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The Gig Economy Is Changing Everything—Is America Ready?

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The structure of the economy needs to adapt as a majority of Americans will make their living as independent contractors in just a few years’ time.

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The days of Americans working 9-to-5, Monday through Friday, in a cradle-to-grave job are all but over. That’s not hype; it’s just the direction the economy is going.

The digital revolution is fundamentally and permanently changing the relationship between worker and employer.

The Gig Economy Is Huge—and Growing

Consider, for example, that today, already more than one-third of American workers don’t work for companies on a W-2 employee basis. Rather, they work on a project or contract basis. If this trend continues as expected, by 2027 more than half of American workers will be working in America’s gig economy.

For the sake of clarity, the gig economy is the quintessence of the free market system at work, and is a direct result of the digital revolution. Much like the railroad in the 19th century and the national highway system of the 20th, universal digital connectivity has expanded and facilitated commercial and labor transactions, as well as the sharing of all kinds and classifications of information.

The digital revolution has truly changed the world much faster and to a greater degree than any other invention coming before it.

A Revolution for Working Americans

The digital transformation of the employer–worker relationship can hardly be overstated. Individuals can now freely market their labor and services as independent contractors to companies around the world. This allows firms to hire independent contractors alongside—and often instead of—full-time workers. They’re typically paid by the job or project.

As you might imagine—or perhaps even know firsthand—gig workers may have more than one job and employer at a time. They often work remotely from their home or, in the case of the massive ride-sharing industry, from their cars. This is an enormous shift in how the economy works. It gives both employers and contractors more control and flexibility over their relationships, schedules, types of work and locations where they perform their work.

But as fantastic and liberating as the gig economy is for tens of millions of Americans and their employers, there are some downsides that must be addressed sooner than later.

Health Care Behind the Times

One of the biggest challenges for gig workers is replacing the affordable health care coverage.

Many former W-2 employees had health care coverage through their old employers. But as contract workers, many are now under-covered or have no health care insurance at all. Excessively high and rising health care costs pose a great risk to the wellbeing of workers, putting a higher burden on social services as well as being a threat to the tax base.

In fact, out of control health care costs are already a national problem. Health care and medical bills are the cause of two-thirds of bankruptcies in the country today. That will only worsen as more working people leave the W-2 employment rolls.

Broken Health Care System a Risk to Millennials, Too

Adjusting our health care coverage choices for the gig economy is not only a political problem, but an economic one as well. It’s not just older, former W-2 workers at risk of financial ruin due to high health care costs. Almost half of millennial workers participate in the gig economy as well.

The more that the younger generation becomes engaged and invested in the gig economy, the more acute the problem will become. In a few short years, low-cost, employee-sponsored health care coverage will become less the norm in the American workforce.

Failure to adapt to the new realities poses a huge risk to the country’s citizens and the overall economy.

California Trying to Kill Gig Economy

It remains to be seen, however, if some of the major gig economy employers, such as Uber and Lyft, GrubHub, UpWork, and others, offer health care insurance to their contract workers, or even if they’re legally or financially able to.

In California, for instance, a new legislation, Assembly Bill 5, has been passed to force employers to treat gig workers as fulltime employees. But it’s a disaster in the making.

Intended to protect gig workers, the new California law only endangers their livelihoods by forcing firms that use contract workers to pay for their health care and other benefits. Gig workers are against it, as are employers.

The pain is already being felt by gig workers residing in California—they’re already being shut out of work opportunities in other states because of the new law that takes effect in January of 2020.

Outdated Tax Code Punishes Gig Workers

The tax code needs to reflect the new realities of the 21st century American workforce as well. Allowing gig workers to fully deduct expenses such as gas, insurance, office equipment, internet connection fees, and other business-related costs is crucial. But under the new tax laws, deductions are capped, making it too costly and even unprofitable to be a gig worker.

The problem is that, like our health care system, many of the tax codes—even some just passed—do more harm than good. Of course, lower taxes are key to a healthy economy; but limiting the rights of contractors to deduct business expenses and mortgage interest payments isn’t the answer. It’s the same as adding more taxes and regulations to businesses. It destroys jobs and economic growth, and only adds to the social services burden.

A New Approach is Needed

But that’s not the only problem facing gig workers in the new economy. Other negatives include missing out on sick pay, Social Security contributions, life insurance, and retirement fund matching. All of these benefits typically come in most employers’ benefit packages. These are not only safety nets for workers, but for society as well.

How all of these benefit needs are resolved going forward remains an open question. But what is clear is that things can’t continue as they are now.

