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California unemployment claims remain high at 230,000; claims from gig workers fall 53% in coronavirus era

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New official figures on new claims for unemployment benefits in California dipped slightly last week but remained at the high pandemic level. Meanwhile, applications for special help for the self-employed and gig workers plummeted 53% last week, even ahead of new rules to stem a surge in suspected fraud.

New applications for conventional unemployment insurance were 230,225 last week, down 13,000 from 243,404 the week before, the Labor Department reported Thursday.

New claims have been 200,000–300,000 since late May, following a big spike just after the state’s shelter orders for the coronavirus went into place in mid-March. Weekly claims were 30,000–50,000 before the virus.

Californians last week made up 29% of the 790,000 new claims nationwide, up from 28% of 866,000 applications the week before.

Residents receiving traditional unemployment benefits totaled 2.76 million in the most recent tally, for the week ending Sept. 5, down 256,000 from 3.01 million the week before.

Californians accounted for 22% of the 12.3 million Americans receiving benefits as of Sept. 5, roughly the same proportion as the in the week before, according to the latest figures available on recipients.

For the new Pandemic Unemployment Assistance benefits for the self-employed and gig workers, put into place in California in late April from the federal CARES Act, new claims totaled 204,700 in the Golden State last week, down by 236,000 from nearly 441,000 the week before.

On Sept. 11, the California Employment Development Department said it will require more proof before payments are made on the new type of benefits, according to the San Francisco Chronicle. The department will no longer automatically backdate claims for the new benefits to the date of claimed work loss and limit multiple claims at the same address.

It’s one of the reforms Gov. Gavin Newsom has said he’s trying to make to the state’s employment safety net, which at one point had a backlog of 1 million claims and was not answering a number of calls.

The roll of Californians getting the new benefits dropped by almost 592,000 the week ending Aug. 29, the latest data available, to 6.39 million, down from 6.98 million the week before. Recipients of these benefits in the state accounted for 44% of the 14.5 million getting them nationwide, down from almost 48% of 14.6 million the week before.

The hardships of the pandemic economy also came just three months after a new California law, Assembly Bill 5, took effect, reclassifying many independent contractors as employees. However, categories of workers have been excluded from that law by legislation and court orders in the months since.

Jeff Quackenbush covers wine, construction and real estate. Before the Business Journal, he wrote for Bay City News Service in San Francisco. He has a degree from Walla Walla University. Reach him at jquackenbush@busjrnl.com or 707-521-4256.

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Workers

Nearly 3 in 5 Gig Workers Earned Less Than $1,000 a Month During Pandemic

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Nearly 3 in 5 Gig Workers Earned Less Than $1,000 a Month During Pandemic
Nearly 3 in 5 Gig Workers Earned Less Than $1,000 a Month During Pandemic

Traditional nine-to-five office workers aren’t the only ones having a hard time during the pandemic — gig workers also have seen their livelihoods greatly impacted.

More than two-thirds — 68% — of gig workers who perform services such as making deliveries and ride-share driving said their total income has declined during the COVID-19 outbreak, according to a new report by venture capital firm Flourish Ventures.

For many gig workers, their earnings aren’t enough to meet their most basic needs.

A precipitous drop in gig workers’ income

Many gig workers saw a dramatic drop in income between March and the summer months of July and August.

In March:

  • 16% of gig workers earned $4,000 or more

  • 32% earned between $2,000 and $4,000

  • 32% earned between $1,000 and $2,000

  • 20% earned less than $1,000

In contrast, during the months of July and August:

  • 5% earned $4,000 or more

  • 14% earned between $2,000 and $4,000

  • 22% earned between $1,000 and $2,000

  • 59% earned less than $1,000

People of color have been particularly hard hit by the crisis. An earlier survey found that job concerns were weighing heavier on Latinos than other groups.

Among Black gig workers, 61% earned less than $1,000 in the past month, according to the Flourish Ventures study. Additionally, 71% of Black workers said they were “very concerned” about COVID-19 compared with 68% of Latino workers and 55% white workers.

