Cracks Become Fissures in America’s Gig Economy
It’s easy to get tired of– or even inured to- the barrage of articles and e-mails about how this or that company is facing the global pandemic. One of the biggest things COVID19 has highlighted in our economy is the precarious economic position of a large portion of the workforce, who rely on the so-called “gig economy” to make ends meet. This sector lacks access to the same safety nets as “real” jobs. This is troubling– but it’s also an opportunity for us to examine some ideas for how we might avoid these issues in the future.
Gig workers, so named because they are working from assignment to assignment (“gigs”) rather than a predictable nine to five, can range from rideshare drivers to graphic designers. According to the Bureau of Labor Statistics, “[gig] workers are spread among diverse occupation groups and are not easily identified in surveys of employment and earnings.” In other words, we are everywhere.
Proponents of gig-work create parallels to entrepreneurship or freelance work. Using slogans like “Work on your own time!” “Flexible hours!” and “earn what YOU want!” so-called platform companies like Uber, fiverr, and Shipt (now owned by Target) aim to attractively showcase the advantages of gig work. But little is done to warn about the thin ice workers stand on in comparison to their full-time counterparts as far as things like health insurance, unemployment insurance, and other benefits.
LEFT OUT IN THE RAIN
“Everything looked as good as it could be until this happened,” Lee, a veteran Lyft driver in Michigan, told us over the phone. He said that he stopped driving in late March because he has an underlying health condition and didn’t want to risk it. Lee was a fan of the flexibility and variety afforded by Lyft, which let him drive around the state, meet new people, and earn a steady income. (We are only using his first name).
Lyft provided hand sanitizer for drivers in Metro Detroit. But Lee doesn’t live in Detroit, and says that such “support” hasn’t reached his city. He says that the company promised cash payments to drivers affected by COVID shutdowns, and that they sent him $250 after he said he had a sick passenger in his car.
“I needed to quarantine after that,” he said. “I didn’t feel comfortable doing it anymore. I sent them a message. They didn’t say anything. Another week and a half and they deactivated me.”
Though he has since stopped driving, he previously invested at his own expense in things like a dashcam to record in-car interactions with customers. It is common for drivers to take such precautions in a system designed to favor the customer instead of the worker, though Lee says his experiences have been overwhelmingly positive until this.
We spoke with another driver, Jake, a Metro Detroit driver who said that “Lyft has offered sanitizing supplies in a limited sense.” But he said that the company wasn’t doing enough to help workers. “Before the virus, I used to make $300 plus a day. Now I’m lucky to make [half of that],” he explained. Jake said he was unaware of supplemental cash assistance from Lyft but did qualify for unemployment compensation under the state’s expanded UI platform.
Many smaller businesses have been able to survive because of the estimated 53 million gig workers that continue to log into their apps and go to work every day– exposing themselves not only to economic uncertainty of 1099 employment but also potentially to the novel coronavirus.
WITHIN THE CONTEXT OF ECONOMIC DECLINE
People are already looking ahead to a post-COVID19 America and what that means for workers. The skyrocketing unemployment rate has shown how fragile our economy is. But these workers may not even be counted properly, because they fall outside the normal labor statistics. Meanwhile, the shift to socially distanced commerce has seen restaurants explore revenue streams through apps like Doordash. Many smaller businesses have been able to survive because of the estimated 53 million gig workers that continue to log into their apps and go to work every day– exposing themselves not only to economic uncertainty of 1099 employment but also potentially to the novel coronavirus.
But this isn’t even rosy for most workers. According to the Denver post:
“A recent survey of 170 Uber and Lyft drivers around the country found that 58% saw their earnings fall by 80% or more during the period from March 16-26. It was a timeframe when many communities, including the city of Denver, were placed under stay-at-home orders.”
Optimistic estimates for the general end of a nationwide shutdown are May 1st at the earliest. Some states have defied federal guidelines and have begun to reopen, raising questions about the possibility of an even deadlier second wave of the virus. But the risk of infection is already far higher for gig workers, who are a major component of the workforce at large– and especially of the workforce that serves people under stay-at-home orders (think– grocery delivery).
Lee says that Lyft suggested that drivers “partner” with Amazon to deliver prescriptions. “But they didn’t give us any way to do that,” he said. Lyft similarly refers to “partnering” with companies to offer insurance to drivers, which is tantamount to the exact same rates those drivers would be getting on the Marketplace.
POLICY THINKING TO PROTECT WORKERS
Beyond COVID, gig workers face an inevitable economic slowdown with a lot of questions about their future. We are already in a recession. Companies like Uber and Lyft have been slow to provide their workers with benefits if at all. Lee, our Lyft driver, says: “We got one message [from Lyft] that was like, ‘consult the CARES Act.’ I was like, ‘Really?’ That has nothing to do with keeping us informed.”
As much of the stimulus spending is oriented toward protecting companies, the government hasn’t been much help for workers in general when discussing long term solutions for the newly unemployed. Some states have stepped in to guarantee assistance for gig workers. (Treasury Secretary Steven Mnuchin suggested that the $1200 stimulus checks should be enough to help Americans for the next ten weeks).
As demonstrated by unemployment numbers– which began soaring immediately after shutdowns started- our economy was fragile. This, of course, ran contrary to the president’s claims that it was the strongest of all time. But however precarious the economy was then, the gig economy is a thin, glass box in comparison. In order to avoid future and ongoing disaster, policymakers will need to take a long, hard look at protections for this subset of the workforce.
Universal basic income is increasingly discussed as a blanket safety net that could help avoid most problems associated with mass layoffs and gig worker instability. As an upcoming article is exploring in California, the gig economy is going to be impossible to simply legislate away. But it is possible for the state to incentivize better protections– and provide them itself.
Lee emphasized that he’s fortunately able to stay afloat because he is on his wife’s health insurance, provided through work. “Thankfully, I’m not in financial turmoil,” he says, but acknowledges that others might well be. “Most of my experiences [with Lyft] have been great. I just wish there was better communication– [and that] they only make promises they have an intention on keeping.”
A spokesperson for Lyft did not respond to the question about direct cash payments, but pointed us to a page on their site that mentions federal stimulus transfers, among other things.