Gig work, which can be defined as any type of income-earning activity that exists outside of traditional employer–employee relationships, was on the rise before the COVID-19 pandemic hit. In both 2019 and 2018, around 41 million Americans were classified as gig workers. Collectively, the revenue these individuals generate is equal to about 6 percent of the U.S. gross domestic product (GDP).
COVID-19 has only accelerated these trends. The Denver-based company GigSmart, which connects employers with gig workers via an app, reported a 25 percent increase in the number of gigs completed per day after the novel coronavirus descended on the United States last March compared with the months prior.
GigSmart, which operates in several U.S. cities, found that Denver was one of the metro areas with the largest increases in gigs, along with Dallas, Las Vegas, Houston, and Chicago. By contrast, San Francisco, which has had some of the strictest stay-at-home orders throughout the pandemic, saw a large decrease in gigs.
Rich Oakes, CEO of GigSmart, says such work is increasingly becoming more popular with both workers and employers. “It gives American workers freedom and control when it comes to their schedule,” he says. For employers, the uncertainty of the COVID-19 crisis has pressed the importance of flexibility on their end. Employers “don’t want to risk another furlough,” says Oakes. He expects the trend to continue after the wake-up call brought by the pandemic. “There are a lot of companies that have deployed a strictly W-2 staffing strategy, and those companies now are recognizing that it is critical to have a healthy mix between not only W-2 employees but third-party, outsourced solutions and independent contractors or gig workers, flex labor,” Oakes adds.
What is considered gig work is pretty loose, but it can include freelance, consulting, and temporary, or project-based work. GigSmart’s data shows that the local industries with the most demand for gig work post-COVID are commercial moving, commercial cleaning, and construction. Additionally, food delivery and consumer goods delivery both are “soaring,” according to Oakes.
While traditional employees receive W-2 forms from their employers, most gig workers, also referred to frequently as “independent contractors,” receive 1099 forms. Employers who hire traditional, W-2 employees are obligated to provide them with certain benefits, such as health insurance, and abide by minimum wage and anti-discrimination laws. Gig workers are entitled to none of these protections.
Denver resident Elexa Gilbert has been delivering groceries through Instacart full-time since before COVID-19, and she has continued to do so throughout the pandemic. She says she loves the flexibility of working for Instacart and that it provides her a similar income, if not better than what she was making in her previous career in middle management, running a call center. However, she says paying $600 per month for her own private health insurance, a necessity of gig work, is a significant downfall of this type of employment. Additionally, though Instacart made PPE kits available to its workers for free, Gilbert, like many others in the gig economy, wound up purchasing her own. “My hand sanitizer exploded in the bag,” she recalls of the PPE kit she ordered from Instacart, and “the mask was almost a joke, basically a cut-out from t-shirt material. I ended up just throwing it away.”
Oakes echoes Gilbert’s concerns about health insurance, saying, “Health benefits are tied to employers. When someone’s embracing the gig economy, you know, what do they do?” However, Oakes is confident the situation will improve. “If gig workers, companies, and state legislators work together, I think there are some great solutions that are going to be developed that will make the working arrangements better for everyone.”
But what happens when gig workers’ work dries up? While those who are self-employed have traditionally been on their own through dips in employment, the CARES Act, which was passed by Congress in March, extended unemployment benefits to independent contractors for the first time. While there have been plenty of issues locally with the Pandemic Unemployment Assistance program, it was extended in December until March 2021—providing an avenue of support for contractors who are struggling.
Pre-pandemic, about 10 percent of Colorado workers identified as self-employed, according to data from 2017. Gig work is on the radar of the state legislature, which considered (and eventually killed) a bill in 2018 that would have made online gig marketplaces responsible for workers’ compensation insurance and unemployment insurance. Furthermore, in September 2019, Governor Jared Polis created an Office of the Future of Work within the Colorado Department of Labor and Employment. One of the group’s focuses is on gig work and how it fits into Colorado’s future.
Gilbert believes the rise in the gig economy will continue, along with a continuation of people working from home. “People are growing accustomed to just having items delivered to their door,” she says. “People get set in their ways and then they have a hard time going back to the way things were.”