The Impact of Covid-19 on the Gig Economy

11
May 2020
Share This Story
 

Covid-19 is having a huge impact on the American economy, but, according to a new report from Cake & Arrow, gig economy workers may be among those hit hardest.

Covid-19: Disaster for the Gig Economy

An estimated 30-40% of workers nationwide are employed in the gig economy. When it comes to the health and economic threats of Covid-19, these temporary, freelance, and independent contractor workers are among the most vulnerable.

Gig economy workers provide professional or creative services, rideshare driving, grocery shopping and deliveries, and more. According to Cake & Arrow,  gig workers tend to fall into two categories: virtual laborers who derive their income from Internet-based work such as programming, design, writing, or marketing, and physical laborers who derive their income using their bodies or physical property, such as rideshare drivers, delivery workers, or AirBnb hosts.

Gig economy workers are more like entrepreneurs than traditional workers. While they often benefit from greater freedom of choice for the individual worker, gig work also comes without the security of a steady job with regular pay, benefits, and a predictable daily routine. While the effects of the pandemic are being felt across the globe, gig workers in the U.S. have been hit especially hard.

Living Paycheck to Paycheck

Many gig workers already live paycheck to paycheck, and losing even a single day of work can make the difference between paying rent, a utility bill, or buying groceries. Even workers who supplement their incomes can be at risk from diminishing gig work.

Living paycheck to paycheck doesn’t only pose a financial risk to gig workers, it can potentially pose health risks too. According to the American Psychological Association, those who live paycheck to paycheck are more likely to skip going to the doctor and more likely to continue working, even when they are sick. This poses a risk to their own health and to that of society.

Lack of Paid Sick Leave and Health Benefits

The U.S. Department of Labor classifies gig economy workers as independent contractors, not employees. That means most gig workers lack the benefits of regular employees, such as access to paid sick leave, employee-sponsored health insurance, worker's comp and disability insurance.

This means that unless they happen to live in a state with a paid sick-leave policy, should a gig worker become sick due to Covid-19, they may not be eligible for paid sick leave and could potentially continue to work, putting both themselves and those they come into contact with at risk.

Gig workers are less likely than traditional employees to receive health insurance from their employer, and to have health insurance at all. According to gigeconomydata.org:

  • 84% of traditional workers had healthcare coverage, with more than half receiving insurance from their employer.
  • Among temp-agency workers, 67% had coverage, and only 12% received insurance from an employer.
  • Among independent contractors, 75% had coverage, all of whom had to access that insurance on their own.

Holes in the Unemployment Safety Net

Gig workers are not classified as employees, and thus aren't typically eligible for the safety net of unemployment benefits.

While the recent stimulus passed by congress includes a provision to extend unemployment benefits to gig workers, states are reporting delays in making benefits available to newly eligible workers, with state officials reporting that it could take weeks to stand up new programs and disburse benefits, leaving those who have lost work due to the virus to fend for themselves in the meantime.

Some Gig Workers More Vulnerable than Others

There is a class divide amongst gig workers, leaving some much more vulnerable than others during the Covid-19 crisis. Among the differences between virtual laborers and physical laborers, those who fell into the virtual category, such as professional services and creative work, tend to earn higher incomes.

And it's these higher incomes that offer more protections to virtual laborers than their physical counterparts.

Workers engaging in professional services and creative work not only tended to have higher incomes than other types of gig workers, but generally found the crisis to be less disruptive.

Those doing creative and professional services as opposed to other types of gig work are:

  • More financially prepared for a period in which they might not work.
  • More likely to still be working amidst the pandemic.
  • Less concerned about the threat to their physical health.

According to the Cake & Arrow report, 27% of rideshare drivers and 40% of delivery workers name their physical health as their top concern amidst the pandemic.

What Can Gig Workers Do to Survive the Financial Impact of Covid-19?

There's no doubt about it: gig workers lack many of the protective benefits that come along with full-time employment. And Covid-19 has disrupted gig economy workers, leading to loss of income and bigger health risks for many.

Rules that previously disqualified gig workers from getting unemployment benefits have been temporarily lifted. In addition, gig workers can find financial help from:

The Covid-19 pandemic has shown, in dramatic fashion, the need for gig workers in society. As people began to shelter-in-place, the gig workers who shop for food and make deliveries put themselves on the front lines, risking their health and even their lives to deliver the essentials. What Covid-19 will do to the gig economy is left to be seen, but one thing is certain: gig workers are an essential part of our economy.

Solutions on Demand  Get Quote