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Let’s Create An Economic Infrastructure For The Gig Economy

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When this crisis is studied from the lens of economic history, we will learn more about the winners and losers. Surely, though, we have good reason to know already that a significant group of losers have been gig economy workers.

Who Are They?

No one knows how to accurately count gig economy workers; the US Bureau of Labor Statistics estimated them at 21 million in 2017. The problem is that we do not even have a consistent definition of the term. Are they full-time freelancers or do we include people who work as a W-2 employee part of the time and drive for Uber
UBER
or run an Airbnb during the rest of their work time? What about traditional freelancers – those who have been around since before Uber and DoorDash and the myriad of other gig companies – like architects, dentists, computer programmers, and realtors? That is why estimates range so widely. US Bureau of Labor Statistics estimates about 15 million higher earning self-employed and potentially an additional 21 million contingent workers. The Freelancers Union estimates a total population of 57 million freelancers in 2019. Analysis of the Survey of Consumer Finances (SCF) shows 13% of households have a worker who qualifies as one of the following: self-employed, consultant, or partners at a law, dental or medical partnership.

Gig Economy Workers Lack The Traditional Supports of Employment

Gig workers typically do not get health insurance, retirement plans, or even unemployment if they get laid off; though, an exception was made in the stimulus package for some gig economy workers.

Systemically, what is needed is a partnership between the public, private, and nonprofit sectors to provide these workers with the infrastructure they need. Private employers alone cannot fill the gap.

While private employers feel the pressure from both workers and customers to do more for these workers, they risk making contractors into employees, which defeats the benefits of the relationship for both sides. Employers want the flexibility to use contractors on an as-needed basis and individuals seek the flexibility to design their own hours and be entrepreneurs.

To date, government action has sought to blur the distinction between gig workers and employees by making more of them employees, e.g., a law in California classifying Uber drivers as employees (which is now being contested in California state court). The public sector has limited itself to the interpretation of existing laws governing employment relationships and has not brought any innovative solutions to the lack of gig infrastructure. Broad programs, such as a single-payer health insurance system, that would level the playing field between gig workers and employees face resistance from employees who have access to high quality health insurance.

Thinking Collaboratively Outside The Box

Substantively, what is needed is a way to fill the gap, and there is a way in which all three sectors (public, private, and nonprofit) can partner. Let us consider the example of retirement savings, where many employees have access to an employer-sponsored 401(k) plan. While self-employed individuals have access to a number of tax-deferred retirement savings options, such as Roth and traditional IRA accounts and solo 401(k) plans – in reality they rarely take the initiative to save on a consistent basis. According to data from the SCF, only 10% of the US labor force (approximately 16.2 million workers in 2018) contributed to an IRA. We cannot estimate how many of these individuals are self-employed, but in any event, this number is far short of the freelancer estimates discussed above. Of the households including an individual who is self-employed, only 18% contribute to an IRA, a higher contribution rate than the general population. Despite this higher contribution rate, many gig workers are still not contributing to an IRA nor are they covered by a 401k.

Both the lack of easy access and an employer match negatively impact the savings of the self-employed. Having access to a 401(k) plan with automatic enrollment makes a huge difference to savings. We know from the 401(k) space that employees are much more likely to contribute to a 401(k) plan if there is an employer match. Even without one, the Bureau of Labor Statistics shows that the majority of people who have access contribute, albeit at low rates.

But a match certainly increases both the likelihood of contribution and the percentage of income contributed. The bar graph below shows contribution rates by income with and without an employer match as computed with data from the SCF.

What if the government were to match for everyone? We would end up in the same debate that we have for healthcare. What about employees who like their 401(k) plans? Would employers be disincentivized to provide 401(k) plans?

On the other hand, what if nonprofits were to provide a match, particularly for low-income workers? They could provide a match for a gig economy worker earning less than a certain threshold. That match can go into an IRA account that the worker could keep in any brokerage firm or it could be set up for the worker to receive automatic contributions.

And even better, what if these gig economy companies were incentivized to donate to those charitable institutions? For instance, Uber could donate to the Gates foundation which could match 401(k) or IRA contributions for Uber drivers (or all individuals) earning less than $30K annually.

