Who are the ‘real’ gig economy workers and what does their future hold?

Hantz Fevry

May 28

As the COVID-19 crisis continues to unfold perhaps no demographic has been impacted more than on-demand economy workers, those contributing to the economy through freelancing or through app-based platforms such as Uber, DoorDash, and Instacart. Coined ‘gig or on-demand workers,’ they contributed $1.28 trillion to the U.S. economy in 2018 yet work as independent contractors without the duty of care benefits provided by their gig employers. Many prefer the flexibility of schedules and the ability to work for multiple employers, but it does not come without its drawbacks.

Over half of on-demand workers have lost their jobs.

Source: World Economic Forum

Those traditionally employed and able to work from home due to COVID-19 comprise almost 40 percent of the workforce — their salaries, benefits, and any protections that fall under duty of care have not been affected. In contrast, The World Economic Forum reports that over half of gig workers have lost their job and another 25 percent have seen their income fall.

Over half of gig workers have lost their job and another 25 percent have seen their income fall

Freelancers and app-based gig workers: Who’s better off in this crisis?

If there is one thing that this crisis has exposed, it’s the lack of protections for freelancers and gig workers and the glaring differences between freelance or self-employed workers and those who rely on gig economy apps for income.

Freelancers or the self-employed are typically writers, editors, engineers, programmers, or other white-collar positions, though they run the gamut from musicians and performing artists to truck drivers, health care workers, and cleaning service workers, among others.

Nationwide claims under the Pandemic Unemployment Assistance program — which expands unemployment benefits to those not traditionally eligible, such as self-employed and gig workers — were actually about half of the reported 2.23 million figure reported.

Source: U.S. Labor Department on the period ending May 9, reported by Crain’s

When the Pandemic Unemployment Assistance (PUA) program was announced, most freelancers serving in professional job roles were able to qualify for benefits based on income, but the process has been painful, and many have yet to see any payments.

However, many on-demand workers don’t qualify for assistance based on their previous year’s income. In their world, many make only minimum wage, while some make $15 per hour and others over $30 per hour — for them, it’s been about chasing the work that is thriving during the crisis and, out of necessity, working in an environment where they are fearful of contracting the virus or of giving it to others.

What the COVID-19 pandemic has glaringly revealed is the lack of protection and disparity between freelancers working in more traditional job roles and those working in the app-based on-demand world with income volatility and greater health risk.

Only about 3 percent or 4 percent of grocery spending in the U.S. was online before the pandemic, but that’s surged to 10 percent to 15 percent at the height of the pandemic.

Source: Bain & Company

The big winner: Food and grocery delivery services, but their gig workers are struggling

As the pandemic unfolded and states initiated lockdowns, Uber and Lyft drivers felt the impact immediately. International travel came to a grinding halt eliminating typically profitable airport runs. Businesses shut down, employees began to work from home, and transport from virtually all transportation hubs stopped.

Depending on the state, many restaurants were able to continue operations for pick-up and delivery, after adhering to strict guidelines. Most app-based drivers quickly switched to restaurant food delivery such as DoorDash and Uber Eats. Others switched to grocery shopping and delivery services such as Instacart. But in the world of on-demand jobs, most drivers chose to deliver food in their vehicles while grocery shopping and delivery saw an explosion of new gig workers as laid-off workers from other sectors struggled to find employment.

Instacart hired 300,000 new workers in the first month of the pandemic lockdown and plans to hire 250,000 more. But, that’s not good news for many gig workers who had been making a living working full time on apps such as Instacart. As more people became unemployed, app downloads exploded and gigs disappeared for long-time workers and their ability to earn an income, creating a ‘race to the bottom.’ [Source: Time].

Gig worker conditions on the ground

When the pandemic lockdown began in March, gig workers using app-based platforms were left scrambling to secure their own hand sanitizer, masks, and gloves as they continued to work. This is one of the many disparities between what a typical freelancer has to secure to perform their duties — mainly working from home on a laptop as many bona fide employees are doing now — versus an on-demand worker who works out of their car, on a bike, motorized scooter, or even on foot in large urban areas.

On-demand platform companies had no plans in place to secure or distribute personal protective gear to their army of gig workers ­– not even hand sanitizer — it was only after disturbing social media posts from workers, and media coverage of their working conditions went public, did the companies begin addressing worker protection issues.

An explosive article by Vice Media reported that virtually all restaurants working with food delivery platforms have closed their restrooms to the public, and that includes the delivery drivers delivering your food. Not only do they not have access to restroom use, but they also have no way to wash their hands, creating potential adverse health conditions for the workers and unsanitary delivery conditions for the customers.

The future of gig work means reducing income volatility and access to better-paying gigs

The on-demand economy could increase by as much as 50%

One silver lining in this global crisis has been the ability to more clearly define the disparities amongst self-employed workers — those working as independent contractors with higher and more steady pay, and those dependent on app-based platforms which make them vulnerable to income volatility due to numerous events out of their control.

The on-demand economy could increase by as much as 50 percent due to high unemployment as a result of the pandemic. Existing on-demand platform companies will no longer be able to operate with their workers at the bottom of their list of priorities, and on-demand workers will no longer be able to rely on one platform to satisfy their income requirements.

Just as Uber and Lyft drivers pivoted to food delivery due to the pandemic, so will all on-demand workers pivot — workers will go where the money is and need to have the ability to seamlessly work for multiple platforms.

Emerging platforms that offer the ability to engage on multiple apps with one user profile, those that identify the best-paying gigs to reduce income volatility, and those that offer financial management services will thrive as more people work full time in the on-demand economy and it becomes the future of work for more and more displaced workers.

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Hantz Févry is the CEO and founder of Stoovo, a gig economy platform that aggregates gig worker profiles and reviews, helps workers find the highest paying jobs, and offers users a financial management platform.