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Big jump in unemployment benefit claims from gig workers

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Buried in the details of the Labor Department’s weekly unemployment claims Thursday morning was a significant jump in the number of gig workers filing for jobless benefits, up more than 48% to nearly 424,000.

Gig workers can apply for temporary Pandemic Unemployment Assistance which is specifically for “self-employed, independent contractors, and others who are unemployed as a direct result of COVID-19, who are not eligible for regular unemployment benefits or extended UI benefits,” according to the U.S. Department of Labor.

One person grateful for the extra cash is Joy Chowdhury. He’s an Uber driver in New York City, and when the pandemic shut down most businesses in the city, he was in a bind.

“I was struggling to pay my rent,” he said.

That changed when Congress passed the first COVID-19 relief package.

“It did help me” once he could get unemployment benefits, Chowdhury said. “I’m going to appreciate that opportunity as a gig worker.”

This latest spike in pandemic unemployment claims is likely linked to the brief lapse in the program before the last aid package was approved, new shutdowns, and to the after-holiday slowdown, according to Dmitri Koustas an economist at the University of Chicago. 

Since about a third of the labor force does some work in the gig economy, Koustas said.

“If more people are relying on gig work, a lot of the risk is on the workers themselves.”

That’s because “we’ve attached a whole bunch of rights and privileges and opportunities to employment,” according to Erin Hatton, a sociologist at the University at Buffalo.

Privileges like retirement plans, parental leave, health insurance and unemployment insurance are tied to traditional full-time jobs.

And Heidi Shierholz, a labor economist at the Economic Policy Institute, said that was problematic before, but with the pandemic, “it’s really shown us that there are gaps in our regular unemployment system that you can drive a truck through. We do have the ability to close them, like the existence of this program shows us that we can do it.”

Josh Godfrey in Houston knows this well. His works for DoorDash, and his earnings dropped from $600 to $150 a week during the pandemic.

Without the temporary gig unemployment benefits, Godfrey doesn’t know what he would have done. And now he’s making plans.

“The pandemic kind of pushed me to kind of reevaluate what I’m doing in life and make steps towards getting a more stable job that I won’t lose due to market volatility.”

So he’s going back to school.

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Workers

Can the gig economy support pandemic recovery?

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Reading Time: 5 minutes

 By Anne-Frances Hutchinson

 The waning days of the most catastrophic era in living memory are ahead, and all eyes are on recovery. The rise of remote work and the need for millions of unemployed workers to find alternatives to jobs lost during the pandemic has led to a major shift in the nation’s workforce. Today, over one third of it is made up of gig workers. At the very least, the gigging boom—which encompasses freelance, contract, and temporary work—is expected to outlast the pandemic and be an important aspect of getting the nation’s economy back on its feet.

“There’s a strategic shift happening where employers competing in a war for skilled specialty talent have accelerated their adoption of contingent labor—and it’s not only “gig” app and blue-collar jobs anymore. In fact, 40% of all white-collar workers fall into this category,” said Kevin Akeroyd, CEO of workforce management specialists PRO Unlimited.

Their December 2020 survey of market trends in the gig economy revealed that business pros are welcoming freelance work more than ever. “Not only does this new contingent economy offer increased flexibility and high-paying white-collar jobs, but employers benefit from a more diverse talent pool, greater innovation, better fiscal management, and much more,” Akeroyd reported. “By late 2021, we expect over half of skilled workers will be contingent and employers will need to successfully manage this expanding workforce as part of their overall human capital strategy.”

As employers reeled from the disorientation that marked the pandemic’s earliest days, hiring freezes, furloughs, and layoffs were common strategies used to manage the uncertainty.  Initially, temporary hiring plunged by 56%, a more rapid and deeper descent than in the Great Recession of 2008. Those rates bounced back to normal levels by July, and by September the hiring rate had increased by 9% year-over-year.

“It’s no surprise that freelancing is on the rise, especially now that we have fully disentangled ‘where’ we work from ‘what’ we work on,” said Hayden Brown, President and CEO of Upwork, the nation’s leading online talent staffing firm. “Amid all of the uncertainty brought about by COVID-19, the data show that independent professionals are benefiting from income diversification, schedule flexibility, and increased productivity.

“At the same time, companies are finding that these professionals can quickly inject new skills and capabilities into an organization and strategically flex capacity up and down along with changes in demand and workloads. We expect this trend to continue as companies increasingly rely on freelancers as essential contributors to their own operations.”

In their analysis of the current freelance landscape, Upwork found that while freelancing has increased overall, 10% of the workforce has paused it. The occupations most affected are also those most adversely impacted by social distancing and those where remote work isn’t feasible. Of the employers temporarily halting freelance hires, 88% said they were likely to return to it in the future.

