inclusive and portable approach to benefits provisioning could help bridge this benefits gap, according to a survey conducted by Stride and Mastercard.
The gap in receiving benefits contributions was most pronounced among 1099 workers, although 32% of W2 employees said they do not receive any benefits contributions. Nearly two-thirds of full-time W2 employees and more than three-quarters of part-time W2 employees surveyed do not receive health insurance contributions from their employer. This underlines a misconception regarding the provision of benefits to W-2 employees, challenging the assumption that employment classification guarantees comprehensive benefits access, said the report.
Income and age magnify these disparities. Among respondents with household income below $35K, 50% receive no benefits contributions, and an increasing percentage of respondents report not receiving benefits contributions as they fall into higher age cohorts. More than half of workers between the ages of 56 and 64 lack benefits contributions.
Health insurance, paid time off and retirement savings are the benefits employees value most. Younger employees selected paid time off as their most desired benefits contribution, while older respondents favored retirement savings contributions.
A small but notable percentage of respondents didn’t know if they have access to any benefits contributions through their employer, the survey found. Lack of awareness of benefits contributions was highest among part-time workers and those earning less than $35,000 per year, highlighting the need for comprehensive communication and education about benefits to encourage workers to take advantage of their options. This is particularly important for those who need to track benefits across multiple jobs, which encompasses 37% of those surveyed.
“Companies can help bridge the gap for nontraditional workforces, such as independent, contract, and part-time workers, by creating access points to portable benefits and staying informed on new regulatory progress that increases flexibility for employers to provide monetary benefits support,” said the report.
Sixty-one percent of Independent workers who do not receive employer benefits say they cannot always cover their monthly expenses with their job earnings and more than one-quarter are currently not saving any money primarily due to insufficient income. Nearly 1 in 3 (31%) independent workers rarely or never take scheduled time-off, according to the report.
Read more: Can the gig economy boom without benefits?
Among respondents who do not currently receive benefits contributions, 37% reported limited knowledge on savings for retirement, 34% reported limited knowledge on financial products that help them save, and 34% reported limited knowledge on finding affordable benefits. This group is also most vulnerable to financial shocks in categories such as health expenses.
Part-time 1099 and W2 workers also exhibited pronounced knowledge gaps, with 35% and 36% respectively indicating a limited understanding of retirement preparation. In contrast, full-time W-2 employees demonstrated the highest level of knowledge across financial topics, particularly in managing personal finances, with 92% expressing some level of proficiency, the report found.