Gig workers using savings, borrowing to get by

Gig workers have turned to a variety of measures to withstand the current economic crisis. Nearly two-thirds — 63% — have dipped into their savings during the pandemic. Other tactics taken include:

  • Cutting spending (62%)

  • Borrowing money (55%)

  • Finding new or additional work (39%)

  • Selling or pawning something they owned (33%)

  • Reducing or cutting bill payments entirely (33%)

With a reduction in income, some gig workers are having to choose between using their money to buy food and spending it on bills and other priorities, such as health insurance. Of those who have cut their spending, more than half — 55% — cut back on food. Meanwhile, 24% reduced their entertainment costs and 21% cut back on household bills.

Among the gig workers surveyed, more than 3 in 4 — 77% — received an economic impact payment as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Of those who received a payment, 66% said they were able to cover their living expenses for more than a week compared with 53% of those who did not receive a payment.

Those who did not receive a payment from the federal government were also more likely to feel hopeless about their situation. Nearly half of those who did not receive a payment — 46% — reported a lack of hope. Of those who did receive a payment, only 35% reported such feelings.

Methodology: Flourish Ventures partnered with Steady, a gig worker platform, and 60 Decibels, a research firm, to survey 695 gig workers in five cities in the months of July and August 2020. Among respondents, 31% were from Atlanta, 22% were from New York, 19% were from San Francisco, 18% were from Chicago and 10% were from Philadelphia. When it comes to the racial/ethnic makeup of respondents, 41% were Black, 33% were white and 13% were Latino.

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How COVID-19 accelerated SA’s move to the gig economy

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The pandemic has redefined the workplace for employers and employees: rigid constraints have been removed in terms of place and time in a new remote economy where the workforce has shifted to include the expertise of gig workers.

These changes were happening anyway because of the fourth industrial revolution, but being locked out of our offices for more than six months has accelerated this trend by between five and 10 years.

While the pre-COVID world of work already saw a move away from the old-fashioned notion of having to work in one place at one job, the pandemic has turned traditional employment models on their head, in favour of more agile workforces augmented by experts who are employed on a contingent basis, bringing their particular skill set to a company as and when needed.

Gig workers allow businesses to be more flexible in terms of scaling up or down fast − an essential survival tactic when competition to deliver new products and services is intensifying and the demand for scarce, digital skills such as cloud computing, machine learning, big data, cyber security and more are increasing rapidly.

The lockdown response to the pandemic has dramatically transformed the workplace. Deloitte has called the COVID-19 pandemic “a time machine to the future”, while theHarvard Business Reviewdescribed it as the “most significant social experiment of the future of work in action, with work from home and social distancing policies radically changing the way we work and interact”.

This has upended the workplace, validating the significance of remote working as a viable alternative to the necessity of the physical presence of the traditional business model.

Having become accustomed to having workers scattered outside the office, businesses have become more comfortable augmenting their teams with talent sourced outside the company.

The pandemic has turned traditional employment models on their head, in favour of more agile workforces.

More and more firms are outsourcing skills to complement or expand their current talent pool. This “gig” economy is more efficient and cost-effective, but importantly, allows access to talent in far-flung geographies.

While a shift towards contingent labour of the gig economy was already under way prior to the pandemic, the COVID-19 pandemic has brought the benefit of flexible working into sharper focus, highlighting its crucial role in enhancing business productivity without the associated costs of employing permanent staff.

The gig economy has been a rising trend for some time now, first emerging in the wake of the 2008 financial crisis. Some 64 million individuals in the US and European Union are gig workers − the fastest growing area of job creation, according to McKinsey. In the African context, McKinsey estimates that 63 million people in Africa are involved in some type of self-employment.

These numbers are receiving a significant boost, with most organisations surveyed expecting contingent work to play a key role in shaping people strategy in the near future as professionals seek flexible alternatives to traditional employment.

Many workers who are joining the gig economy are doing so to be more flexible − foregoing job security and other perks to have more control of their working lives.

With this flexibility comes great responsibility to keep skills up to date, as this is no longer the role of an employer.

Accessing a digitised labour market platform for the right talent without being limited by geography is the upside for companies.

Now businesses can expand their talent pool, closing skills gaps in the IT and digital skills space, according to the demands of particular projects.

Employees in turn can work at a growing number of jobs that can be done anywhere there is access to a computer or smartphone. Additionally, according to McKinsey, most independent workers who have actively chosen the gig working style report high levels of satisfaction with it.