“(T)he shift towards greater workforce flexibility coupled with the necessity to maintain continuity brought new demand for independent professionals from businesses. The changing dynamics to the workforce that has occurred during the crisis demonstrate the value that freelancing provides to both businesses and workers,” noted Upwork Chief Economist Adam Ozimek.

 The advantage of highly skilled gig workers

Although much attention has been paid to the unskilled sector of the gig economy, such as workers providing delivery, shopping, and ridesharing services, skilled professionals will benefit substantially from the labor market’s embrace of contingent hiring. Monster predicts that the gig economy will continue to flourish post-pandemic, as companies approach the future with increased caution and take advantage of the economic benefits of hiring independent contractors.

“Employers avoid the cost burden of recruiting new talent, onboarding, training, benefits, unemployment insurance expenses and the exposure to worker’s compensation, and liability when they use a gig worker,” John Schuller, PMP, EVP, Chief Operating Officer CORE, Headway Workforce Solutions told Monster.

While companies benefit from the agility that on-demand workers bring when hiring to meet the needs of specific projects or responding to market fluctuations, those choosing to freelance do so as well. The freelancing pool added 2 million workers from 2019, over a third of whom are now freelancing full-time.

Upwork found that 12% of the American workforce began freelancing for the first time because of the pandemic, and that 48% of new COVID-era participants see freelancing as a long-term, full-time career opportunity. According to Akeroyd, “Millions of skilled workers have chosen the flexibility in time, location, and work experience benefits of contingent as their long-term career path, and have chosen not to take full time jobs anymore.”

Tim Robbins, VP of staffing and recruiting at Monster, expects contingent hiring to maintain its newfound popularity in the near term, at least. “Historically, the staffing industry has been a leading indicator of economic recovery. As we look to 2021, I see guarded optimism for ongoing recovery across the majority of the key staffing sectors,” he said.

“There are key sectors in the space like warehouse and transportation that are experiencing significant growth, due to changing consumer behavior due to COVID-19,” he stressed. In addition to the rise of temporary hiring in healthcare in response to the crisis, “Growth will also be fueled as hospitality and retail recover from the impact of COVID-19, in the second half of 2021,” he said.

Monster found that the most in demand contingent workers are IT analysts, data engineers, IT/tech project managers, marketing managers, clinical pharmacists, and designers.

Speaking to business.com, Brent Messenger, vice president of public policy and community at Fiverr, said, “When the pandemic first hit and during the first wave of lockdowns, we saw an uptick in personal project-oriented services, such as music and crafting lessons, fitness plans, video game coaching, and the like,” he said. “However, after about a month, we began to see a jump in the demand for business-related services, particularly ones that were linked to bringing traditionally offline businesses online or those that help promote businesses online, like social media marketing and more.”

The Upwork survey showed that 50% of current contingent workers are very highly skilled. The availability of remote work spurred by the pandemic has also made gig work more attractive to 58% of professionals who hadn’t previously considered it.

“Non-freelancers new to remote work say they are considering freelancing in the future because it has made them a more productive worker (73%), they’d prefer working remotely over returning to a traditional office (74%), and to earn extra income to cope with the impact of the pandemic on their personal finances (85%),” they said.



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Financial Institutions Will Increase Use of Gig Economy Workers in Near Future

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More than half (52%) of financial institutions expect to have more gig-based employees over the next three to five years, according to a report from PwC.

This second iteration of PwC’s productivity research surveyed more than 500 financial services businesses globally and received more than 60% of responses from C-suite leaders. The report looked at workstreams implemented by financial services businesses and evaluated their impact on productivity.

The upskilling of the workforce is a key element to improving productivity within financial services. This includes better understanding the workforce, embracing the platform economy and gig workers, and making sure employees are equipped with the right digital tools, specialist knowledge and soft skills to navigate in the new normal of the business world. Firms need new capabilities — both in-house and through outsourcing — as technology solutions increasingly involve collaboration with third parties.

Despite increasingly available on-demand talent, most institutions still rely primarily on full-time and part-time employees. Among respondents, contractors comprise just 9% of the workforce and gig-economy talent makes up just 5%.

PwC believes that gig economy employees will likely perform 15% to 20% of the work of a typical institution within five years, driven by continuous cost pressure and the need to access digitally skilled talent.

Beyond the gig-economy, crowd-sourcing solutions also were highlighted as key contributors to improve productivity. Crowd-sourcing has more than doubled since 2018 and was cited by 50% of the survey’s participants (up from 21% in the first survey). Eighty percent of respondents who leverage crowd-sourcing believed it added ‘high value’ to their organizations. This is an increase from just 39% who felt it would add value in 2018.

