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Opinion: Legislation should help rather than hinder the gig economy

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Peter St. Onge, senior economist at the Montreal Economic Institute, and Daniel Dufort, senior director of external relations at MEI

Now that British Columbians can finally hail a ride-share on their phone – a right Quebeckers only won last year – a new threat is emerging, this time from California.

Casual or “gig” work has been around a very long time, but the sharing economy has put freelancers in the spotlight. It’s especially important for workers who can only work part-time: single parents, college students, the elderly and seasonal workers. These groups have long counted on the ability to work flexible hours when they really need to, be they waiters, nannies, deliverymen or translators.

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What has changed is the dramatic creation of new part-time jobs thanks to the internet and cellphone apps. These have expanded the range of services people are willing to hire for, and made it much easier both to work and to hire people for casual work. The sharing economy has created more than 60,000 Canadian jobs a year on average between 2005 and 2016. This has been fantastic for consumers, who can now easily hire someone to deliver the groceries, shovel the driveway, walk the dog, mow the lawn or walk them to their car safely at night. And, of course, now you can call a cab that actually comes on time.

So far, labour laws have helped by sheltering casual workers from the hassle of paperwork, and employers from the risks inherent in hiring permanent employees. Unfortunately, regulators are becoming hostile to this new job creation. California Assembly Bill 5 (AB 5), which took effect on Jan. 1, effectively turns freelancers into employees. The goal was to improve conditions for gig workers, but, in practice, it has meant the disappearance of their jobs. Mass layoffs of part-time and full-time freelance workers have occurred in the media and the film industry, with fears of more to come.

The experience of California illustrates why governments should avoid interfering in the sharing economy. Despite good intentions, forcing employers to provide benefits to contract workers risks pricing low-wage workers out of employment altogether. Studies have also shown that even when the company is paying for the benefits, the costs get directly passed along to the employees. So even workers who don’t lose their jobs end up paying for the mandated benefits through reduced wages.

Empirically, job losses from mandatory benefits disproportionately target low-income workers. A similar phenomenon occurred in Ontario where an Montreal Economic Institute study estimated that 50,000 young workers lost their job in the wake of a hike in the minimum wage from $11.49 to $14 on Jan. 1, 2018.

Losing one’s job not only hurts the worker today, but can negatively affect future job prospects. One study found that the simple fact of having a part-time job reduces the odds of being unemployed a year later by more than 80 per cent – from 25 per cent for unemployed workers to just 4 per cent for part-time workers. Working part-time also considerably increases the chances of having the work situation you prefer a year later, whether full-time or part-time, from 41 per cent for those unemployed to 69 per cent for part-time workers. In other words, a great way to get the job you want is to work any job right now.

Flexibility is key to the sharing economy: to work, to hire, to buy and sell. Even those who do it for the money may only be able to work part-time because of school, or are semi-retired workers who prefer only working a few hours each week. Statistics Canada estimates that only one in four part-time workers (24 per cent) are led to work part-time for economic reasons. Nearly half (48 per cent) have to care for children or other family members, have a disability, or are going to school, while 28 per cent have voluntarily chosen to work part-time. A poll conducted in the United States in August, 2018, showed that only 7 per cent of American contract workers would rather be considered as full employees.

The Canadian economy is already one of great upward mobility. A 2012 study of census data found that 83 per cent of Canadians in the bottom 20 per cent of income earners in 1990 had moved up to a higher income category 10 years later. In 2009, the percentage of those who had risen into a higher bracket was 87 per cent, with 40 per cent having even reached the two highest quintiles. However, temporary jobs at the bottom of the ladder are often a prerequisite for this phenomenon to endure.

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Too often, lawmakers propose reforms that might sound good, but actually make the problem worse. Instead of making it harder to hire freelancers and part-time workers, lawmakers should be making it easier. The freedom to contract and work as one pleases is not only a fundamental right, it is among the most effective ways to help marginal workers who need that first rung on the ladder.

