Social Security and Independent Contractors: Challenges and Opportunities

By: Elliot Schreur and Benjamin Veghte
Published: June 2018

Independent contractors (ICs) experience many of the same risks as workers in a standard employment relationship, but face them without many of the rights, benefits, and social insurance protections enjoyed by traditional employees. Given its universal coverage and mandatory contributions, Social Security offers a reliable source of retirement income for ICs. Yet several factors limit Social Security’s effectiveness in providing financial security to these workers. This brief addresses two of these factors: risk and cost shifts to workers, and low tax compliance. After elaborating how Social Security covers ICs, the brief investigates the policy challenges arising from the two factors, and offers policy options to address them.

This brief is based on a full-length paper, "Improving Social Security Coverage and Retirement Benefits for Independent Contractors".