Uber and under: Why gig workers struggle in pandemic

Until about 10 years ago, Cat Thomson owned a flower shop in Boston’s perennially up-and-coming Jamaica Plain neighborhood, before it succumbed to the economic distress of the Great Recession. 

Today, Ms. Thomson is still her own boss, in a sense. She drives a Lyft, or at least she did until the pandemic struck. 

Now, even as the economy begins a spasmodic reopening from coronavirus restrictions, Ms. Thomson worries that her livelihood will be undercut again, as hard times produce a shortage of riders and a glut of drivers.

“People will be financially strapped in general and will be taking fewer Lyfts,” she says. “Wages will probably go down because when there are more drivers, there is more competition for the work.”

Stuck at home since March, Ms. Thomson is surviving on unemployment plus an extra weekly $600 offered by the CARES Act, the federal government’s largest response so far to the coronavirus. Those payments are set to stop on July 25, after which, she says, “all bets are off.”

Editor’s note: As a public service, all our coronavirus coverage is free. No paywall.

It’s a challenge faced by throngs of U.S. workers, and one hitting especially hard in the arena of gig or “contingent” work, which lacks the steady paychecks and benefits of traditional full-time jobs.

Thanks to the CARES Act, for the first time unemployment assistance is available for the self-employed and gig workers like Ms. Thomson. As of May, a stunning 11 million workers were receiving or awaiting these special Pandemic Unemployment Assistance benefits.  

On Friday, the Labor Department reported that the official U.S. unemployment rate declined in May, as steps toward economic reopening allowed many businesses to rehire. But the jobless rate remains at a level not seen since the Great Depression: 13.3%, or actually 16.4% if people “employed but not working” are properly counted among those unemployed.

The magnitude of the problem, for gig workers alone, is a sign of how precarious these jobs are. Yet to some observers, the upheaval also represents an opportunity to carve a path toward a more humane gig economy.

“This is one of those moments where we have this very dramatic fork in the road,” says Bama Athreya, an economic inequality fellow with Open Society Foundations and the host of “The Gig,” a new podcast about gig workers. “We need to redefine work in a way that gives people decent lives. And the money is there to do that.” 

While unique in its particulars, the arc of Ms. Thomson’s working life so far – from an English degree at Macalester College in Minnesota to small-business owner to salaried employee to gig worker – mirrors the trajectory of much of the American labor experience since 2008. During the Great Recession and the fitful recovery that followed, some workers prospered while others saw only slow gains in pay and others found little job security at all. By 2016, the Federal Reserve Board reported that nearly half of Americans said they had less than $400 on hand for an emergency.

If the recovery from the past economic crash is any sign, it’s likely that many of the jobs, when they return, will at least initially be more precarious than the ones they replace. 

Gigs and gigabytes

Gig work, of course, is nothing new. Capitalist economies have long fielded a reserve army of laborers, from performing artists to office temps to housecleaners to adjunct professors, who can come and go as demand waxes and wanes. Moreover, the flexibility of nonstandard hours has always held an attraction for some workers. 

What is relatively new, however, is the smartphone, and the companies that connect service workers with consumers via apps like Uber, Lyft, Fiverr, and Instacart. Setting the prices and wages on these apps are complex algorithms that parse every tap and swipe and relentlessly seek to optimize worker productivity and customer revenue. 

It’s an arrangement that has attracted many Americans, and not always out of financial desperation. In 2018, according to Gallup, 36% percent of U.S. workers had some kind of arrangement in the gig economy. Separate surveys have found that about 10% to 13% of workers, like Ms. Thomson, rely on gig work for their primary income. 

“To me, it’s been well worth what I’m doing for the pay that I’ve been getting,” says Ms. Thomson, who also paints and DJs. “It’s fun for me. I actually weirdly enjoy driving in Boston.”

Two gig economies

Some describe it as “a tale of two gig economies.” Gallup polling has revealed a sharp divide between “independent” gig workers who experience high levels of autonomy and job satisfaction and “contingent” workers, the temps and on-call workers who are forced into unpredictable hours, receive little feedback, and are afforded scant opportunities for creative expression.

Mike Della Penna, a San Francisco-area children’s entertainer who performs as Mike the Magician, falls decidedly into the former category. A full-time elementary school teacher, Mr. Della Penna relies on magic shows, which he performs in preschools, libraries, and other venues, for about a quarter of his family’s income. 

This translates into a significant financial hit from the pandemic for Mr. Della Penna, his wife, and their 10-year-old son. He says that he was able to convert only about a fifth of his magic shows into virtual ones.

“That’s the negative, losing all that work,” says Mr. Della Penna. But the positives, he says, are manifold. For one thing, he picked up a 10-episode virtual performance with the city of Novato, California. 

“I now have a YouTube channel,” he says. “I now know how to use iMovie.”

More important, like many Americans afforded with the ability to stay home during the pandemic, Mr. Della Penna has used the time to deepen his skills.

“It’s made me come up with new routines and new material,” he says. “It’s made me go into my closet and read my magic books. I feel like I’m going to come out the other side of this knowing my craft.” 

Ms. Thomson, for her part, has been spending more time painting, which she now says she can do without feeling guilty that she’s not out driving.

Meet the new boss

Those experiences reflect a wider trend. For many white-collar workers, the pandemic has offered a glimpse of the kind of flexibility and autonomy that gig work has long offered. No longer physically tethered to their workplaces, workers are getting a taste of the “be your own boss” mentality that first dazzled observers when apps like Uber emerged following the 2008 crash.

But much of this flexibility is illusory, says Dr. Athreya, and it represents part of a larger historical trend in the United States. “This is not new,” she says. “There have been a variety of technologies over the past few decades to fragment work and make it ever more short-term.” 

Dr. Athreya agrees that flexible labor has its role in the economy. “There’s nothing wrong with nonstandard employment,” she says. “The problem is not that everyone needs to be a full-time, formal employee. The problem is with precarious work.” 

Ms. Thomson understands that Lyft’s oft-touted flexibility for its drivers has its limits, because Lyft’s pricing changes according to supply and demand. “You’d be foolish not to drive at certain times of day or certain days of the week, because [if you didn't] you’d be paid only half as much. But that’s no different than any other business.”

These algorithms have the effect of squeezing drivers, as tech platforms compete for riders. For instance, a JPMorgan Chase Institute study found that, as the supply of Uber and Lyft drivers has expanded, their average monthly earnings dropped from $1,469 in 2013 to just $783 in 2017.

“They don’t have control over when they drive, over who they drive, and how much they get for that drive,” says Dr. Athreya.

Now, for Ms. Thomson and many other gig workers, the bigger question is whether job opportunities will revive before unemployment benefits run out.

Editor’s note: As a public service, all our coronavirus coverage is free. No paywall.