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Coronavirus will hit gig workers particularly hard

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Investors in the gyrating US stock markets might be forgiven for feeling seasick this week. On Wednesday, share prices rose more than 4 per cent after the Super Tuesday primaries and approval by the House of Representatives of an $8bn package to combat the coronavirus outbreak.

It is easy to see the reason for cheer: $8bn is far more than the $2.5bn initially suggested by the White House, and it will be mostly directed to hospitals and medical research. However, before investors become too excited, they should note what is sadly missing in this bill: a commitment to plug the holes in America’s medical and social safety net that have been exposed by the disease, known as Covid-19.

This matters. If these holes go unfilled, and the virus keeps spreading, this could exacerbate the potential economic pain. And, as US Federal Reserve officials know only too well, it is foolish to rely on monetary policy to cushion this blow — notwithstanding Tuesday’s decision to cut rates by 50 basis points.

To understand why America’s weak safety net matters, consider an issue that has sparked hot debate in recent years: the rise of the so-called “gig” economy, in which workers are paid piecemeal for contingent work, often linked to tech platforms, such as ride-hailing and food delivery.

Tracking the size of contingent activity has always been notoriously hard. However, economists estimate that about a quarter of American workers currently do gig work, considerably higher than in previous years, and nearly half of these rely on it as their primary source of income.

In some ways, the gig economy has been positive for US growth: the creation of new tech-related gig jobs has helped to push unemployment down to 50-year lows. It also seems to have kept a lid on wage growth and inflation, enabling the Fed to keep rates low.

But the dark side of this arrangement is insecurity. Contingent compensation is unpredictable. Gig workers generally lack access to company-funded unemployment insurance, sick pay and medical benefits. In Europe, this is offset by public safety nets; not so in America, for the most part.

Well-paid gig workers, such as software engineers, can cope with this insecurity by purchasing private insurance. But many gig workers are low paid and sacrifice this to join the pool of 27.5m Americans who lack health insurance. Others buy cheap policies that require them to pay the first several thousand dollars of medical bills themselves.

This creates obvious medical risks with the coronavirus. The cost of testing and treatment will deter some Americans from seeking care if they fall sick. Tales of sky-high bills are buzzing in the media. A Miami man says he received a $3,270 bill for a voluntary coronavirus test; an American evacuated from the outbreak’s epicentre in Wuhan China received a $3,918 bill for mandatory quarantine in San Diego. The lack of sick pay may encourage unwell gig workers to keep working. And many low-paid gig jobs cannot be performed at home. Delivering a pizza or driving an Uber car still requires a human.

If the coronavirus sparks a lasting downturn in travel, tourism and the retail sector, it will hit low-paid contingent workers particularly hard. Indeed, United Airlines cut domestic flights by 10 per cent and the threat of more could shatter confidence. This matters in a country where so many households live pay cheque to pay cheque that nearly one-third of American families could not meet an emergency $400 bill from existing resources.

What can be done? Congress could make coronavirus testing and quarantine, and perhaps treatment, free for all US residents who lack insurance. New York state has taken a first step by waiving co-payments for testing. But much more is needed. Laurence Boone, chief economist at the OECD, has suggested that governments should use “temporary direct transfers” of cash to support vulnerable households, if the virus spreads. That would deliver far more impact and reassurance than the vague pledge of $1bn in loan subsidies to small companies in Wednesday’s bill.

But American leaders must start a proper debate about creating a better longer term safety net for gig workers. California is doing this in a piecemeal and imperfect manner. However, federal action is needed. Congress could start by considering some sensible proposals on portable benefits from senator Mark Warner and the Aspen Institute.

But none of this was included in this week’s House bill. And Fed chairman Jay Powell knows rate cuts are not enough but is wary of wading too directly into policy matters. Therein lies a potential tragedy.

gillian.tett@ft.com

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Companies

GigSmart saw 460% jump in gig work postings since pandemic began

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Dive Brief:

  • GigSmart, a mobile staffing app, saw a 460% increase in hourly gig postings since March, even as companies closed down and laid off workers due to the coronavirus pandemic, according to a Nov. 17 announcement from the company.
  • Many of the placements were in construction, food service and warehouses — all industries hard hit by the pandemic lockdowns. 
  • GigSmart also increasingly had its workers placed in healthcare, particularly at senior living facilities, the announcement said. “We have a high turnover rate because it can be a challenging environment to work in,” Susie Stebbins, director of HR for Senior Housing Options, said in a statement.