The COVID-19 tipping point

Employers and employees have become comfortable with remote work. Previously, many organisations didn’t trust employees to work remotely, concerned they would not be able to manage productivity.

In a survey conducted by Boston Consulting Group, a large group of respondents reported being able to maintain or improve productivity. In the past, many felt the need to engage with clients face to face, often travelling across town, the country or even overseas to attend a single meeting.

Having now spent months meeting via video-conference, productively, it’s unlikely that all meetings will revert to face to face once this crisis is behind us.

Working remotely and attending meetings via video-conference has allowed companies to think more broadly about resourcing.

As businesses have put the necessary controls and processes in place to function effectively without the physical presence of employees, it has opened our minds to the possibility that not all staff will be permanently employed. Relevant expertise can be engaged regardless of location.

Many organisations have decided that when employees return to the office, it will be on a more flexible arrangement. Seventy percent of staff surveyed would prefer a hybrid model − to return to work for some of the time and be based remotely for the balance of their time.

In this landscape, companies will increasingly leverage a blend of external and internal resources, combining a stable, permanent workforce for their core skills requirements, complemented by on-demand, highly-flexible resources as required.

By augmenting the current workforce with gig talent, companies gain a competitive-edge in productivity and service delivery while simultaneously reducing cost and mitigating the financial risk of a large, permanent workforce.

The COVID-19 crisis has given businesses an opportunity to re-imagine their existing talent strategies and incorporate alternative workforce models as a critical lever for growth. This will see a workplace with a blend of onsite and offsite teams, comprising permanent and gig workers.

As businesses begin to adjust to the post-pandemic normal, we will see an increasing move away from traditional, inflexible staffing models as the independent workers and the gig model become mainstream as businesses embrace the benefits of a flexible workforce.

The gig economy has the potential to bring much-needed economic benefits, providing a solution to addressing South Africa’s unemployment crisis by opening up opportunities for independent workers in the South African job market and internationally.

In turn, businesses can leverage this on-demand workforce solution to radically transform the workplace, boosting productivity, efficiency and the competitive-edge of their organisations in the post-pandemic environment.

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Gig economy under the microscope as former Deliveroo driver takes company to Fair Work Commission for unfair dismissal

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The debate over whether food delivery drivers deserve employee rights has once again entered the courts with a former Deliveroo driver taking the company to the Fair Work Commission to argue he was unfairly dismissed.

The case is the first of its kind in Australia against Deliveroo and could see a judge rule that a Deliveroo delivery driver is an employee, rather than a contractor.

Ever since rideshare and food delivery apps launched in Australia, the legalities of the gig economy have been under the microscope.

Despite multiple cases around the country and internationally about alleged unfair treatment by these companies, not much has changed.

And Federal Government intervention might be the only way to change the state of play.

So what’s the issue?

The main sticking point that sees drivers take companies like Uber and Deliveroo to court is whether delivery and rideshare drivers are employees or independent contractors.

Companies including Uber, Lyft, Menulog, Deliveroo and Uber Eats argue they are not delivery or rideshare services but instead provide a flexible platform to allow independent contractors to be in the business of food delivery and ridesharing.

“The companies say these people aren’t working for us, we are providing tech support to a business the contractors are running,” says Andrew Stewart, a law professor at the University of Adelaide.

“This is how their contracts are constructed. The contracts try to make it clear they are providing tech support to a contractor.”

A man with glasses sits on a couch ordering food from his iPhone
On-demand food apps have brought cheap convenience to consumers, but it comes with a cost to workers.(ABC News: James Carmody)

But some drivers, backed by unions, argue they are being misrepresented and should receive worker protections such as minimum wage, annual leave, sick leave, superannuation and be protected by unfair dismissal laws.

Companies including Deliveroo, Uber Eats and Menulog will do anything to stop their riders being classed as employees under the law so they can avoid paying entitlements that could threaten the viability of their business model.

What have previous court cases ruled?

Unfortunately for the workers, there are a few details in their contracts that have continued to prevent courts from agreeing they are employees.

The most common include:

  • The ability for drivers to work for multiple platforms at the same time
  • No requirement of a uniform or for drivers to associate themselves with a company
  • Drivers/deliverers can work whenever they like and;
  • No-one is obliged to take up any jobs

But drivers and delivery riders argue they are not treated in this way and are instead threatened with being blocked from the apps if they refuse too many trips or deliveries.

