As a staff writer, I cover trends in side gigs, app-based work and odd jobs, collectively referred to as “the gig economy.” These trends are volatile during a good year, and 2020 was anything but a good year.
Last year, I wrote a similar article about what to watch in the gig economy in 2020. And I’ll be the first to tell you I got some stuff laughably wrong. No one could have predicted a pandemic that steamrolled our economy.
But as things inch back to some sense of normalcy, there are a few trends that we can reasonably expect in 2021. Here’s what I’ll be watching.
1. An Overall Boom in Gig Work
The gig economy ballooned like never before in 2020.
According to an annual survey commissioned by Upwork, the freelance economy (including gig work like ridesharing as well as professional freelance services) soared to $1.2 trillion this year — a 22% increase from 2019.
On its face, that might sound like a great thing, but it’s more complicated. Instead of breaking our 9-to-5 chains, gig work has instead become a vital safety net. Gigs were there for millions of Americans when traditional jobs were not.
So when the gig economy sees huge gains like it did this year, that could be an indicator that the traditional economy is tanking and forcing people to pick up second or third jobs to get by.
Those gains weren’t distributed evenly, either. Similar to the traditional economy, events and entertainment-related sectors shrunk considerably, while delivery and e-commerce shined. With a vaccine rolling out and local economies creaking back open, it’s likely those discrepancies will start to even out in the coming year.
The overall job market, however, will take much longer to recover. Some economists predict things won’t be business as usual until 2024.
In the meanwhile, gig work will remain a makeshift safety net and continue growing in 2021 and beyond.
2. Side Gigs — Without the ‘Side’ Part
In a perfect economy, you wouldn’t need a side gig because your day job would be stable and would pay you well enough to cover a comfortable standard of living.
In an imperfect but functioning economy (think U.S. circa 2019), you might want a side gig to help you meet a goal. You have a solid day job but maybe you want to start Ubering temporarily to help you pay off your student loans or credit cards. Better yet, you launch a side gig to hone new skills that can translate into a better job — or even your own business. (This is really the best side-gig scenario. We highly recommend creating a similar “exit plan” for your side gig before taking on more work.)
Then there’s the pandemic economy. Cue the sad trombone. It has become increasingly common for people to cobble together their entire income off a smattering of different gigs. There’s no main gig or job. So none of them are technically “side” gigs.
In an interview with The Penny Hoarder earlier in the pandemic, Shiftsmart President Patrick Brandt, said he sees this gig economy trend playing out on his app, which provides a free service that pairs users with local or remote gig work and pays them per shift.
“People who were just using us for [side money] are now using us to stack shifts across multiple opportunities to fulfill their entire income,” he said.
Until the traditional job market recovers, more people will be forced into a similar situation.
3. A Coming Cliff for Some Gig Workers
For the first time ever in 2020, people without adequate work history — including independent contractors and gig workers — could qualify for unemployment benefits through a new program called Pandemic Unemployment Assistance.
The program was created through the $2.2 trillion CARES Act back in March 2020. It has been a lifeline for millions of Americans who are out of work due to the pandemic but don’t meet the requirements for regular unemployment insurance. The December stimulus package extended PUA into March 2021. Plus, it rebooted the enhanced weekly payment program known as Federal Pandemic Unemployment Compensation (FPUC) — though this time as a $300 weekly boost instead of the original $600.
Read more on the extended unemployment benefits included in the second stimulus package.
All good news so far. But the December stimulus package also included some stipulations that might affect your benefits if you’re a gig worker.
By the end of March 2021, PUA recipients must submit documents (income statements, ledgers, 1099s and more) to prove their eligibility for the program. Providing such documentation may prove difficult for even the most earnest bookkeeping gig workers, as a comprehensive record of 1099 income is notoriously tough to maintain.
Fail to supply the proper information, and PUA recipients may be asked to pay back the unemployment money.
Previously, PUA recipients could self-certify that they were out of work due to coronavirus-related reasons — essentially pinky-promising under penalty of perjury.
Additionally, the December stimulus package was much smaller in scope than the CARES Act. It provides only 11 more weeks of unemployment benefits. The economic situation is unlikely to resolve itself within that time frame, so jobless folks may once again face their benefits being cut off in March 2021 unless there is a third stimulus package.
4. Ripple Effects of a New Gig Economy Rule in California
Something happened this year that has the potential to change the nature of the gig economy. I’m not talking about the pandemic.
After a long and expensive campaign that pitted some gig workers, unions and worker-rights advocates against Uber, Lyft, DoorDash and other major gig companies, a ballot measure called Proposition 22 passed on Election Day in California. Gig companies spent a collective $200 million in support of this new rule that affects their gig workers and independent contractors.
Why would they spend so much money lobbying in support of this rule? Well, if Prop 22 hadn’t passed, Uber, Lyft and other companies that rely on independent contractors would have had to reclassify their workers as employees. Among many changes, they would’ve been forced to adhere to minimum wage laws, grant benefits like health insurance, pay payroll taxes and provide workers compensation.
Prop 22 is essentially a compromise. It doesn’t supply gig workers with the full benefits of W-2 employment, but it provides more than they had previously. Uber CEO Dara Khosrowshahi refers to it as a “third way.” It doesn’t grant a minimum wage, but it does give gig workers an “earnings guarantee” and subsidizes health insurance costs if they regularly work a certain number of hours.
Why this matters is because the gig worker classification issue isn’t contained to California. It’s sprouted up in Illinois and New York already. And Khosrowshahi has overtly stated that he sees this “third way” as a national solution to the debate, which is sure to engulf even more states in the year to come.
This was originally published on The Penny Hoarder, a personal finance website that empowers millions of readers nationwide to make smart decisions with their money through actionable and inspirational advice, and resources about how to make, save and manage money.