Washington lawmakers are exploring ways to update labor statutes, with bipartisan support for assisting the growing self-employed workforce through portable benefits.

Recently, Rep. Kevin Kiley introduced a bill to enable benefits for all workers, extending beyond traditional employment arrangements. Both Republican and Democratic leaders including Senator Bill Cassidy and Senator Mark Warner, among others, have expressed backing for similar initiatives.

Although the main goal is to assist freelancers and gig workers, portable benefits also have the potential to promote entrepreneurship, contributing to the economy.

Entrepreneurs play a crucial role in creating jobs, driving economic progress, and innovation. However, with most benefits in the US tied to W-2 jobs, many potential business owners may be deterred from starting a company due to the risk of losing essential benefits like healthcare.

This challenge particularly affects aspiring entrepreneurs facing financial constraints, student loans, or caregiving duties. For example, a single parent considering entrepreneurship may hesitate to leave a stable job to retain employer-sponsored health insurance covering their child’s medical needs.

This dilemma, known as “entrepreneurship lock,” hinders workers from pursuing entrepreneurship due to their reliance on employer benefits, notably health insurance.

Studies and surveys have shown that the focus on employer-based health insurance is a barrier to starting new businesses. Access to health care and other benefits is a significant concern for women, people of color, and underrepresented founders, discouraging them from transitioning from traditional jobs to entrepreneurship.

Portable benefits offer a viable solution by allowing individuals to retain benefits when switching jobs or starting new ventures.

The first step towards portable benefits involves legalizing access to benefits for self-employed workers without impacting their classification. Policy measures like tax advantages similar to those for traditional employees through flexible benefit plans could help entrepreneurs manage key expenses like retirement savings, insurance, and childcare.

Furthermore, legislative changes to health care benefits such as relaxing restrictions on Health Savings Accounts (HSAs) could provide financial relief to entrepreneurs without employer-sponsored plans.

The bipartisan effort for portable benefits offers a chance to support independent workers, enhance entrepreneurship, and drive job growth in the US. By removing barriers to business formation, these reforms could empower more Americans to launch their own companies.