Just as employer-sponsored health care coverage became a part of American working life back in the 1940s in response to new economic conditions, we need a quick response to the rapidly evolving, 21st century gig economy. Low-cost health care coverage must be made available to gig workers. It makes no economic sense for Americans who added over $1 trillion to the economy in 2018 to be left out of affordable health care.

The divide between our outdated systems based on old assumptions and the new economic realities must be bridged, and fast. The legislative arena is where the right protections for gig workers and the gig economy itself must be established. It begins with having access to low group rates for health care coverage and being able to write off all business-related expenses.

Now is the time to rethink how we can structure these very critical aspects of our society and government in accordance with our rapidly evolving structural economic changes. If we don’t, the negative implications for American workers’ health and economic wellbeing are staggering.

James Gorrie is a writer and speaker based in Southern California. He is the author of “The China Crisis.”

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

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Economy

‘Uber for evictions:’ Startup raising eyebrows for listing tenant removal gig jobs | WETM

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(NEXSTAR) – The newest option for flexible gig work doesn’t involve driving your neighbors around or delivering food to their homes, it requires removing them and their stuff for failing to pay the rent.

The website for the startup Civvl advertises process server and eviction crew work on a flexible schedule across all 50 states.

The company website describes the work as the “fastest growing money making gig due to COVID-19.”

According to Civvl’s site, the work involves posting eviction notices, serving papers and assisting with foreclosure cleanouts on behalf of banks, landlords and property managers.

While it may seem like a cruel parody of the gig economy in the age of COVID-19, Vice reporter Ashwin Rodrigues dug into the business and says it appears to legitimate based on its national advertising effort and links to slightly more established gig sites. Rodrigues was unsuccessful in attempts to get a response from the company founders.

“Seizing on a pandemic-driven nosedive in employment and huge uptick in number-of-people-who-can’t-pay-their-rent, Civvl aims to make it easy for landlords to hire process servers and eviction agents as gig workers,” wrote Rodrigues, describing the company as, “Uber, but for evicting people.”

An estimated 22 million people lost their jobs in the early days of the pandemic, and while some of those people have been rehired, many have been lost for good. With government agencies and facing unexpected deficits and stimulus efforts gridlocked, it’s likely that the economic fallout will be felt for months to come.

Renters fearing eviction should look at protections instituted at both the state and federal level.

On September 1st, the Centers for Disease Control and Prevention issued a moratorium on evictions that covered roughly 40 million Americans at risk of losing their residences. In order to be covered, the renters are required to sign a document declaring that they don’t make more than $99,000 annually or $198,000 if filing jointly, and that they would likely become homeless if not receiving protections.

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Startup Civvl Blends Gig Economy With Evictions

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The world of startups can sometimes teeter dangerously close to self-parody. For years now, “Uber, but for ____” has worked as shorthand for hundreds, if not thousands, of upstart tech companies. Over the summer, an app allowing swimming pool owners to rent out their pools by the hour got plenty of coverage; a year earlier, that’s the kind of thing that might have popped up in a satirical novel or television show.

Where do we go from here? A new article at Vice offers one suggestion: a startup called Civvl. As author Ashwin Rodrigues describes it, Civvl is “essentially, Uber, but for evicting people.” As apps go, that sounds like something that would’ve been cut from Sorry to Bother You for being a little too on-the-nose.

The Vice article chronicles Civvl’s growth: it’s been posting ads on Craigslist for work all over the country, citing the pandemic and the damage it’s done to the nation’s economy as an explanation for why its services are in demand. “There is plenty of work due to the dismal economy,” one ad states. Among the gigs offered: process servers and furniture movers.

The article goes into even more detail about Civvl’s origins, including the fact that it’s part of a larger gig economy-based company called OnQall — and that people who have downloaded the app have posted angry reviews about being charged a $35 fee to use it. A startup charging people money to find work evicting other people sounds like the stuff of satire; instead, it’s just another sign of 2020 being 2020.

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Code on Social Security, 2020, lays down gig and platform worker benefits

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In a first, the central government has recognised the gig economy gig workers, platform workers, and aggregators under a wide-ranging proposed labour law that it introduced in Lok Sabha on Saturday. The Code on Social Security, 2020, empowers the central government to formulate social security schemes for gig workers and platform workers around life and disability cover, accident insurance, health and maternity benefits, old age protection, creche, and other benefits the government may determine as necessary.

So far, gig workers have not fallen under any legislation and are not entitled to social security schemes. Companies that rely on gig workers, such as Zomato, Swiggy, Ola, and others, consider such workers as independent contractors, and not employees, and hence leave them out of any social security benefits.

