I. Executive Summary

The American social safety net was created for a workforce that no longer exists. It was built upon long-term employment with a single employer. And this is the structure (healthcare, retirement planning, unemployment protection) that is currently tied to a job rather than to an individual. In the past, when that was a viable model for many generations, the system worked. But for Gen Z, those protections are no longer a given.

This brief explores the benefit gap as a structural issue. Young workers aren't failing within the system; rather, the system is simply no longer designed for the modern realities of career opportunities. With decreasing job tenure, increasing numbers of freelancers and contractors, and growing early-career instability in the workforce, millions of individuals lack consistent access to the social and economic benefits required for economic stability. This isn't limited to gig-workers or individuals outside the traditional labor force-it can be any worker whose career does not move along the assumed linear path of a single employer.
What follows is an examination of how the existing framework was constructed, where it has fallen short, and what a more adaptable system would require. Ultimately, one premise holds: economic security cannot be contingent on the form a worker's employment happens to take.

II. Relevance & Background

The U.S. social safety net is not fit for the 21st-century workforce. The current system of employer-based benefits is not the result of a deliberate, overarching plan. It reflects a gradual accumulation of factors: wartime economics, tax policy decisions, and market dynamics. 

During World War II, manufacturers faced wage and price controls, so owners offered benefits to recruit workers, including health and life insurance, and superannuation. The IRS eventually deemed these contributions tax-free, and the law was enacted in 1954. A wartime tax ruling set the stage for our health-care system.

It was a similar story with retirement savings. In 1970, 45% of private sector workers had access to a pension. Following the Internal Revenue Service ruling in 1981 that allowed workers to defer income taxes to save for retirement in 401(k) accounts, these accounts replaced pensions as the retirement savings vehicle of choice, leaving workers to save for retirement on their own. 

Unemployment insurance came even earlier, but with built-in gaps from the start. When it was passed in 1935, it covered workers in commerce and industry in firms with at least eight employees. It did not extend to farmers, domestic workers, or government employees.

All these schemes presumed one thing: an employee with a single employer for an extended duration. This is no longer the case.

Gen Z's average tenure in the first five years of their working life is 1.1 years, compared to 1.8 years for Millennials, 2.8 years for Gen X, and 2.9 years for Baby Boomers.  And it's not just that Gen Z moves around. Gen Z accounts for 28% of the total U.S. freelance workforce, despite being one of the youngest generations. Only 45% of Gen Z currently work full-time. 

The U.S. social safety net is increasingly mismatched with the realities of the workforce. Employers increasingly use non-regular employees, and most social benefits, such as health insurance, unemployment insurance, and retirement benefits, remain geared to the traditional employer-employee relationship.

The system is designed for a workforce that no longer exists. Younger workers are changing jobs, working multiple jobs, and early-career instability is the norm. Employee-based benefits don't go with them.

III. Tried Policy

Over the past several decades, the United States has relied on employer-sponsored benefits as the main mechanism for delivering economic security, while supplementing this system with limited expansions, temporary public interventions, and ongoing classification reforms. Although these approaches have provided some coverage and short-term stability, they have yet to adapt to a labor market defined by job mobility, multiple income streams, and nontraditional employment. Because of this, existing policy frameworks continue to leave many workers without consistent access to healthcare, retirement savings, and income protection.

A. Reliance on Employer-Sponsored Benefits as the Dominant Model

The foundation of the U.S. safety net remains employer-sponsored benefits, particularly in healthcare and retirement systems. As of 2023, about 60% of Americans receive health insurance through an employer, which makes it the largest source of coverage nationwide. Similarly, retirement savings are primarily structured through employer-based plans such as 401(k)s, which depend on continued participation at a single workplace. These systems were designed around long-term employment relationships, in which workers would stay with the same employer for extended periods. However, this model does not align with current labor patterns. The U.S. Bureau of Labor Statistics reports that the median job tenure for workers aged 25 to 34 is approximately 2.8 years, significantly shorter than that of previous generations. As a result, workers frequently lose access to benefits when changing jobs, creating coverage gaps and limiting long-term financial stability.