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State Launches Unemployment System For Gig Workers

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CARSON CITY, Nev. (AP) — Nevada has launched a system to accept weekly claims from non-traditional workers for unemployment benefits authorized by the federal government.

The Nevada Department of Employment, Training and Rehabilitation announced late Saturday morning that residents eligible for the Pandemic Unemployment Assistance program could begin filing weekly claims.

The department made the announcement about 2 1/2 hours after saying it and its vendor had worked “tirelessly” overnight to launch the system as scheduled at 8 a.m. but that “technical complications” delayed the launch.

The first payments for gig workers, contract workers and self-employed workers are expected to be made beginning Wednesday, the department said.

“We know there is a great deal of interest and demand for weekly filing and expect our call center and claims portal to be very busy today,” said DETR Director Heather Korbulic. “Staff will continue to work including the upcoming holiday to ensure this functionality is available for Nevadans.” 

Gov. Steve Sisolak later tweeted that his staff told him that 2,000 claimants filed 9,500 weekly certifications in 45 minutes.

The new system is independent of the traditional unemployment insurance system and Nevada was among the last states to get the expansion working.

Nevada’s travel-oriented economy and its workforce have been battered by the impact of closures of casinos and other non-essential businesses in March due to the coronavirus outbreak.

State officials said Friday that Nevada topped the nation with an April unemployment rate of 28.2%, the worst any state has seen since the national jobless rate was estimated at 25% in 1933 during the depths of the Great Depression.

Sisolak has begun allowing businesses to reopen and expand operations that had been restricted, and he has set a tentative June 4 date for reopening casinos. 

The Democratic governor said in a statement Friday that Nevada has continued to see decreasing cases of the coronavirus and hospitalizations of COVID-19 when some restrictions began to be eased nearly two weeks ago.



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Gig Workers Unite While Facing Risk from Coronavirus / Public News Service

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Gig workers make up about a 10th of the workforce and that number is expected to rise during the pandemic.(Angelov/Adobe Stock)

Gig workers make up about a 10th of the workforce and that number is expected to rise during the pandemic.(Angelov/Adobe Stock)

May 26, 2020

PORTLAND, Ore. — During the COVID-19 pandemic, workers for online platforms who shop for groceries and deliver food have become essential for many people stuck at home.

But they face an uphill battle for recognition as well as remuneration.

Heidi Carrico is a Portland-based grocery shopper for the app Instacart and founding member of the Gig Workers Collective. She says she stopped shopping for Instacart and officially went on strike in March because the risk of contracting the virus wasn’t worth the pay.

“Being called household heroes and that sort of thing — that speaks to our heart and soul and what we want to do,” she states. “We want to help our communities. We want to. But that can’t take the place of being able to support our own families.”

The Gig Workers Collective is a collection of 11 labor activists, all women, across the country and has been organizing strikes against companies such as Instacart, GrubHub and Postmates.

The collective is calling for protective equipment, hazard pay and access to paid time off.

After a protest organized by the collective on March 30, Instacart responded by rushing out 10,000 kits of protective equipment. A representative for Instcart says the company has invested $20 million in the last few months to support the health and safety of shoppers.

The gig economy is a growing slice of the labor market. Bureau of Labor Statistics data from 2017 found about 1 in 10 workers is part of this economy. And ballooning unemployment numbers from the pandemic likely will cause numbers to rise.

Instacart has about 500,000 shoppers across the country and responded to increased demand by announcing in April a plan to hire 250,000 more.

But Carrico worries about how these workers will protect themselves.

“I’m seeing a lot of really clever and creative things that people are doing to stay healthy, but if you can’t afford it, then you’re kind of working without a safety net and hoping you don’t get sick,” she states. “I mean, crossing your fingers.”

The Gig Workers Collective has been active since Instacart changed the algorithm for its delivery payments, making working for the company unsustainable in the eyes of some workers. Carrico says this has been the case across the gig economy.

