As we transition from summer to autumn, there still remain more questions than answers for independent contractors whose livelihood depends on the gig economy. With many schools planning on starting the new school year still in remote mode—or only open for a few hours each week—how will parents who depend on the gig economy be able to work? How will a continuing COVID crisis affect the earlier projections of substantial economic growth in 2020? What can we expect for the last 4 months of 2020…and beyond? And the biggest question of all: how do independent contractors prepare for another season of unprecedented uncertainty?
Back to School? Another Year of Remote Learning Puts the Strain on Parents
Many school districts, including New York City schools are planning to have children attend virtual classes, and stagger in-classroom time so children will be attending school approximately two days a week. To put it mildly, this is a challenging scenario for independent contractor parents. Congress passed the Families First Coronavirus Response Act which gives gig economy workers the ability to claim a credit against self-employment taxes. But when many families are struggling to put food on the table, a tax break in 2021 offers little solace right now.
Heading into the fall season, it’s safe to say that the pervading mood for workers continues to be a surreal sort of limbo. Parents are unsure about the ability to safely send their children back to school. Gig economy workers continue to wonder when they will be able to resume their full working schedule. And we all wonder if a reliable vaccine will be available anytime soon.
Ironically, aside from COVID (granted, that’s a big aside), the long-term economic outlook is actually quite rosy for independent contractors, particularly as the digital transformation continues to expand. “A lot of small businesses, even if they are squarely situated in the physical world, are going to see the digital channel as a source of resilience,” said Arun Sundararajan, a business professor at New York University and author of “The Sharing Economy.”
Many businesses are indeed finding innovative ways to use digital channels to continue earning during COVID. From nail salons mailing nail care products to people for home use, to bartenders offering online bartending lessons, many workers are using video conferencing as a way to supplement lost income. Granted, the revenue is not the same as if their businesses were open, and it’s hard to imagine people paying for online bartending lessons six months from now. But in hard times like these, it’s a testament to the spirit of entrepreneurship and the “give it a go” mentality that helps make the gig economy so attractive to so many.
Back to School but Spending Less
Still, confusion and uncertainty still loom largly over the economy. It’s even affected what was once as close to a sure-thing as there was in retail: back to school sales. In 2019, retailers were expecting consumer spending on K-12 back-to-school to reach nearly $26.2 billion, or $696.70 per household. But this year, experts say it’s unlikely to look the same. Deloitte has found that the demand for this year’s back-to-school season may be less robust, particularly in apparel. Which makes sense—why spend money on a whole new back-to-school wardrobe when classes are virtual?
Unsurprisingly, when looking at the numbers, the people who are harmed most economically from COVID are working families with young children. Federal stimulus money helped quite a bit during the spring, but there does not seem to be another round for the fall…at least not yet. If the crisis continues unabated as we get closer to election day in November, don’t be surprised to find a sudden compromise much more appealing. If that happens, it will give working parents a bit more relief—and maybe even some extra cash for holiday spending. If Washington is able to pass a robust stimulus for the fall, that will help millions of families stay afloat. Because despite what you may hear, experts believe a reliable vaccine is unrealistic for 2020. Which means more social distancing, more masks, and unfortunately, more uncertainty.
Where Do We Go from Here?
The mobile technology explosion—particularly smartphones—helped give birth to the Gig Economy. It provided hard-working, entrepreneurial types unprecedented flexibility to choose the work they want, when they want, with no limits other than their own ambition and grit. But despite the newfound flexibility and unprecedented opportunities of independent contractors, no economy was designed to withstand a once-in-a-century pandemic that shows no signs of abating anytime soon. Gig economy workers need to remember that we are all in this together, and these problems are not of their own making. We just need to continue staying safe, maintaining social distancing, and wearing masks in public to help slow the spread.
When this is over—and it will end, hopefully sooner rather than later—the demand for gig work will continue to grow. As the old 9-to-5 work model becomes increasingly antiquated, especially to a new breed of Gen Z workers.
In short, despite the uncertainty brought on by COVID, in the long run the fundamentals of the gig economy, and independent contract work, remains strong.
What are your thoughts on another season with COVID? How do school closings and remote learning affect your work schedule? How have you adapted to shutdowns, slowdowns and lockdowns? Let us know…we want to hear from you.