Personal Finance

1 in 5 gig drivers got unemployment benefits at pandemic peak


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About 1 out of every 5 drivers in the gig economy was collecting unemployment benefits at the pandemic’s peak, according to a new analysis published by the JPMorgan Chase Institute.

These drivers worked for “online platforms” offering services like ride hailing (Uber and Lyft, for example) and food delivery (like Instacart and DoorDash).

Nineteen percent of all gig drivers were receiving jobless benefits in July 2020, according to the report, published Tuesday. That’s the highest monthly share among drivers during the Covid pandemic. (The report analyzed anonymized personal checking accounts for 30 million Chase customers.)

It’s also a higher share than other categories of gig workers and more than twice that of non-gig workers.

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The data suggests lawmakers should consider gig workers — especially drivers — when designing the U.S. safety net, according to Fiona Greig, co-president of the JPMorgan Chase Institute.

Drivers tend to live in low-income households and account for the biggest share of gig workers, according to the report.

“Of all platform workers, drivers appear to be the group of biggest concern for policymakers from a welfare perspective, the report said. “They are the most numerous group, have the lowest family incomes and were the most likely to have received unemployment insurance during 2020.”

Unemployment benefits

Gig workers, generally treated as independent contractors, are typically ineligible for state unemployment benefits.

Congress authorized them (and others like freelancers and part-timers) to collect benefits via a new federal program, Pandemic Unemployment Assistance, during the Covid crisis. (The program ended on Labor Day.)

“There was no one to drive to the airport because no one was traveling,” Greig said of work conditions for drivers during the pandemic. “There was a demand shock and income shock.”

Worker advocates have called for aspects of the PUA program — which supported millions of people — to be a permanent fixture of the unemployment safety net.

Benefit receipt peaked at between 13% and 15% for non-driver gig workers (services like house repair, dog walking, online selling and short-term leasing of housing or cars) during the pandemic, according to the JPMorgan report.

The share peaked at 9% for non-gig workers (like W-2 employees), even when accounting for differences in factors like age and income.

In 2019, the typical take-home pay for drivers was $49,000 — the lowest among all categories of gig workers, the report found. (By comparison, people who offer short-term leases — like an AirBnb owner, for example — made $102,000 that year.)

Low earners throughout the U.S. economy were unemployed at much higher rates than other workers during the pandemic. Jobs in the service sector, which tend to be in-person and pay lower wages, were hit particularly hard by the health crisis.

In mid-August, employment for the bottom third of wage earners (who make less than $27,000 year) was still down 26% from pre-pandemic levels, according to Opportunity Insights, a joint economic project of Harvard University and Brown University. Meanwhile, jobs were up 10% for the highest third of earners, who make over $60,000 a year.

The report doesn’t specify how the rate of unemployment receipt among gig drivers compares with other low-paid groups outside the gig economy, such as those in leisure and hospitality.  



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