Failure to Contribute: An Estimate of the Consequences of Non- and Underpayment of Self-Employment Taxes by Independent Contractors and On-Demand Workers on Social Security

Abstract

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Shoring Up Shortfalls: Women, Retirement, and the Growing GigSupp Economy

“…A key explanation for the decline is that the Bureau of Labor Statistics designed the CWS to capture data on nontraditional work that is a worker's main or sole source of income rather than a supplemental source of income (Bruckner & Hungerford 2019;Abraham & Houseman, 2019). Moreover, the survey only asked respondents to identify work done in the prior week, which "may fail to capture seasonal workers or workers that supplement their income" (U.S. Government Accountability Office, 2019, p. 3).…”

“…In addition to analyzing multiple jobholding trends, SIPP data has been used to estimate populations of independent contractors and on-demand workers. For example, Bruckner and Hungerford (2019) 1). The education services/health care/social assistance industry was the home to largest percentage of both women and men who were multiple job holders: it attracted 40.7% of the women with multiple jobs and 16.7% of the men with multiple jobs (ibid., p. 6 figure 4).…”

“…Although some important work has focused on the retirement income implications for gig workers (see, e.g., Bruckner & Hungerford, 2019;Hegewisch et al, 2019;Secunda, 2018;Jackson et al, 2017, Brown, 2017, there is a notable absence of work dedicated to understanding how women engage in gig work and the impact it has on their retirement. Moreover, in 2020, the COVID-19 pandemic accelerated the need for more comprehensive research on gig work generally as Congress scrambled together policy responses for impacted workers, especially women (see, e.g., Karageorge, 2020;Hassan, 2020).…”

OECD Pensions at a Glance

“…Findings from other countries confirm that the self-employed often underreport their earnings (Hurst, Li and Pugsley, 2010 [26] ; Bucci, 2019 [27] ). In the United States, a 2018 survey found that 32% of self-employed admittedly underreport their income for tax purposes (Bruckner and Hungerford, 2019 [28] ). Moreover, the inclination towards informality might be magnified when working with or through the internet platforms, especially if the platforms are based abroad and do not report any transaction data to Source: OECD domestic authorities.…”

“…A few countries introduced specific regulation to limit pension coverage gaps for selfemployed workers with only few major clients. While in Germany, self-employed persons who work predominantly for one client 28 and do not have employees have been mandatorily insured in the pension system since 1999, in Italy and Portugal the contributions of independent contractors relying on single contracts are now topped up by their clients. In addition, in Portugal if a self-employed worker depends significantly on one single client -the so-called ordering customer -the latter has to pay social security contributions for the self-employed.…”