On behalf of our members that make NJBIA the largest, most impactful association representing job creators in New Jersey, we write to you in opposition of Senate Bill 1386, which would significantly raise prices for New Jersey families while hurting local businesses and the very workers the bill is supposed to help. And while we appreciate that portable benefits can be a complicated – and novel – idea, the bill makes them more complex. Without significant changes, we urge you to vote “no” on this bill.S. 1386 will increase prices for New Jersey families.
To fund “portable benefits” accounts – and to cover the overhead costs of “qualified portable benefits providers” – the bill would impose a 15% surcharge on every dollar paid to app-based delivery workers by local commerce platforms (e.g., DoorDash, Uber Eats, Grubhub, and Instacart). This would dramatically increase the operating expenses for those platforms and lead to increased prices (or a reduction in services) for consumers. At a time when families are still trying to weather persistently high inflation, raising prices on consumers is the last thing lawmakers should do.
This bill will hurt New Jersey businesses. Families won’t be the only ones affected by S. 1386. Businesses – who increasingly rely on mobile, online, and takeout orders to reach new customers – will receive fewer orders due to higher prices. That means less revenue to cover their costs and less money to pay their workers. That could be the point of no return for thousands of businesses just trying to make ends meet amid other imposed cost increases.
- 1386 will hurt delivery workers. Fewer orders from local businesses will lead to decreased demand for delivery services. That means less take-home pay for the very workers this bill is supposed to help! And, ironically, because of how this bill is structured, less net earnings for delivery workers means less money for “portable benefits.” S. 1386 also will threaten the flexibility for workers to work when, where, and how they want. Under the bill, delivery workers will need to work a minimum number of hours to earn benefits, forcing them to sacrifice their flexibility and independence.
The Committee should reduce the contribution rate to between 3-5%. Portable benefits remain a relatively new concept, and we have been encouraged to see innovative approaches emerge over the last several years. That said, not all portable benefits policies are created equal. We would encourage the Committee to explore reducing the required company contribution rate to between 3-5% of worker earnings, putting S. 1386 on par with proposals in other states, such as Massachusetts, Minnesota, and Pennsylvania. As written, S. 1386 will make operating in New Jersey more expensive by a not insignificant amount overnight. That makes it hard to run a business here, and it can discourage new businesses from joining the state’s economy.
The bill should encourage innovation, not create new industry incumbents. Where S. 1386 permits only nonprofit organizations to serve as “qualified benefits providers,” bills in other states let private companies participate as well. As with any new idea, it will take significant investment as well as trial and error to find the best approach to helping independent workers get benefits. Some private companies are developing products that can help with this effort, and there is no reason to exclude them from participating. It’s hard to see how doing so helps workers.
Give workers the ability to control their own accounts. Among other curious proposals, S. 1386 requires companies to make contributions to “individual portable benefits accounts.” But “individuals” don’t really control those accounts; “qualified benefits providers” do. Setting aside the somewhat clunky nature of that structure, it is not clear why “qualified benefits providers” need to provide benefits to workers – or do anything at all. Instead – as we have seen proposed in other states – why not let individuals direct their benefits accounts as they see fit while limiting the use of funds to benefits-like things (e.g., buying health insurance or putting money into an IRA)? That is a more flexible approach that stands in contrast to the highly prescriptive one laid out in S. 1386. After all, if these benefits are to be suited to workers with flexible working arrangements, it makes sense that their benefits plans are flexible, too.
Of course, there likely is no shortage of differing opinions about how best to design a new way for workers to get benefits. That said, it is clear that this bill is not the right solution for New Jersey workers – and it is not the right solution for New Jersey consumers or businesses either. We urge you to vote against this bill and to stand with delivery workers, local businesses, and consumers throughout the Garden State.