The new code said that social security schemes can be can be fully or partially funded by the government, by aggregators, in part by the state government, or funded by CSR, or “any other source”. Aggregators will have to contribute between 1-2% of their annual turnover, excluding taxes or cess payable to the central government, as contribution to social security funds for gig and platform workers. The aggregator’s contribution will not exceed 5% of the amount payable to gig workers and platform workers.

The bill was introduced in Lok Sabha amidst opposition from Congress MPs Manish Tewari and Shashi Tharoor.

How the code defines gig workers, platform workers, and aggregators

A gig worker is a person who works or participates in a work arrangement and earns from such activity “outside of traditional employer-employee relationship”. Separately, the bill also recognises “platform work”, also a work arrangement outside traditional employer-employee relationship “organisations or individuals use an online platform to access other organisations or individuals to solve specific problems or to provide specific services or any such other activities which may be notified by the Central Government, in exchange for payment”. A “platform worker” is a person engaged in or undertaking platform work.

An aggregator is a digital intermediary or market place for a buyer/user of a service to connect with the seller/service provider. The bill classifies aggregators into the following kinds:

  1. Ride-sharing services
  2. Food and grocery delivery services
  3. Logistic services
  4. e-Market place (both market place and inventory model) for wholesale/retail sale of goods and/or services (B2B/B2C)
  5. Professional services provider
  6. Healthcare
  7. Travel and hospitality
  8. Content and media services
  9. Any other goods and service provider platform

Central govt will lay down scheme specifics

The government will also provide for how the scheme would be administered, what the role of aggregators would be, and the agencies for implementing the scheme, and so on. The government will notify when aggregators have to start contributing.

  • Power to exempt aggregators: The central government can exempt an aggregator or a class of aggregators from contributing funds to social security subject to certain conditions. An aggregator having more than one business shall be treated as a separate business entity or aggregator. [Section 114].

Additionally, the central government will provide for the interest rate payable by aggregators in case of delayed payments or failure to contribute to the social security fund. [Section 114]

Toll free centre: The “appropriate Government” “may” set up a toll free call centre or helpline to give information about social security schemes for unorganised workers, gig workers, and platform workers. The centre will also help with processing registrations for gig workers and platform workers, and help enroll them in the social security schemes. [Section 112]

Government also to establish social security fund

Apart from letting the government form schemes [under Section 114], the bill also provides that the central government establish a social security fund for unorganised workers, gig workers, and platform workers [under Section 141]. For gig and platform workers, the funding can come fully or partially funded from the central the government, from aggregators, in part from state government, or from CSR, or “any other source” (as was mentioned above). It can also be made up of the composition of the offences under the bill.

Social security means “the measures of protection afforded to employees, unorganised workers, gig workers and platform workers to ensure access to health care and to provide income security, particularly in cases of old age, unemployment, sickness,invalidity, work injury, maternity or loss of a breadwinner by means of rights conferred on them and schemes framed, under this Code”.

Scheme under ESIC: The central government can also frame a scheme for gig workers and platform workers, and their family members for benefits admissible under the Employees State Insurance Corporation (ESIC). The government will have to specify the contribution, user charges, scale of benefits, and eligibility criteria in the scheme.

National Social Security Board to be formed, will administer, monitor schemes

A National Social Security Board will be formed by the central government, that will give recommendations on formulating schemes for gig workers and platform workers (and for unorganised workers). It will also monitor the schemes, and advise the centre on issues that arise out of the code’s administration. It will review the state-level record keeping and review the expenditure of the fund and account. The labour minister and labour secretary will serve as chairperson and vice-chairperson.

  • Out of the 40 nominated members (by the centre), 19 will be government officers, including from central government ministries and departments, and from state governments. There will be 21 members 7 representatives each from unorganised sector employers, unorganised sector workers, and eminent persons from civil society [Section 6].

This will also be the board for welfare of gig workers and platform workers. Provided while “such Board serves the purposes of welfare of, or matters relating to, gig workers and platform workers”, some of the members will be replaced by [under Section 114] :

  • 5 representatives each of aggregators, and gig workers and platform workers, nominated by the central government
  • Experts nominated by the central government
  • Five representatives of state governments in rotation
  • Joint secretary in the Labour ministry to serve as member secretary

It’s unclear whether there will be two separate National Social Security Boards, one for unorganised workers [Section 6], and another for gig workers and platform workers [Section 114]. It is more also possible that the same board will have different members, when addressing gig and platform workers.

Mandatory registration with Aadhaar

To avail benefits, every gig worker and platform worker has to register for a unique number, “in such form along with  such documents including Aadhaar number as may be prescribed by the Central Government”. This comes with the pre-condition that gig and platforms workers seeking registration are above 16 years of age and has submitted a self-declaration “containing such information as may be prescribed by the Central Government” [Section 113].

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