“Leaders in the industry are looking seriously at their workforces to evaluate which roles need to be performed by permanent employees and which can be performed by gig-economy workers, contractors or even crowd-sourced on a case-by-case basis. COVID-19 and remote working have opened the door to accessing talent outside of a firm’s physical location, including outside of the country,” John Garvey, global financial services leader for PwC US, said. “What we are seeing now is a talent marketplace for gig workers in financial services competing to take advantage of their specialist skill set and boost productivity within their businesses.”

“Gig economy workers also add value by immediately bringing the digital skills needed by financial services firms to improve functions such as customer experience and improving institutional resilience while the full-time workforce is being upskilled,” Nicole Wakefield, global financial services advisory leader for PwC Singapore, said.

However, there are challenges for financial services businesses taking on gig economy working which will require overcoming several obstacles. The survey showed that the most common issues cited by respondents included confidentiality concerns (44%), a lack of knowledge (43%), regulatory risk (42%) and overall risk avoidance (37%).

“Many of the most valuable companies in the world share one thing in common: They have embraced the platform economy as a business model,” Garvey said. “They operate with relatively few full-time employees and an increasing percentage of gig-economy talent and skills that they can access on-demand, making the organizations far more innovative, nimble and cost-efficient.”

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Gig Workers United launches new campaign to unionize app-based delivery jobs

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One year after the historic ruling in Ontario that Foodora couriers are dependent contractors, organizers in the Greater Toronto Area are setting their sights on legislative change to improve gig workers’ working conditions.

Announced today, the Foodsters United campaign has been relaunched as Gig Workers United. The name change also comes with a broadened scope, as organizers seek to support all app-based delivery workers in the GTA.

First launched in summer 2019, the Foodsters United campaign fought to unionize Foodora couriers in the GTA with the Canadian Union of Postal Workers. Along the way, it brought about the Ontario Labour Relations Board’s landmark decision in February 2020 that Foodora couriers were dependent — not independent — contractors, which affirmed their right to unionization.

“Legislation has not kept up with the pace of technological change.”

But that win was bittersweet, as Foodora pulled out of Canada three months later. The company cited profitability issues, despite posting surging first-quarter revenues in 2020.

Its parent company, Delivery Hero, subsequently agreed to a $3.46-million settlement with former Foodora couriers in Canada.

“The Foodsters have broken many barriers to become the first app-based workers in Canada to form a union, but the fight doesn’t stop here,” said Jan Simpson, national president of CUPW, in today’s press conference.

Supported by CUPW, Gig Workers United is calling for livable wages, enforcement of workers’ rights and health and safety support. The key, organizers said, is changing labour laws to stop worker misclassification.

“Legislation has not kept up with the pace of technological change,” said Brice Sopher, an organizer and courier with Uber Eats, at the press conference.

“It’s time that … our politicians wake up and make those changes and address them now because an increasing segment of the population is going to be subject to this situation. So if we don’t stop it now, then we’re going to have a much more impoverished population.”

Organizers added that the COVID-19 pandemic has increased the importance of this call for change.
Narada Kiondo, a bicycle courier with a number of food delivery apps, said at the press conference that besides facing a higher risk of infection as a frontline worker, couriers often don’t have access to washrooms. The job is also physically taxing, making all paid sick days important for gig workers, organizers said.

With workplaces contributing to the spread of COVID-19, there have been calls for Ontario to provide paid sick days. But the Doug Ford government has repeatedly put the onus on the federal government, despite federal employment minister Carla Qualtrough saying that a provincial program would not duplicate what Ottawa currently offers.

“We should all be demanding that we be paid better.”

At the same time, some couriers such as those with Uber Eats said they have faced a gradual but significant base-pay cut over the past year, which could go as low as $3.99 per trip. Uber previously told The Canadian Press that the change was made to “better reflect each trip’s total time, effort and distance and include travel to the restaurant.” The company said couriers could turn down trips with prices that are too low for them.

“It’s a major slap in the face for myself and all the gig workers out there who are putting their lives at risk and their health at risk delivering food and groceries while everyone else is being told to stay at home,” said Kiondo.

When asked about the idea of basic income, organizers said it would help on a day-to-day level when coupled with paid sick days. But they view it as a stopgap measure.

“[The industry] is exploitive and extractive,” said Arash Manouchehrian, a delivery courier, at the press conference. “We should all be demanding that we be paid better.”

With its relaunch today, the Gig Workers United campaign coincides with a quickly growing organizing effort around the world by gig workers. For instance, the U.K.’s Supreme Court recently ruled that Uber drivers are workers instead of self-employed contractors. And while the campaign’s current focus is on the GTA, organizers said their ambition is bigger.

“This is an industry problem and it’s a national problem,” said Sopher. “So the scope is ultimately to change the industry and to improve lives for all gig workers going forward. That is our aspiration.”



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