Could this ever happen? Why not? Perhaps the companies do so for publicity. Perhaps they do so for tax incentives. But in this way, companies can retain the contractor status of these workers and still help them navigate the system of social benefits. Across benefit categories – retirement savings, disability insurance, health insurance – we need creative solutions and new partnerships to enable gig workers to have the financial security they need and the rest of society, which depends on them more and more by the day, to be able to rely on the continued development of the gig economy.

Thanks to Jake Spiegel, Research Associate at the Employee Benefit Research Institute for his contribution to the statistics from the SCF cited here.

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Seattle Enacts Gig Worker Paid Sick And Safe Time Ordinance During COVID-19 Crisis | Jackson Lewis P.C.

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The Seattle City Council has enacted the Paid Sick and Safe Time for Gig Workers Ordinance, which temporarily provides paid sick and safe time (PSST) to “gig workers” for online-based food delivery network companies and drivers of transportation network companies with 250 or more gig workers worldwide. The ordinance takes effect July 13, 2020, and ends 180 days after either (1) the termination of the Mayor’s civil emergency, or (2) the termination of any concurrent civil emergency applicable to Seattle that is proclaimed by a public official in response to COVID-19, whichever is later. However, the law’s other legal requirements, such as recordkeeping, will stay in effect for three years.

This law applies to all such gig workers who had a work-related stop in Seattle at least once in the 90 calendar days before requesting to use PSST. These gig workers may use PSST in 24-hour increments for any reason covered by the ordinance, including:

(1) caring for themselves or a family member for a physical or mental health condition, including a doctor’s appointment;

(2) caring for themselves, a family member, or a household member for reasons related to domestic violence, sexual assault, or stalking;

(3) when their family member’s school or place of care has been closed; and

(4) if the company reduces, suspends, or discontinues operations for health or safety related reasons.

The ordinance will require covered entities to pay a gig worker his or her “average daily compensation,” which is based on each day worked for the covered entity during the highest earning calendar month since October 1, 2019, or since the commencement of work for the company, whichever date is latest.

There are two options to calculate accrual of PSST. First, covered entities can provide gig workers one day of PSST for every 30 calendar days worked in whole or in part in Seattle since October 1, 2019, or upon starting the gig, whichever is later. Alternatively, covered entities can simply provide five days of PSST to gig workers starting on the ordinance’s effective date and let them start accruing one day of PSST for every 30 calendar days going forward.

In certain circumstances, hiring entities may be able to request reasonable verification from the gig worker after three consecutive days of PSST.

Covered entities must create a written PSST policy and provide at least monthly notification of the gig worker’s average daily compensation, and the accrued, used, and available PSST.

This law creates a private right of action for violations of the ordinance. Prevailing gig workers can recover treble (3x) economic damages, interest, a monetary penalty for retaliation, and reasonable attorney fees and costs.  Gig workers can also bring actions on a class basis and obtain equitable relief.

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Gig workers face shifting roles, competition in pandemic

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NEW YORK — There were the two-hour, unpaid waits outside supermarkets when San Francisco first started to lock down, on top of the heavy shopping bags that had to be lugged up countless flights of stairs.

And yet even after signing up for several apps, 39-year-old Saori Okawa still wasn’t making as much money delivering meals and groceries as she did driving for ride-hailing giant Uber before the pandemic struck.

“I started to juggle three apps to make ends meet,” said Okawa, who recently reduced her work hours after receiving unemployment benefits. “It was really hard, because at that time, I could not afford to stay home because I had to pay rent.”

Okawa is one of an estimated 1.5 million so-called gig workers who make a living driving people to airports, picking out produce at grocery stores or providing childcare for working parents. Theirs had already been a precarious situation, largely without safeguards such as minimum wage, unemployment insurance, workers compensation and health and safety protections.

But with the pandemic pummeling the global economy and U.S. unemployment reaching heights not seen since the Great Depression, gig workers are clamoring for jobs that often pay less while facing stiff competition from a crush of newly unemployed workers also attempting to patch together a livelihood – all while trying to avoid contracting the coronavirus themselves.

U.S. unemployment fell to 11.1% in June, a Depression-era level that, while lower than last month, could worsen after a surge in coronavirus cases has led states to close restaurants and bars.