B. Limited Efforts to Expand Benefits Beyond Traditional Employment Structures

‍In response to the rise in nontraditional work, policymakers have made limited efforts to expand benefits beyond employer-based systems, but these remain fragmented and small in scale. For example, several states have explored portable benefits programs for gig workers, including pilot initiatives that allow contributions to follow workers across platforms. However, these programs are not standardized at the federal level and often depend on voluntary participation by employers or platforms. Additionally, sector-specific benefit models, such as multi-employer plans in industries like construction, offer some portability but are not broadly applicable across the modern workforce. As a result, these efforts demonstrate the feasibility of alternative systems but fail to provide universal, consistent coverage for workers who operate across multiple jobs or income streams.

C. Short-Term or Crisis-Driven Expansions of Public Benefits

During periods of economic crisis, the federal government has temporarily expanded access to benefits, most notably through the CARES Act. This legislation extended unemployment insurance to gig workers and independent contractors through the Pandemic Unemployment Assistance program, while also increasing benefit levels and duration. At its peak, this expansion provided support to over 40 million Americans who would not have qualified under traditional unemployment systems (U.S. Department of Labor). However, these measures were explicitly temporary and then also expired as the immediate crisis subsided. Once these programs ended, many workers went back to a system that excluded nontraditional employment from core benefit eligibility. This pattern demonstrates that while the U.S. can expand coverage in response to emergencies, it has not yet institutionalized these changes into permanent policy structures.

D. Ongoing but Inconsistent Attempts to Address Worker Classification

‍Efforts to address worker classification have also played an important role in policy responses, particularly in determining eligibility for benefits. One of the most prominent examples is California Assembly Bill 5, which aimed to reclassify many independent contractors as employees, thereby extending access to employer-provided benefits. However, the law dealt with significant opposition from gig economy companies, leading to the passage of California Proposition 22, which created a separate classification for app-based drivers with limited benefits. This sequence of policy changes shows the instability and inconsistency of classification-based approaches. Rather than establishing a uniform standard, these efforts have resulted in a patchwork of rules that vary by state and industry, leaving many workers in uncertain or incomplete coverage categories.

E. Lack of Comprehensive, Long-Term Structural Reform‍

Despite these efforts, no policy has fundamentally shifted the structure of the U.S. safety net from an employer-based system to one centered on individuals. Existing reforms either reinforce the traditional model, apply only to specific sectors, or operate as temporary responses to economic shocks. Benefits, therefore, remain tied to jobs rather than workers, limiting portability and creating persistent gaps in coverage. Without a comprehensive, long-term redesign of how benefits are delivered, current policy continues to reflect a 20th-century employment model that does not align with the realities of a 21st-century workforce.

IV. Policy Solutions

A. Building a Benefits System That Works for the Modern Workforce

The existing U.S. benefits system was not designed with today’s workforce in mind. Rather, it was built around a model of stable, long-term employment with a single employer, which worked well enough for generations. However, as the prior sections of this brief have established, Gen Z is entering a labor market defined by job-hopping, contract work, freelancing, and multiple simultaneous income streams. The mismatch between that reality and the current policy framework was structural. Therefore, addressing it requires more than minor adjustments to existing programs–it requires a shift in how benefits are conceived and delivered.

B. Shifting Towards Worker-Centered Benefits Systems

The most foundational change needed is a reorientation of who the benefits are tied to. Under the current system, access to healthcare, retirement contributions, and paid leave goes from the employer to the worker. When employment ends, the benefits do too. For a generation that the Bureau of Labor Statistics projects will hold an average of 12 or more jobs before age 50, that model creates constant gaps in coverage with every transition. A worker-centered benefits system would instead attach protections directly to the individual, making them persistent regardless of employment status or job changes.

Denmark and the Netherlands have long operated social insurance systems in which core protections follow workers across employers and work arrangements rather than depending on any single employment relationship. Domestically, Social Security itself operates on a worker-centered model, accumulating credits based on earnings rather than tenure with a single employer. Expanding that logic to healthcare and paid leave would yield broader benefits that better reflect how work realistically functions for millions of young Americans. The goal is to decouple benefit access from employment continuity, so that a worker who leaves one job or takes on a contract does not fall through the gaps in the process.

C. Improving Portability of Benefits Across Jobs and Income Sources

Even within a worker-centered framework, benefits only function if they are portable, meaning they can move with workers across different jobs, platforms, and income sources without resetting. The National Conference of State Legislatures defines portable benefits as those tied to an individual rather than a single employer, allowing contributions from multiple sources to accumulate in a single account that the worker controls and carries forward. 