“All gig workers — regardless of the situation, regardless of whether there’s a pandemic or not — deserve a living wage,” she stresses.

Eric Tegethoff, Public News Service – OR

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Gig economy may hold some hope for jobs in age of COVID-19

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Hundreds of thousands of Australians are out of work as a result of COVID-19, but a QUT expert says some may find new jobs through digital platforms, particularly in areas like food delivery, writing, law, accountancy, home maintenance, IT or graphic design.

More than 100 such platforms are now operating in Australia, with workers matched to clients via apps or websites who are then paid through the platform.

“Doors have slammed shut for many employees throughout Australia since the start of the COVID-19 pandemic and there may be alternative work opportunities within the gig economy,” said Professor Paula McDonald from QUT’s Business School.

“Digital platform, or ‘gig’ workers may be eligible for JobKeeper payments but as self-employed workers they must demonstrate a 30 percent reduction in turnover from the previous 12 months. Establishing this may be difficult for some.

“There have also been concerns raised about on-demand drivers having to choose between earning an income delivering food and other goods and being exposed to Covid-19, especially as they face an absence of sick pay entitlements if they acquire the virus or are directed to self-isolate.

“However, the gig economy could provide opportunities for some workers laid off from ‘regular jobs’ to source alternative income.”

Professor McDonald and QUT colleagues Dr Penny Williams and Associate Professor Robyn Mayes, along with researchers from UTS and the University of Adelaide, last year conducted the first ever national Digital Platform Work in Australia survey and have now published their preliminary findings.

“We had more than 14,000 useable responses from adult internet users from throughout Australia and the top five platforms are Airtasker, Uber, Freelancer, Uber Eats and Deliveroo,” Professor McDonald said.

“Overall, 13.1% of survey respondents have, at some time, undertaken digital platform work, similar to recent findings in Europe but larger than any previous estimates in Australia.

“It’s a rapidly growing sector and while for most it is not full-time, a substantial minority treat the income generated from this work as important or even essential.

“There are two main types of digital platform work. The first is performed in-person at a specified location, such as driving, food delivery, caring or home maintenance. The second is computer or internet-based.”

Professor McDonald said the COVID-19 restrictions requiring people to mostly stay at home, along with the closure of restaurants, cafes, hotels and other hospitality venues, has probably driven up demand for some kinds of in-person digital platform work.

“Transport and food delivery were the most common types of work performed by platform workers in our survey. This work is consistent with social distancing rules because the driver usually works solo and has limited contact with restaurant staff and often no contact with customers,” she said.

“Even as some restrictions relax, demand in this space may well increase as a result of people’s reluctance to encounter others on public transport. At the same time, work for on-demand drivers may well decrease due to fewer people having nights out and meeting with others.

“Uber has just announced a cut of 3,000 staff and the closer of 45 offices, including its Singapore base. This comes after the company already shed 3,700 jobs earlier in May.

“Computer or internet-based platform work may also provide options for some who have lost jobs, especially in professional services such as law, accountancy, engineering and architecture, or fields like writing and translation, creative and multimedia work and software development.

“People with technological, creative or professional skills may find work on digital platforms and work entirely from home for clients anywhere in the world. They may even be able to develop new skills and enjoy a level of flexibility not possible in regular employment.

“Constraining such opportunities, however, is the overall contraction of the global economy. The chances of substituting employment income with money earned performing internet-based platform work are also dependent on particular skills sets and having appropriate home-based technology.

“Gig workers should also assess whether income they earn is sufficient for the time and effort they put in. Most platforms don’t pay workers to create and maintain online profiles, respond to jobs that don’t eventuate, negotiate with prospective clients, and travel between paid jobs or tasks.

“For these reasons, many platform workers don’t know how much they actually earn per hour.

“And if more retrenched workers sign onto platforms without an equal increase in client demand, it may create further competition for work and a ‘race to the bottom’ in pay and conditions.”

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