Recognizing a gap in the United States’ social support system for independent workers, Sara Horowitz has spent the last 30 years working to provide freelancers affordable benefits and advocating for their improved labor rights. Her organization, the Freelancers Union, offers over 240,000 members access to discounted group benefits such as medical, dental, and disability insurance in addition to pension plans, helpful educational resources, and a platform to facilitate political action.
Over 42 million people in the United States workforce are freelance workers. But despite this large and rapidly growing number, these workers have no national system of support to rely on. Their employment classification denies them the right to claim benefits of any kind and they are subjected to the high cost of individual insurance coverage and unfair tax policies.
While Franklin D. Roosevelt’s New Deal legislation in the 1930s was a landmark achievement for workers’ rights, it was customized for the workforce of that decade. This was largely defined by employees working consistently for one employer with their benefits tied to that job. Although the system was practical at the time, the dynamics of America’s workforce have since significantly changed. Unfortunately, government policies have not kept up with these changes and freelancers are restricted by an outdated social support system that entirely excludes them.
Sara Horowitz realized the gravity of this problem early in her career. Working long hours as an attorney in Manhattan, her employers misclassified her as a contractor and refused to offer her any benefits, including health insurance and paid vacation. Her hard work left her with a paycheck, but little else – she was left to take care of her medical and other needs independently.
Disillusioned with the system and realizing she had nowhere to turn for help, Sara decided to take matters into her own hands. In 1995, she created Working Day, the first union of its kind to advocate for the improvement of freelancers’ financial security and rights to benefits. Working Day was the precursor to the present day Freelancers Union, which has succeeded in bringing together over 240,000 independent workers from all walks of life – including artists, writers, designers, lawyers, and nannies. The Freelancers Union provides a new approach to labor unions by empowering freelancers and providing them with a collective voice to raise their concerns publically.
While Sara initially believed a freelancer’s main concern was the general insecurity of freelancing jobs, her discussions with numerous workers revealed that they were also worried about being unable to afford health insurance on their own. So Sara decided to create her own insurance company specifically for independent workers. Thus the Freelancers Insurance Company, a for-profit social venture, was born. The company, whose sole shareholder is the Freelancer’s Union, currently provides discounted group benefits, including medical, dental, and disability insurance, for premiums that are approximately 40 percent less than other individual insurers across 31 states. More than 25,000 freelancers and their families are insured through the company.
Freelancers Union, which has received $340,000,000 in federal funding, is also launching consumer-driven health insurance cooperatives around New York, New Jersey, and Oregon in an effort to significantly scale access to coverage for members. It is also providing the first 401(k) plan of its kind for freelancers and offering various educational resources to members like a Client Scorecard and Contract Creator. Through the Freelancers Life platform, the union encourages freelancers to share their experiences and insights online with one another and to openly share their opinions for potential improvements.
The union has already made strides on the political front and continues to work to achieve greater impact. For example, in 2009, it was able to convince New York City to eliminate the Unincorporated Business Tax, which enforced a double tax on freelancers’ businesses and personal incomes, for workers who earn less than $100,000 a year. This decision saves workers up to $3,400 annually.
Sara has also recently joined the board of the Federal Reserve Bank of New York as a director to represent public interests, where she has more leverage than ever to echo the concerns of independent workers in the state. In the coming years, she hopes to mobilize millions more freelancers across the United States to demand the benefits they deserve and continue to catalyze impactful systems change.
This is one of several case studies created as part of the Investing In Impact series, illustrating how the market-based mechanisms social entrepreneurs use tackle critical challenges and create lasting, systemic change.