How COVID-19 Transformed the Gig Economy
By Ben Rapp
On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic, and things have not been the same since. Thousands of people were dying every week in the United States alone. People were scared to go outside and many lost their jobs. As cities across America began sheltering-in place, people began relying on the gig economy. Restaurant and grocery delivery companies such as Doordash. Postmates, UbearEats, Instacart, and Shipt helped many throughout this pandemic both by providing on-demand deliveries of groceries and other essentials for those who were unable or unwilling to leave their homes. Additionally, many individuals who had lost their jobs or needed a supplemental source of income flocked to these platforms for employment. Even as lockdown restrictions are lifted and vaccines are distributed, enabling more people to leave their homes and return to their traditional jobs, it is clear that COVID-19 has transformed the gig economy, and it is reasonable to predict that it will never return to what it once was.
In the beginning, the pandemic forced customers to order food and groceries online, many of whom had never tried these services before. But, as the necessity fades, consumers continue to use these services due to their convenience. According to Forbes, prior to the pandemic, 81 percent of consumers have never ordered groceries online. However, during the pandemic, nearly 79 percent of shoppers were doing their shopping online. In August 2019, online grocery sales in the United States totaled $1.2 billion. This number increased by six-fold to $7.2 billion in June 2020. Even if this number does not remain as high as it was at the peak of COVID, it is evident that there will be more people shopping online for groceries after the pandemic.
In addition to providing essential services to those who were avoiding leaving their homes, the gig economy has also provided employment opportunities to those who were laid off from their jobs or needed a supplemental source of income. The gig economy provided workers with more flexibility and even sometimes more income than a traditional 9-5 job. This was incredibly valuable to those who had other responsibilities during the pandemic, such as parents who needed to homeschool their children. Forbes estimated that 35 percent of the US workforce was composed of the gig economy in 2020, an increase of at least 15 percent from 2014. Some experts predict this number will be even greater by 2023, with expectations that the gig economy will make up more than half of the US workforce. Despite the opportunities the gig economy has presented for workers, there is also a growing challenge to confront as the pandemic nears its end: competition among gig workers. An increase in the workforce has led to increased competition to find work. Many times, when a worker is available for work, there may not be work available to them. When the pandemic began, gig economy platforms didn’t have enough workers to fulfill the incredibly rapidly increasing demand. Within a few months however, thousands of gig workers were onboarded, and eventually, the supply of labor exceeded demand.
COVID-19 has also brought a lot more attention to the legislation surrounding gig work. There has been a long debate about whether or not gig workers should be considered employees who are entitled to benefits or independent contractors who are not. As essential workers who put themselves on the front lines during a dangerous period, some workers were provided hand sanitizer and cleaning supplies at no cost. Some were eligible for unemployment benefits when not earning more than $504 in a given week, and some were provided with relief funds if impacted by COVID-19. However, a clear definition has not emerged, and benefits are not equally distributed. It is a complicated policy to construct due to the market’s flexibility, but the pandemic has certainly given a lot more attention to the issue. For example, in California, Prop 22 passed on November 3, 2020 classifying Lyft and Uber drivers as employees and giving them rights that they previously lacked. Clearly, COVID-19 has had a huge impact on the gig economy. As things progress, it will be vital to match customers’ demand for orders with the supply of workers as well as workers’ demand for work with the supply of orders. It may take some time to properly determine how the demand for deliveries will level-off following the closure of the pandemic and the demand for gigs. Some customers may return to shopping for themselves and some gig economy workers may return to their 9-5 jobs. It is also evident that the conversation regarding the classification of gig economy workers is far from over. The gig economy has definitely been transformed and will likely not return to what it was before the COVID-19 pandemic.
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