Dive Insight:

GigSmart’s sharply rising usage numbers reflect one avenue for talent management post-pandemic. A June Gartner report noted that changes to workplace protocols instigated by the pandemic may lead to an increase in contingent work, something that could shape people strategy for years to come. Employers turn to contingent hires to save money and improve efficiency, Gartner said key considerations during the pandemic era.

Changes wrought by COVID-19 only heightened current trends in the contingent work space. A February PeopleReady report said that gig workers were aiming to take on more work in 2020. And a September 2019 Randstad survey said that 1 in 4 companies were replacing employee positions with contingent jobs in an attempt to remain agile in a tough market.

Before the pandemic, employers more broadly were shifting to what Randstad called a total talent management model — “an organization’s acquisition and management of all human talent, including permanent hires and contingent workers, as well as non-human talent such as robots, AI, software, and automation.” That shift comes with its own challenges; back in 2018, companies were still figuring out how to organize people data and understand exactly who worked for them.

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Gig economy ‘crisis’ needs basic regulation: TWU

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The gig economy is in “crisis” and there is a need for urgent action from the federal government after the deaths of five delivery riders in Australia in the last two months, Transport Workers’ Union national secretary Michael Kaine said.

On Monday night an UberEats rider died following an accident on a road in Sydney’s CBD. He is the fifth delivery rider to die on Australian roads in just the last two months.

The recent tragedies have reignited calls for the federal government to step in and regulate the gig economy, especially on the definition of employee and private contractor, to ensure gig economy workers are afforded the same benefits and protections employees receive.

The federal government has largely brushed aside concerns and said regulation of the gig economy is a matter for state governments.

UberEats
Crisis in progress: The gig economy is crying out for better regulation according to the TWU

With four of the recent deaths happening in Sydney, the New South Wales government has this week established a taskforce to investigate if improvements are needed to improve the safety of delivery riders, while the Victorian government considers to consult on the final recommendations of its inquiry into the on-demand economy.

This push for federal regulation is being driven by the Transport Workers’ Union, which has been bringing attention to the recent deaths and campaigning on the issue for several years.

Its national secretary, Mr Kaine, said action is needed to better protect workers in the gig economy, especially delivery riders.

“We’re now in a position where it’s quite clear there is a crisis here. Workers are under incredible pressure – they are left to their own devices, they’re not trained and they’re given no protective equipment to support them when working,” Mr Kaine told InnovationAus.

“They’re left at the whim of a company and an algorithm. They have to answer jobs in seconds and if they fail to do that they can be kicked off the platform. There’s a perfect storm against them – it’s a recipe for disaster. The time has come for urgent action.

Delivery riders are not given adequate training, proper safety gear or provided with insurance, and their families are not afforded compensation, Mr Kaine said.

The TWU this week wrote to federal Workplace Relations Minister Christian Porter calling for an urgent inquiry into food delivery companies such as UberEats.

“We’ve written to him before and he simply relies on the old fashioned notion of employee and independent contractor. The time has come in the modern economy to accept that is not good enough. We’ve called on him to lodge an urgent inquiry to investigate UberEats and other food delivery platforms,” Mr Kaine said.

The federal government should also establish a tribunal to inquiry into the gig economy and hold the tech companies to account, he said.

In response, Mr Porter said that the safety of delivery riders is a matter for state governments, but rider safety will be included as a priority agenda at the next meeting of national work health and safety ministers.

“Every worker, no matter how their employment arrangements are structured, has the right to a safe working environment and to come home to their families at the end of each day. For delivery riders, maintaining that safe work environment is a state and territory government responsibility,” Mr Porter said in a statement to InnovationAus.

“However, it is clear that a problem exists in relation to delivery riders and changes need to be made by state and territory governments to prevent further injuries or loss of life. While the Commonwealth has no direct authority to make changes in this area, it can play a leadership role on issues such as this.”

