Pandemic exposes cracks in US labor market, leaving gig workers feeling desperate and exposed

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Demand for Uber rides and other on-demand services plummets in Seattle amid COVID-19 outbreak. (GeekWire Photo / Curt Milton)

When Uber announced this week it will provide cash assistance to drivers diagnosed with COVID-19, Vasil Denev considered whether getting sick was his best option.

“Uber offered to pay me $500 for two weeks if I get sick, if I’m diagnosed with coronavirus,” the Seattle-area driver told GeekWire. “If I get sick with something else, no. Only if it is coronavirus. In [that] moment, I start thinking it’s probably better to get sick and see some money than be healthy and work for no money.”

Before the coronavirus outbreak, an eight-hour shift driving for Uber and Lyft earned Denev anywhere from $200-$300, before subtracting gas costs. It was a modest income, but he made enough to put food on the table for his kids. Now, as thousands of workers switch to telecommuting, air travel grinds to a halt, and schools, bars, and restaurants are shuttered by the Washington state government, Denev is watching his earnings plummet. Today, he says he’s lucky to take home $80 after 10 hours of work.

“I want to cry about it,” he said. “It’s not easy to work 10 hours and go back home with $80 in the pocket. It’s the 21st century. Who works for $8 per hour in the state of Washington?”

Denev’s story is not unique. Gig workers we interviewed for this story expressed fear, desperation, and uncertainty as their income dries up and their contract status leaves them ineligible for many of the relief programs that help traditional employees stay afloat.

The pandemic is exposing holes in the social safety net pierced by tech companies’ growing reliance on contingent work. The gig economy was born after the last economic crisis in 2008, which means its workforce is struggling with an unprecedented threat.

Low demand for on-demand services

Over the past two weeks, many of Washington state’s largest employers, including Amazon and Microsoft, asked all employees who can telecommute to do so to slow the spread of COVID-19. Neighborhoods once bustling with tech workers are now eerily quiet, as are drivers’ Uber apps, which typically ping with requests from riders in these travel hotspots.

Amazon’s ubiquitous banana stand is gone for now. (GeekWire Photo / Kurt Schlosser)

Uber CEO Dara Khosrowshahi said Thursday during a call with investors and analysts that in hard-hit markets like Seattle, bookings are down 60-70 percent from this time last year.

“Our business is incredibly resilient, and we’ll bounce back, but I recognize that many people — drivers, couriers, restaurant workers — are suffering right now,” he said.

A survey of 200 Uber and Lyft drivers by The Rideshare Guy revealed 80 percent have seen earnings and demand decrease in the past week.

Some of the same people who have stopped hopping in an Uber to get to a meeting are canceling walks for their dogs on Rover, the Seattle-based on-demand pet sitting service.

It’s hitting Rachelle Hohn and Christopher Wolfing hard. Rover is the couple’s only source of income. Their days are typically full, walking dogs, visiting cats, and caring for pets whose owners are tied up at the office. In a typical month, they earn $3,000-$4,000 on the platform. That has plummeted to $500 since the virus hit.

“It’s really scary because we were doing really well just a couple weeks ago,” Hohn said. “I had 10-12 visits a day, which was over $200 a day. I had two today.”

Christopher Wolfing and Rachelle Hohn petsit for Rover full-time. They’ve seen their earnings tank. (GeekWire Photo / Monica Nickelsburg)

One category of the gig economy is bucking the trend: delivery services. Workers who deliver groceries, meals, and other goods are seeing a spike in demand, according to Consumer Reports.

“A lot of gig workers are feeling very exposed — quite literally on the front lines of the crisis, but without sick days or basic economic security,” said Sage Wilson, an organizer with the worker advocacy group Working Washington. “Even in the Bay Area, food delivery is exempted from the shelter-in-place order, so that work continues.”

Online shopping began surging at the outset of the crisis, as consumers stocked up on household goods to prepare to shelter in place. The phenomenon is particularly acute for Amazon, which said this week its warehouses will temporarily stop accepting non-essential items so the company can restock household goods and medical supplies. Amazon is hiring an additional 100,000 warehouse workers around the world to keep up with increased demand.

It’s not just e-commerce. States like Washington and California will only permit restaurants to serve takeout meals, causing a spike in delivery orders from on-demand services like UberEats, Postmates, and DoorDash.

But gig workers who derive their primary income from on-demand services are reluctant to switch to food delivery because the take-home pay is lower. Denev tried UberEats when his ride requests tanked. After a 20-minute delivery earned him $4, he decided it wasn’t worth it.

Hohn and Wolfing had a similar experience.

“We’ve done UberEats before and it was not enough for both of us,” Hohn said.

Despite their reluctance, Wilson said Working Washington is “seeing a big influx of people onto these platforms” from workers who have been laid off from other jobs.

“We are concerned that this is going to exert downward pressure on pay over the medium term, as there will be even more workers chasing the same number of jobs,” Wilson said.

Relief blindspot

Washington Gov. Jay Inslee announced Wednesday he is expanding eligibility for unemployment benefits for workers who are affected by the COVID-19 outbreak. There is already enormous demand for this type of assistance; Suzi LeVine, head of the Washington Employment Security Department, said Wednesday she’s seen a 150 percent spike in unemployment applications since the virus outbreak began.

But increased eligibility for unemployment is cold comfort to gig economy workers in the state. Because they are classified as independent contractors, not employees, they are not eligible for the program.

“The state could establish a presumption that gig workers are employees for this purpose, and pay benefits,” Wilson said. “A more likely path is through federal disaster unemployment assistance, which can pay out benefits more flexibly to contractors and others seeing income loss.”

Some on-demand companies are stepping in to fill the void. Uber, Lyft, Instacart, and DoorDash plan to offer workers two weeks of paid time off if they are diagnosed with the virus, according to The New York Times. Postmates has created a fund in 22 U.S. markets to help cover medical expenses for workers.

Khosrowshahi said Uber is also “actively lobbying to ensure that independent and on-demand workers are included in relief packages.”

But the on-demand industry is walking a tightrope. When companies provide benefits, it’s a signal that their workers are employees. Gig economy companies are only viable because they rely on armies of independent contractors to deliver their services. Those companies are struggling to turn a profit as is. The cost of converting workers to employees with benefits would likely put them out of business.

The coronavirus pandemic highlights how vulnerable a workforce without benefits is, and many tech companies are trying to mitigate those risks by providing stipends to workers who fall ill. But as the gig economy battles with regulators to prove their workers are independent contractors, providing employee-like benefits becomes a tricky proposition.

There may be hope for drivers on the not too distant horizon, however. Uber and other global gig economy services have a birds-eye view of how the pandemic is playing out in cities around the world. Khosrowshahi said during the call that he’s looking at Seattle as a model for West Coast cities and forecasting based on communities that are starting to recover from the outbreak.

“We’re taking Seattle as a model, we’re assuming two months of absolute lockdown/shutdown based on what we’re seeing … Hong Kong is showing us that things get better the minute people get back to work,” he said. “That’s kind of our best guess right now.”

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