According to a new study published by the JPMorgan Chase Institute, about one out of every five drivers in the gig economy was collecting unemployment benefits at the height of the pandemic. These drivers worked for “online platforms” such as Uber and Lyft, which provide ride-hailing services, as well as Instacart and DoorDash, which provide food delivery services.
According to the study released Tuesday, 19% of all gig drivers were collecting unemployment benefits in July 2020. During the Covid epidemic, this was the highest monthly share among driver’s jobs. The investigation looked into 30 million Chase customers’ anonymized personal checking accounts. According to Fiona Greig, co-president of the JPMorgan Chase Institute, the data suggests lawmakers should consider gig workers — especially drivers — when designing the U.S. safety net.
According to the report, drivers tend to live in low-income households and account for the biggest share of gig workers. “Of all platform workers, drivers appear to be the group of the biggest concern for policymakers from a welfare perspective, the report said. “They are the most numerous groups, have the lowest family incomes and were the most likely to have received unemployment insurance during 2020.”
Gig workers, who are treated as independent contractors, are usually ineligible for unemployment benefits in their home states. During the Covid crisis, Congress let them and others like freelancers jobs and part-timers seek benefits through a new federal program called Pandemic Unemployment Assistance. On Labor Day, the program came to an end. “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 urged that portions of the PUA program, which helped millions of people, be made permanent components of the unemployment safety net. According to the JPMorgan analysis, benefit receipt peaked at between 13% and 15% for non-driver gig workers services such as house repair, dog walking, online retailing, and short-term leasing of housing or cars during the epidemic.
The share peaked at 9% for non-gig workers like W-2 employees, even when accounting for differences in factors like age and income. According to the survey, the average take-home compensation for drivers in 2019 was $49,000, the lowest among all categories of gig workers. In comparison, people who offer short-term leases, such as Airbnb owners, earned $102,000 that year.
During the epidemic, low-wage workers across the United States were unemployed at considerably higher rates than other workers. The health crisis wreaked havoc on jobs in the service sector, which are typically in-person and pay lower earnings. According to Opportunity Insights, a cooperative economic project of Harvard University and Brown University, employment for the bottom third of wage earners those earning less than $27,000 per year was still down 26% from pre-pandemic levels mid-August. Meanwhile, positions for the top third of earners, those earning more than $60,000 a year, increased by 10%.
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.