Gig workers, COVID-19, gig economy
Gig Economy

Deep Dive: How COVID-19 Is Shining A Light On The Gig Economy’s Importance

Full-time and gig workers alike have felt the COVID-19 pandemic’s impacts, even if just in the strain of moving their workspaces from office buildings to their homes. Others have seen more striking developments, with some employees facing furloughs as companies adjust their budgets and delivery drivers choosing between picking up shifts that might expose them to the virus or going without money to pay their bills.

The uncertainty of how stay-at-home and quarantine orders will impact freelancers has had a curious side effect: Regulators, companies and workers in multiple countries — including Germany and the U.S. — are now discussing how best to protect gig economy participants. Doing so has also increased awareness as to how large the economy has grown. One study predicts such workers will comprise half of the American workforce by 2028, for example, and the amount of money they earn grows every year. Other countries have seen similar jumps, with the value of the Chinese sharing economy reaching $470 billion in 2019, for example.

France, the U.K. and the U.S. were already creating laws to accommodate their rising freelancer populations’ economic and financial needs prior to the COVID-19 outbreak. Each of these countries is now looking at how independent contractors and full-time employees are treated within their laws, as well as examining payment, tax and medical benefit questions. The virus may speed lawmakers’ decision-making processes regarding which protections they will grant freelancers. A recently passed U.S. stimulus bill includes broad unemployment protections under its Pandemic Unemployment Assistance program, for example, while the U.K. has agreed to pay its freelancers or self-employed individuals a grant worth 80 percent of their typical monthly incomes to minimize their current financial stresses. Freelancers in France can apply for similar grants and tax exemptions, and several of the country’s organizations have also announced financial programs for workers such as musicians, performers and visual artists.

These countries are all responding to COVID-19 in ways designed to ease stress among gig workers. Understanding what the pandemic has revealed about the current state of the gig economy and how the virus may be affecting its workers will be critical to rolling out regulations and freelancing’s future.

COVID-19’s Impact On Freelancer Opportunities 

The range of pre-virus debates concerning gig workers’ health, finances and employment statuses prove perceptions have been changing for a while, but COVID-19’s spread appears to have highlighted just how impactful freelancing has become. Knowing 57 million Americans work in the gig economy is one thing, but recognizing that many of them count among the essential workers keeping grocery stores, deliveries and supply chains moving is another.

Recognizing how large and varied this economy has become is key to understanding why the pandemic has affected some freelancers more than others. Food couriers, part-time grocery clerks and truck drivers are seeing more demand for their services and are thus most at risk of being medically or financially impacted by COVID-19. Job postings for mobile delivery platform couriers jumped 78 percent in March, according to one report, and eCommerce company Amazon announced its intention to hire 100,000 workers to fill increasing online orders. Drivers may be more likely to come into contact with quarantined individuals, however, which drove many off the platform, despite the potential financial consequences. Others have made the opposite calculation and have instead been taking on additional available shifts to earn extra income.

Freelancers in other fields fall at the end of each extreme, with some seeing potential work dry up and others finding their options have increased. Dog walkers, graphic designers, writers and wedding photographers may be seeing listings decline as companies cut staff or reduce budgets and couples cancel wedding receptions or engagement parties. They are thus out of work and reliant upon their savings or government aid to buy groceries, manage debts or pay bills, but they may not qualify for government assistance or find that the grant is not enough to cover their needs. Those in Italy will receive approximately €600 ($653) per month during the pandemic, for example, which could be far less than their monthly earnings. Some workers may be seeing more job postings and opportunities crop up as digital marketplaces expand their offerings during the pandemic, however. Freelance hiring platform YunoJuno launched in the U.K. last month and finalized 2,000 bookings, for example.

The COVID-19 outbreak has also highlighted factors that separate full-time workers from contractors — mainly how their earnings and healthcare costs are protected under employment regulations. Out-of-work freelancers cannot access unemployment benefits and may be unable to pay for their health insurance policies, but finding ways to give them protection has been difficult for companies and lawmakers as they confront diverse work levels, incomes and fields. The decisions made regarding these workers now could thus significantly change how they are treated in the future, especially in countries that had been examining their earnings and healthcare coverage prior to the pandemic.

Shifting Gig Economy Regulations  

The recent pandemic has spotlighted gig workers’ lack of benefits. Freelancer and regulator concerns in the U.S. recently led to the Pandemic Unemployment Assistance program, a part of a stimulus package signed into law in late March that included wide-sweeping unemployment coverage for many gig workers. The program will provide many with the same unemployment benefits they would see if they were full-time employees, such as monthly checks and access to state-run healthcare services. Many platforms that rely on gig workers have made their own amendments to relieve the financial and other pandemic-related stresses, such as Uber’s sick pay initiative and DoorDash’s no-contact delivery options.

Such adjustments have reignited the ongoing battle between regulators and larger gig economy companies, however. California regulators argue these workers should be counted as employees, not independent contractors, if they have been given such protections, but platforms maintain they are self-employed individuals and should be covered as such.

These companies are also protesting against the higher taxes they would be forced to pay if gig workers were classified as employees — a distinction that the government will make. This debate is continuing in California and will likely last long after the COVID-19 pandemic resolves. The government’s federal stimulus protections for these freelancers will add another log to the fire for those advocating for additional benefits for the self-employed, however, because it is the first federal regulation with such wide-sweeping coverage for freelancers.

The time when COVID-19 is past is still a long way off, though. All parties are dealing with its immediate impacts, and how necessary these effects will prove to the future of work — for full-time employees as well as freelancers — is uncertain. The space is becoming more important, however, making its workers’ financial, healthcare and payment needs essential components companies must consider as the pandemic continues.

——————————

New PYMNTS Report: The CFO’s Guide To Digitizing B2B Payments – August 2020 

The CFO’s Guide To Digitizing B2B Payments, a PYMNTS and Comdata collaboration, examines how companies are updating their AP approaches to protect their cash flows, support their vendors and enable their financial departments to operate remotely.

TRENDING RIGHT NOW