One possible way to handle this is to decouple social insurance from employment, so companies can hire and fire at will and aren't required to provide social support, but the state directly provides income security and social support to its citizens, to smooth out the resulting fluctuations (essentially socializing some of the variance/risk produced by a flexible labor market). In Denmark this policy is broadly called "flexicurity": https://en.wikipedia.org/wiki/Flexicurity

I think in the medium term this is a more stable approach, since it brings in contract work within the aegis of the social-support system, rather than fighting a rearguard action to defend social support bundled into full-time employment, against contract work without social support.

Long-term, these problems get solved in other ways. Whatever the system is in different places is the result of evolution & design. The role of individuals, companies and governments in dealing with things like sick pay, healthcare insurance, education and such varies a lot.

In poor countries and poorly functioning (or just poor) governments there is often a wealthy class that demands (and can afford) the sort of services usually provided (or regulated) by the state. Schools, health insurance.. In these places you will generally find pretty good alternatives to state run services payed for individually, by the company or some mix of the two.

We tend to think in terms of what we know. But, usually it's just a product of how the history of it unfolded and the economic structure of the country. How/good bad it is usually depends on "execution" rather than the macro structure (employe pays, government pays or individual pays). Those macro structures make a difference, but it is not like we have a clear and undisputed "best" way that works best everywhere.

For example, in a lot of western european countries (Germany, france) employers have a lot of responsibility to keep everyone employed and employable. This takes pressure off the social welfare system to a large extent.

There are a lot of downside to "employer takes care of things" whatever your ideological position is. I don't like the idea of employee-employer marriages too much. Feels off.

If this really is a major trend, I expect new "culture" will be built around it. Services, standards and common practices.

> Also (though this may only be relevant to Germany) health insurance for full-time contractors is private insurance with massively higher rates, instead of the "standard" insurance provided to employed people.

This isn't the case necessarily. The premium for private health insurance depends on your medical history and your age. If you're older and have chronic illnesses the premium generally will be a lot higher than say when you start out as a healthy 20-year-old. In that case you'll probably even save a lot compared to the compulsory health insurance for employees.

Besides, even if the premium for private health insurance in Germany often is higher than the corresponding premium for the state-run insurance the thing with the latter is that your employer has to pay the same amount, too. So, the actual premium for compulsory health insurance in Germany in fact is twice the amount mentioned on your payslip.

You think you may save money in the short run, but private health insurances can hike their rates almost as they like, and they certainly do with people aged 40+.

While what you're saying is correct there is no single best option. The German system is pretty much geared towards employees. For non-default cases such as freelancers and entrepreneurs the system is convoluted at best and downright broken in some respects. It probably still is one of the better healthcare systems worldwide but there are so many stakeholders involved - the least important of whom is the patient - that it has a lot of flaws that need fixing but aren't very likely to be fixed in the foreseeable future.

>The biggest problem with the "contractor economy" is that there is no form of insurance when you are sick.

That's a feature, not a bug.

Or at least, it is for those who are doing everything to make this 'contractor economy/road to serfdom' a reality.

Canada here - Health insurance costs are inversely correlated with the number of people insured, so it sounds like we have a similar situation as you. My hunch is that this is an underlying principle of insurance - their risk is greater if only the unhealthiest people sign up.

I suspect contractors will have to unionise to gain some form of leverage in insurance negotiations.

I actually pay for a form of contractor insurance that covers my loss of income if I get sick.

In the US you get paid more while not sick. So if you consume at "civilized country" levels while earning at US levels, you'll be fine.

It's a bad idea to force employers to take on large fixed-cost obligations when they purchase labor - this creates rigidities in the market and disincentivizes purchasing.

> In the US you get paid more while not sick. So if you consume at "civilized country" levels while earning at US levels, you'll be fine.

The problem is that for low-income jobs typical in the "contractor economy" like cleaning, driving Ubers and flipping burgers, the amount of cash available to the worker is not enough to cover e.g. a broken leg which puts you out of work for two months or more.

> It's a bad idea to force employers to take on large fixed-cost obligations when they purchase labor - this creates rigidities in the market and disincentivizes purchasing.

In Germany we regard this form of security for the worker an accomplishment of the unions. In the sharing economy you can end up totally broke and fucked up even if it is not your fault at all that you aren't able to work anymore.

Yes, unions do regard labor market rigidities as accomplishments.

That's probably why the sharing economy is growing rapidly while the unionized workforce can't compete. That's probably also why unions are desperate to hinder the rest of the market with rigidities, e.g. a $15 min wage for thee but not for me.

http://www.washingtontimes.com/news/2015/may/27/labor-leader...

> That's probably why the sharing economy is growing rapidly while the unionized workforce can't compete.

This is the same problem as with Mitumba (donated clothing of western countries) in Africa. You can't compete with free.

The sharing economy looks good on paper - but when things like accidents, illnesses or a "disruption" occur, the workers are left in the road ditches, while employed workers keep to enjoy social security, health insurance, unemployment insurance, ...