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June 11, 2020

Policy

In recent years gig workers, acting as independent contractors, entered the gig economy as a means to supplement income, promote flexibility, and even be a secure alternative to regular employment.  Employers took advantage of the cheap available labor.  The workers pay the price in multiple ways and the early potential of the gig option has been dissipating even before the fallout from the Covid-19.

For many workers the pandemic has meant the end of employment, or at least a significant reduction in wages and/or hours.  Its benefits, if they exist, have been limited to a very select few.  Under usual circumstances,  gig workers typically lacked job security; guaranteed minimum hours or wages; health insurance; sick leave; or any other benefits associated with regular employment. With the contracted economy, the demand for many of their services has fallen and the competition for the remaining ones has grown steeper.

Since the shelter in place mandate, 68% of gig workers have had no income; 89% are looking for new sources of income; 50% have no job; 25% have decreased hours; and only 23% have any savings.  Fully 70% of gig workers surveyed felt that their company, and the government, did not satisfactorily support them.  Many platforms catering to freelancers, or gig workers, have seen an upsurge in applications for work along with a decreased demand.  Less travel means decreased demand for ride share services such as Lyft and Uber. Even those where the need has remained stable have experienced a drop in wages and hours.  Instacart, a SF based food delivery service, reportedly added 300,000 jobs while jobs in babysitting, housesitting, and cleaning have fallen by 36%.  Instacart asserts that its shoppers are earning 60% more due to gaining double the tips and maintaining the same average of batches.  But other platforms are not reporting similar gains.  Amazon Flex has shown a decrease in average hours from 28-32 hours a week to 18-20 hours.

Freelancers in professional occupations such as design, development, animation, and technology also have experienced a downturn.  Workers in these areas report decreased pay and contracts that are labor intensive so that the pay does not extend to the actual time needed to perform the tasks.  One worker described the situation as “a race to the bottom.”  Platforms such as Fiverr, Upwork, Clickworker, and Amazon’s Mechanical Turk have sustained significant increases in demand along with depressed wages.  These trends predate the advent of the virus, with some reporting average hourly wages as low as $2-$6.50 an hour in 2017.  The severity of the exploitation seems likely to worsen.  Many companies are contemplating long term remote work, a situation likely to lead to more free lancing, which enhances corporate  profit and capitalizes on the availability of a global workforce.  The World Bank reported, for the first time since 1998, an increase in global poverty hinting at the backslide to come.

Policy

Gig workers, as independent contractors, typically have not been eligible for unemployment, employer health insurance, or sick time.  The CARES stimulus has created a new world in that self-employed and freelance workers became eligible for 39 weeks of state unemployment payments in addition to federally funded $600 a week supplements for 16 weeks.  Unfortunately  this program is unlikely to be sustained without further Congressional and Executive interventions.

Government regulation of labor practices in the freelance world needs to be addressed.  For example, “bots”are programs automated by algorithms which grab new jobs and affix them to new platforms that require subscriptions to access the jobs.  Instacart shippers pay a fee to get the Bot job apps making it harder for other seekers to apply.  Instacart denies this allegation and has stated that any person found to be utilizing these apps will be “deactivated,” a term eerily inhumane, as is the current market policies.  The need for protective legislation is indicated and has been passed in California.

In January, California enacted legislation, known as AB5 or the gig economy bill, mandating that gig workers are entitled to the benefits of employees.  They established this based on a 2004 case of a delivery driver who sued his company, Dynamex, when it forced the drivers to become independent contractors.  The current legislation is based on the findings in that case that a person qualifies as an independent contractor if s/he is exempt from company control or direction; works in non-mainstream aspects of the business; and is already performing similar work in situations independent of that company. These standards do not seem to accrue to gig workers affected by the litigation.

The California legislature has pledged 20 million dollars to enforce the mandate.  CA truckers were immediately granted an exception to the legislation and companies like Uber, Lyft, Doordash, Postmates, and Instacart have raised over 110 million dollars to support a ballot initiative exempting them from the new law.   They estimate the cost to them of bill’s implementation will 20-30% more than utilizing their casual workforce.  With the distraction of the pandemic, little has been established with regard to the future of AB5 though it certainly points to the need for new government labor regulations and to the reform of elements of the safety net.  What is being done temporarily for workers and businesses, through the CARES act, can be seen as a template for more permanent legal change.

 

Learn More

https://time.com/5836868/gig-economy-coronavirus/

https://www.washingtonpost.com/business/2020/01/14/can-california-reign-techs-gig-platforms-primer-bold-state-law-that-will-try/

https://www.cnbc.com/2020/03/30/cares-act-will-be-an-economic-lifeline-for-gig-workers-freelancers.html

https://www.weforum.org/agenda/2020/04/gig-workers-hardest-hit-coronavirus-pandemic/

Resistance Resources

https://gigworkersrising.org/get-informed/covid19-resources/  Information for gig workers and consumers

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