But Mr Kaine said that while state governments have a “residual function” in schemes such as worker compensation, the federal government can take action.

“We’re now getting to the stage where this inaction has shifted responsibility onto government. You can’t continue to ignore circumstances where workers are exploited and they’re literally dying and avoid responsibility and accountability to the community for that,” he said.

“We’ve been saying this for a very long period of time and the response we’ve been getting back is dismissive, and falls back on ancient notions of artificial legal labels and that’s not going to do the job in the modern economy. This federal government needs to get up to speed, to come into the 21st century and figure out what it is they need to be doing to make a difference.

“This is an indictment on the federal government that they are so ideologically paralysed that they can’t see what’s right in front of them – reform is needed.”

Shadow workplace relations minister Tony Burke said the federal government does have a role to play in regulating the sector and protecting delivery riders, and the claim that those completing this work are independent contractors “denies reality”.

“It’s not safe and it needs to be, it’s not secure work and it needs to be and we can’t have a situation where for the sake of convenience we put up with there being a section of the Australian workforce that effectively has no rights,” Mr Burke told ABC News.

“It’s chilling. When you think that the responsibility for their safety is being governed not by an employer but by an algorithm, that’s how they’re working. When they work, whether they work, when they get a shift and how quickly, it’s all being governed by an algorithm.”

At the state level, the NSW government this week launched a new taskforce to investigate whether the recent deaths of delivery riders in the state could have been avoided and if better protections are needed. The taskforce will be led by SafeWork NSW and Transport for NSW.

The inquiry will also inform another piece of research being conducted by the Centre for Work Health and Safety, which is examining potential regulatory reforms to improve safety in the gig economy.

In Victoria, a two-year inquiry into the on-demand workforce, led by former Fair Work Ombudsman, recommended earlier this year that the federal government take the lead on a number of significant reforms to the gig economy, including clarifying the worker status issue, a new agency to facilitate streamlined support and fast-tracked resolutions and a code of conduct.

“It was the universal view of those participating in the inquiry that any change should be led nationally. Reforms confined to a single state risk creating yet more complexity and inconsistency and could impose an unnecessary regulatory burden on national businesses,” Ms James said in the report.

“The Commonwealth is therefore best placed to deliver genuine choice, fairness and certainty for workers and business. The inquiry suggests it should grasp this opportunity to deliver the recommendations set out in this report and make balanced and fit-for-purpose revisions to the current system.”

Consultations on the final report from the inquiry closed in October, with the Victorian government now considered these and the report’s recommendations.

Do you know more? Contact James Riley via Email or Signal.

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New SEC proposal outlines rules for giving equity to gig workers

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The U.S. Securities and Exchange Commission has proposed rule changes that would make it possible for gig companies to give equity to their workers as part of their compensation if they meet certain requirements.

Why it matters: This is something gig companies including Uber and Airbnb have asked the SEC to do over the years as a way to share their companies’ upside with these non-employees.

Details: The five-year pilot program would allow gig companies to issue equity as long as it’s no more than 15% of a worker’s compensation during a 12-month period, and no more than $75,000 in value during a 36-month period (based on the share price when it’s issued).

  • Individuals cannot negotiate whether they want equity or cash in exchange for their services.
  • The company has to reasonably try to prevent gig workers from reselling the equity.
  • These requirements also apply to public companies, except for the prohibition on stock reselling.
  • Between the lines: While the document doesn’t mention home-sharing hosts (like those on Airbnb), it does specify that marketplaces for the permanent sale of real estate, “as opposed to the temporary rental of real estate,” would not qualify. Airbnb, which is in its pre-IPO quiet period, declined to comment.

Yes, but: Commissioners Allison Lee and Caroline Crenshaw opposed the proposal in a joint statement, arguing that the commission is making this exception for gig companies but not for other alternative workers such as freelancers, temporary help agency workers, and on-call workers despite mentioning them in its discussion of the modern work landscape.

What’s next: The proposal is open to public comment for the next 60 days, after which the SEC will assess whether to move forward.

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