Marisa Martin, a law school student in California, turned to Instacart when a state government summer job as paralegal fell through after a hiring freeze. She said she enjoys the flexibility of choosing her own hours but hopes not to have to turn to gig work in the future. The pay is too volatile — with tips varying wildly and work sometimes slow — to be worth the risk of exposure to the virus.

“We are not getting paid nearly enough when we’re on the front lines interacting with multiple people daily,” said Martin, 24, who moved in with her parents temporarily to save money.

Alexandra Lopez-Djurovic, 26, was a full-time nanny in a New York City suburb when one of the parents she works for lost her job while the other saw his hours cut.

“All of a sudden, as much as they want me to stay, they can’t afford to pay me,” she said. Her own hours were reduced to about eight per week.

To make up lost wages, Lopez-Djurovic placed an ad offering grocery delivery on a local Facebook group. Overnight, she got 50 responses.

Lopez-Djurovic charges $30 an hour and coordinates shopping lists over email, offering perks the app companies don’t such as checking the milk’s expiration date before choosing which size to buy. Still, it doesn’t replace the salary she lost.

“One week I might have seven, eight, 10 families I was shopping for,” Lopez-Djurovic said. “I had a week when I had no money. That’s definitely a challenge.”

Upwork, a website that connects skilled freelance workers with jobs, has seen a 50% increase in signups by both workers and employers since the pandemic began, including spikes in jobs related to ecommerce and customer service, said Adam Ozimek, chief economist at Upwork.

“When you need to make big changes fast, a flexible workforce helps you,” he said.

Maya Pinto, a researcher at the National Employment Law Project, said temporary and contract work grew during Great Recession and she expects that many workers will seek such jobs again amid the current crisis.

But increased reliance on temporary and contract work will have negative implications on job quality and security because it “is a way of saving costs and shifting risk onto the worker,” Pinto said.

It’s difficult to assess the overall picture of the gig economy during the pandemic since some parts are expanding while others are contracting. Grocery delivery giant Instacart, for instance, has brought on 300,000 new contracted shoppers since March, more than doubling its workforce to 500,000. Meanwhile, Uber’s business fell 80% in April compared with last year while Lyft’s tumbled 75% in the same period.

For food delivery apps, it’s been a mixed bag. Although they are getting a bump from restaurants offering more takeout options, those gains are being offset by the restaurant industry’s overall decline during the pandemic.

Gig workers are also jockeying for those jobs from all fronts. DoorDash launched an initiative to help out-of-work restaurant workers sign up for delivery work. Uber’s food delivery service, Uber Eats, grew 53% in the first quarter and around 200,000 people have signed up for the app per month since March — about 50% more than usual.

“Drivers are definitely exploring other options, but the issue is that there’s 20 or 30 million people looking for work right now,” said Harry Campbell, founder of The Rideshare Guy. “Sometimes I joke all you need is a pulse and a car to get approved. But what that means is it’s easy for other people to get approved too, so you have to compete for shifts.”

Delivery jobs typically pay less than ride-hailing jobs. Single mom Luz Laguna used to earn about $25 in a half-hour driving passengers to Los Angeles International Airport. When those trips evaporated, Laguna began delivering meals through Uber Eats, working longer hours but making less cash. The base pay is around $6 per delivery, and most people tip around $2, she said. To avoid shelling out more for childcare, she sometimes brings her 3-year-old son along on deliveries.

“This is our only way out right now,” Laguna said. “It’s hard managing, but that’s the only job that I can be able to perform as a single mother.”

Other drivers find it makes more sense to stay home and collect unemployment — a benefit they and other gig workers hadn’t qualified for before the pandemic. They are also eligible to receive an additional $600 weekly check from the federal government, a benefit that became available to workers who lost their jobs during the pandemic. Taken together, that’s more than what many ride-hailing drivers were making before the pandemic, Campbell said.

But that $600 benefit will expire at the end of July, and the $2 trillion government relief package that extended unemployment benefits to gig workers expires at the end of the year.

“So many drivers are going to have to sit down and decide, do I want to put myself at risk and my family at risk once I’m not getting the government assistance?” Campbell said.

______

Follow @cbussewitz and @Alexolson99 on Twitter

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GIG and Enso set their sights on ‘ambitious’ 1GW solar and storage pipeline

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Macquarie’s Green Investment Group (GIG) and Enso Energy have signed a joint venture, targeting 1GW of subsidy-free solar capacity across England and Wales.

