Bill Overview
Title: Gig Worker Equity Compensation Act
Description: This bill expands the existing Securities and Exchange Commission registration exemption for securities that are part of an employee-compensation package. Specifically, the bill applies this exemption to securities provided to independent contractors performing work for the issuer and to customers of the issuer. The bill also requires the corresponding aggregate sales amount to be indexed for inflation annually instead of every 5 years as under current law.
Sponsors: Sen. Lummis, Cynthia M. [R-WY]
Target Audience
Population: Independent contractors/gig workers receiving securities as compensation
Estimated Size: 8000000
- The bill expands the SEC registration exemption to securities provided to independent contractors, who are also known as gig workers.
- Gig economy is a growing sector, with millions of individuals worldwide engaged in some form of independent contracting work.
- Independent contractors include a wide range of jobs like ride-share drivers, freelance writers, or tech developers working on contract basis.
- Customers of the issuer who receive securities as part of a compensation package will be impacted, although this group is significantly smaller.
- Globally, the gig economy is predicted to involve around a billion people by 2030.
Reasoning
- The Gig Worker Equity Compensation Act targets the gig economy workers who receive securities as compensation, expanding their access to financial growth through stock options.
- The act has a budget of $20,000,000 in the first year, which needs to be strategically allocated considering that not all gig workers will receive this form of compensation.
- A significant impact is anticipated for those gig workers whose compensation will include securities. However, the diverse nature of the gig economy means many workers may not be directly affected.
- Over 10 years, the total budget of $236,000,000 will support the expansion of stock option compensation to potentially thousands of gig workers.
- The well-being scores will reflect a combination of financial security and stress associated with stock market fluctuations, while those not directly impacted will see little change.
Simulated Interviews
Freelance software developer (San Francisco, CA)
Age: 28 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- The policy could increase the value of my compensation package.
- Currently, the stock options often seem like a gamble, but indexing for inflation might stabilize it.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 5 |
Ride-share driver (Austin, TX)
Age: 35 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 12/20
Statement of Opinion:
- I doubt this policy will affect me directly; I don’t get stock options.
- Maybe in the future, some gig work could offer these benefits.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 4 | 4 |
Freelance consultant (Boston, MA)
Age: 58 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 4/20
Statement of Opinion:
- As someone who gets part of my payment in stocks, this policy could protect my earnings from inflation.
- It could solidify long-term planning and financial security.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 8 | 6 |
Part-time delivery worker (New York, NY)
Age: 22 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 0.0 years
Commonness: 10/20
Statement of Opinion:
- This bill seems more suited for tech or finance gig workers.
- I don't see how this impacts my line of work yet.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 4 |
| Year 2 | 4 | 4 |
| Year 3 | 4 | 4 |
| Year 5 | 4 | 4 |
| Year 10 | 4 | 4 |
| Year 20 | 3 | 3 |
Freelance graphic designer (Seattle, WA)
Age: 40 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 5/20
Statement of Opinion:
- Getting shares that increase with inflation is an interesting perk.
- This could lead to more favorable compensation discussions with startups.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 4 |
Freelance writer (Miami, FL)
Age: 45 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 8/20
Statement of Opinion:
- My gigs haven’t had equity components, so I’m not directly impacted.
- Maybe in the future, the trend could change through this bill.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 4 | 4 |
Tech contractor (Denver, CO)
Age: 31 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 3/20
Statement of Opinion:
- Having stocks adjust for inflation seems like a solid way to prevent value erosion.
- This could change how independent contractors like me negotiate contracts.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 9 | 6 |
| Year 20 | 8 | 5 |
Freelance accountant (Chicago, IL)
Age: 50 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- Inflation-indexed stock options can add stability to my financial planning.
- The act might make my clients’ offers more attractive over time.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 5 |
| Year 20 | 7 | 4 |
Freelance photographer (Portland, OR)
Age: 27 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 9/20
Statement of Opinion:
- I rarely consider stocks as part of my income.
- Maybe larger firms might offer this to change the trend.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 4 | 4 |
Film editor (Los Angeles, CA)
Age: 29 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 7.0 years
Commonness: 7/20
Statement of Opinion:
- Indexing film equity for inflation seems like a great safety net.
- This policy could really stabilize my income as film values tend to fluctuate a lot.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 4 |
Cost Estimates
Year 1: $20000000 (Low: $18000000, High: $25000000)
Year 2: $21000000 (Low: $19000000, High: $26000000)
Year 3: $22000000 (Low: $20000000, High: $27000000)
Year 5: $24000000 (Low: $22000000, High: $29000000)
Year 10: $26000000 (Low: $24000000, High: $31000000)
Year 100: $52000000 (Low: $48000000, High: $57000000)
Key Considerations
- SEC's ability to manage increased administrative workload due to expanded exemption.
- Impact on traditional employment models as companies may prefer flexible engagement with contractors.
- Need for education of gig workers on implications of receiving securities as part of compensation.
- Effectiveness of annual inflation indexing on maintaining the value of securities.