Australian lawyer Sheryn Omeri, who is currently working in the UK and has represented Uber drivers in Britain, says the Fair Work Commission is having to contend with the novelty of the gig economy.

Uber X is openly operating in Adelaide
Courts around the world are trying to figure out where gig economy workers fall under labour laws.(ABC News: Malcolm Sutton)

“The Fair Work Commission and the courts are accustomed to calling ’employees’ people who are contractually obliged to attend an office at 9:00am and not to leave until 5:00pm and to devote all of their working time to one employer organisation.”

The courts are grappling with the idea that someone may fall within the definition of an employee but have work arrangements that are completely different than anything they have seen an employee do before.

In the case of Uber, Ms Omeri argues that because once someone logs into an app, they must accept a certain number of jobs allocated to them or they will be forcibly logged out, they are being treated the same as an employee.

They also cannot cancel more than a certain number of jobs that they have already accepted without risking their account being permanently deleted.

In a statement, an Uber spokesperson said people who drive and deliver with the company can “choose if, when and where they earn” and said there was “definitely” no requirement to accept a certain number of trips.

“Uber believes that everyone should have access to a set of affordable and reliable social protections, whatever category of employment they are in,” the spokesperson said.

Will upcoming court decisions make a difference?

A close-up of UberEATS delivery drivers on scooters parked in front of a restaurant.
Uber Eats has taken the restaurant home delivery market by storm.(Reuters: Neil Hall)

Unfortunately, the chances of that are slim.

University of Adelaide’s Professor Stewart says, “The one thing you can guarantee is that we will not have certainty unless and until there’s legislation”.

One decision by a court is unlikely to set a precedent for the industry because of the nature of the industry; it’s flexibility.

“Each of the platforms are constantly changing their work methods and contracts. They are constantly reacting to litigation, what’s happening in the market and what their competitors are doing.

“This litigation might end up being an incredibly significant case but it’s not going to be particularly significant until there’s an appeal that makes it up further and into higher courts.”

A precedent could theoretically be set if a case gets to the High Court. But University of Sydney Professor of Labour Law Shae McCrystal says this is unlikely because of the way the law works.

“Just because you hire person A and they are found to be an employee it doesn’t mean person B is an employee. It’s not automatic,” she said.

What else could be done to change things?

Professor McCrystal says what we need is a clearer definition of someone who either works to pursue the interests of another business (an employee) or for their own business (a contractor).

“You need a response that’s not relying on individual employees to challenge their contractual terms to achieve an outcome. You need to be proactive with regulation,” she said.

“We need a statutory definition of employment that is easy to apply and harder to get around.”

A headshot of a woman wearing glasses and blue top.
Professor of Labour Law Shae McCrystal says the law hasn’t caught up to the shifting world of the gig economy.(Supplied: Shae McCrystal)

Some countries have done this — created a new name and definition for workers like Uber drivers called, for example, dependent contractors.

But there are issues with that, Professor McCrystal says.

“I don’t like that because what happens and it has happened, is when you say OK, we’ll have a new category, a midway point, workers who are employees get pushed into that new category.

“A better solution is to stop regulating employees and contractors and just have workers.

“If we can create a model that genuinely distinguishes between someone who is pursuing the business interest of another, and someone who genuinely works for themselves, then we could create a definition of a worker.”

Why hasn’t it happened yet?

In short, it takes time and there’s not a lot of demand for it.

It’s worth noting that while some drivers say the system is failing them, users of these services are benefiting from low prices.

The gaps in labour law that are exploited by these companies allow consumers to get food delivered to their door without leaving the couch, and to catch a cheaper and faster ride home from the airport than if they had to line up at a taxi rank.

Research conducted by the Victorian Government found almost two-thirds of Australians rely on these on-demand platforms to buy goods and services.

If the system changes to benefit the driver, those costs are likely to be passed on to the consumer in the form of higher prices.

Professor Stewart said the simplest answer to creating positive and lasting change to on-demand workers’ lives is to have the Federal Government “step in and sort it all out” by changing our labour laws.

“But there is not the faintest bit of interest by the Commonwealth Government,” he said.

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