Several early models demonstrate that portability is administratively feasible. Utah has authorized voluntary portable benefit plans, and Washington State’s WA Cares Fund established a portable long-term care benefit funded through payroll contributions that follows workers regardless of employer. At the federal level, the proposed Portable Benefits for Independent Workers Pilot Program Act would have provided grants to states and nonprofits to test portable benefit structures for nontraditional workers. While that legislation has not yet passed, it signals growing recognition that portability is a necessary design feature rather than an optional enhancement. For Gen Z workers who may earn income simultaneously from a salaried part-time job, a freelance client, and a platform app, a portable account that aggregates contributions from all three sources would represent a significant improvement over the current structure.

D. Modernizing Policy Frameworks to Reflect Current Labor Patterns

Portability and worker-centered design can’t function effectively within an outdated regulatory framework. As prior policies established, most U.S. labor law was codified in the 1930s and 1940s around a binary of employee and independent contractor that does not map cleanly onto modern work arrangements. Modernizing that framework is a prerequisite for any broader reform. Without it, expanded benefit systems will continue to exclude large portions of the workforce through classification loopholes.

Several states have begun testing intermediate approaches. California’s AB5 attempted to narrow the criteria under which workers could be classified as independent contractors, though it faced significant industry opposition. More durably, some legal scholars and policy researchers have proposed a dependent contractor category. This middle classification would entitle workers who rely substantially on a single platform or client to baseline protections without requiring them to be treated as full employees. The Economic Policy Institute has documented that worker misclassification costs workers an estimated $16.8 billion annually in lost wages and benefits, a figure that reflects not just platform behavior but the failure of existing law to account for the actual conditions of modern work. Updating classification frameworks and standardizing definitions across federal and state law to avoid benefit obligations would provide any new portable or worker-centered system with the legal foundation it needs to operate at scale.

E. Expanding Access to Baseline Protections Independent of Employment Type

Finally, effective reform must ensure that baseline protections are not contingent on how a worker is classified or where their income originates. Healthcare coverage, a minimum earnings floor, access to unemployment assistance, and retirement savings infrastructure should function as a floor available to all workers, rather than a reward for holding the right kind of job. As Georgetown University’s Center for Retirement Initiatives reported, 17 state auto-IRA programs were open to eligible workers as of February 2026, with more than 1.2 million funded accounts and approximately $2.96 billion in assets, demonstrating that automatic enrollment savings infrastructure can be built and administered at scale outside of traditional employer-sponsored plans.

Extending that logic more broadly, a federal or multi-state framework that automatically enrolls independent workers in baseline savings, subsidized health coverage, and unemployment assistance, regardless of their classification status, would address the core inequity that the current system produces. The mechanism already exists in programs like Medicaid, the ACA marketplace, and the pandemic-era Pandemic Unemployment Assistance, each of which extended protections beyond the traditional employment relationship when political will allowed. What is needed now is not a new invention but a permanent commitment to the principle that baseline economic security should not depend on the form a worker’s employment takes. For Gen Z, that commitment is a prerequisite for basic financial stability.

V. Conclusion

The benefits gap is not the result of neglect or oversight.  Rather, the benefit gap results from applying a 20th-century benefit framework to a 21st-century worker. For many years, health care, pension/retirement, and income-replacement plans have been developed based on the 20th-century workplace, which was typically characterized by a single employer-employee relationship, long-term employment, and tenure. Thus far, these systems have operated effectively within those parameters. However, there is no basis to believe that the future workforce will be structured similarly; in fact, evidence suggests that the average tenure of jobs held by members of Gen Z will be less than two years, with individuals potentially holding several jobs at once. 

Policymakers face challenges beyond expanding current programs. They also need to develop new structural underpinnings for delivering benefits. This brief argues that the way forward involves separating the delivery of benefits from an individual's employment status (i.e., allowing for benefits to be portable), providing a structure that allows for protections to follow employees regardless of their classification as an employee or independent contractor, and revising the statutory definitions that establish eligibility for benefits. These suggestions do not represent a departure from the established tradition of economic security in America; rather, they are a modernization of that tradition to account for how work is conducted today.

For a generation already navigating economic instability, the gaps are real: access to healthcare during a job transition, the ability to save for retirement without a traditional employer match, and protection against income loss that does not depend on how a platform chooses to classify its workers. Economic security should not be a reward for holding the right kind of job. The question is whether policymakers are willing to build a system that reflects that principle, before another generation inherits the gap.