The companies say they have identified the initial projects that will form their “ambitious pipeline” of solar and battery storage sites, all of which have are already grid secured and are being submitted for planning approval.

According to GIG and Enso Energy, the subsidy-free developments will be backed by power purchase agreements (PPAs).

Ian Harding and Andrew King, co-founders of Enso Energy said the partnership with GIG brought together two organisations with “the same vision, to dramatically accelerate the delivery of the benefits of low-cost solar energy to communities up and down the country”.

Solar Media’s head of research Finlay Colville said: “Our in-house market research team came across Enso and Macquarie’s UK solar plans back in April this year. Currently, we are showing ten sites – all nominally at the 50MW-dc level – at early stages, within our monthly pipeline analysis on UK solar. Activity appears to be all pre-application at the moment, with planning seemingly confined to screening and scoping at the local level, and spread mainly in the South East/West of England.

“To put this into context, it is worth recalling that there is currently a pipeline of pre-build large-scale solar sites in the UK well above 8GW, that has evolved since the end of incentives back in 2017. Of this, about 5GW is at pre-application stages of screening and scoping, inclusive of the initial 500MW of Enso/Macquarie activity. However, there is a further 3GW-plus that has gone into full application either waiting for approval or having been approved. Screening/scoping is a low-cost effort; the real money enters the game when full planning applications for 50MW solar farms get into the planning portal.”

The sites will take advantage of newly available tracking and bifacial solar technology, helping to maximise the amount of energy they can produce whilst minimising their footprint.

Battery storage will allow the projects not only produce more flexible electricity output, but also provide auxiliary services and stability to the grid.

Edward Northam, head of Green Investment Group Europe, pointed to the company’s origins in the UK as the “world’s first green investment bank” to highlight all it brings to the project.

“The UK’s solar market holds huge potential to create green jobs and help the UK get closer to its aim of becoming a net zero economy. By combining GIG’s deep technical and financial capabilities with Enso’s highly experienced development team, our partnership has the skills and expertise to unlock that potential, bringing low-cost, low-carbon power to communities right across the UK.”

GIG has supported 7.5GW of renewable projects in the UK, in particular through corporate PPAs. Enso Energy – previously known as Green Frog Development – has 1,500MW of distributed generation in the UK, predominantly gas-powered balancing plants.

Colville continues: “Macquarie’s alignment with Enso is interesting also, mainly owning to Enso being a newish entrant to large-scale UK solar farm planning. The strategy of the companies is therefore something that will be interesting to monitor going forward. Macquarie could certainly have chosen to enter the pre-build/planning phase in a different way, acquiring shovel-ready activity from the host of experienced pure-play solar developers that dominate the current 3GW-plus of sites that have had planning submitted.

“The success of companies that have sought to invest at such an early stage is mixed within the UK solar industry. A few have been highly successful, most notably BP Lightsource, Bluefield and ib Vogt, as examples of companies whose early-stage investments were driven by retaining ownership through and beyond the build-phase. Many others however have not been successful, reflecting the fact that pre-build application is a skillset in its own right, justifying the role of the greenfield pre-build flip model of developer.”

In December 2019, BP Lightsource heralded the return of large-scale solar build-out in the UK, revealing it is pursuing a 1GW project pipeline in its home market. As of last November, the company had deployed over 2GW of solar projects globally.

Similarly, Bluefield Solar Income Fund was reportedly looking to “exciting” new investments at the end of last year, predicting subsidy-free solar in the UK to gain momentum.

“One recalls the grand plans of Scatec years ago trying to get into the UK solar market that highlighted the need to have a partner locally that could deliver on planning success,” Colville finishes. “In an interesting twist, fellow Norwegian operated Statkraft recently announced its plans to enter UK solar at the pre-build phase. Similar to Macquarie, Statkraft has also chosen the domestic-partnering route with a somewhat unproven entity in large-scale UK solar.

“Whether Macquarie or Statkraft will have success through this route is very much an unknown today; either way, each company has the cash and ambition to easily change tactics and move into pre-build shovel ready portfolio purchasing going forward. There will be no shortage of greenfield developers today, currently building up hundreds of MW of shovel-ready portfolios, more than happy to take a call from either of these companies going forward!”

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