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Unemployment cliff: 4.2 million gig workers will soon lose jobless aid

Jobless aid for gig workers to run out soon
Unemployment benefits for 4.2 million gig workers to run out next month 04:53

The nation's 59 million self-employed workers got a lifeline last year when lawmakers created the first-ever program that extended jobless benefits to this growing group of workers. But that program, Pandemic Unemployment Assistance (PUA), will end on September 6, once again placing unemployment benefits out of reach for these workers.

About 4.2 million people on the PUA program will lose benefits after September 6, according to a new analysis from the Century Foundation, a left-leaning think tank. (The program officially ends September 6 — Labor Day — but the final payment date is September 4 in some states.) The PUA's end also comes at a time when the economic recovery in some regions appears increasingly fragile given resurgent cases of COVID-19 amid the rapidly spreading Delta variant. 

The PUA program provided aid to gig workers — as varied as actors, house cleaners, drivers and tech contractors — who are considered self-employed and thus aren't on a company's payroll, locking them out of traditional employee benefits including unemployment aid. Although demographic information isn't available on PUA recipients, experts say it's likely that women and people of color are overrepresented, given that these workers are often employed in nontraditional jobs because of issues such as child-care demands.

The U.S. unemployment system's roots extend to the Great Depression and was created when the typical claimant was a man who provided the main source of income for his family. That situation barely reflects the realities of today's labor market, said Jenna Gerry, senior staff attorney at the National Employment Law Project. 

"The PUA program has been hugely successful — it's literally been a lifeline for millions of workers, particularly women and people of color who otherwise would have been shut out of the program," Gerry said. "The PUA program recognized that our labor market has changed."

With the program ending, the outlook for these workers "is not great," Gerry added. 

The PUA also covered workers who were unable to continue working because their children were out of school due to remote education — an issue that impacted millions of parents, primarily women. Meanwhile, the gig economy continues to grow, with the freelancing platform Upwork finding that 59 million people performed freelance work in the last year, an increase of 2 million since 2019.

"The most vulnerable"

After September 6, another 3.3 million workers will be cut off from another pandemic unemployment program, called the Pandemic Emergency Unemployment Compensation (PEUC), which provides an extension of jobless benefits for people who have otherwise had used up their regular unemployment aid. Those tend to be the long-term unemployed, who are more likely to struggle to find new employment given the stigma of longer gaps in their resumes. 

"Going into the termination, workers on PUA and PEUC are the most vulnerable and the most long-term unemployed," Gerry noted. 

An additional 3 million workers will lose the $300 in weekly extra jobless aid that has been provided by the Federal Pandemic Unemployment Compensation (FPUC) program, the Century Foundation found. That program boosted regular state-level benefits, which on average are about $387 a week, or far below income replacement for most workers. Jobless workers who qualify for regular unemployment can still get their regular state jobless benefits after the FPUC program ends.

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While PUA is billed as a program for gig workers and contractors, it covers many other types of workers who would also normally be excluded from the unemployment system. 

For instance, in addition to parents with children in remote school, it also includes workers who hadn't been employed long enough at their company to qualify for regular unemployment aid before they lost their jobs in the pandemic. While that varies by state, it's typical that workers with less than six months of work history within a one-year period fail to qualify, according to the hiring website Indeed.

That's the case for Jerron Spencer, 47, of Logansport, Indiana, who lost his job after he became ill with COVID-19, but had been in his role for too short a time to qualify for regular unemployment. 

"That is another outdated part of the system — in today's world, holding a job for years is not always possible or feasible," Spencer said. "I know that my experience was limited compared to many who freelance for years, but I completely felt the lack of a social safety net."

Spencer lives in a state that ended enhanced unemployment aid early but which was ordered by a judge to reinstate benefits. He's now appealing to get his pandemic benefits reinstated. About 1.25 million workers that have already lost benefits in 26 states that ended enhanced jobless aid early are likely to remain unemployed by Labor Day, the Century Foundation estimates.

"Everyone who has been receiving PUA is worried about what they will do when the unemployment ends," Spencer said of the freelancers he knows. "Because jobs may be plentiful, but the pay is still laughably low and the possibility of exposure to a terrible virus remains frighteningly high."

Does extra aid keep workers on sidelines? 

To be sure, the new pandemic aid programs — especially the additional $300 in weekly benefits — have sparked debate among business owners and economists about whether the expanded safety net programs are keeping workers on the sidelines as many companies are scrambling to hire. 

Yet early data from some of the 26 states that cut off aid in June or July — weeks before the September 6 expiration date — are providing evidence that, so far, the additional benefits haven't hurt job growth. The dozen states that were the first to cut pandemic jobless benefits have experienced hiring growth on par with states that kept the federal benefits, according to a recent Gusto analysis of hiring at small and mid-sized businesses.

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Concerns about getting or spreading COVID-19 as well as struggles to secure child care could be holding back workers, not the expanded unemployment payments, economists say. For instance, Gusto found that most of the job growth among the states that cut aid early stemmed from places with the highest vaccination rates, while those with low vaccination rates experienced meager job growth. 

Another analysis finds that states that have maintained the benefits are actually pulling ahead of those that have curtailed the programs. States still paying the pandemic unemployment aid saw employment growth of more than 2%, compared with a decline of almost 1% for those cutting the aid, the employee-scheduling company Homebase found in its analysis of job data from June and July. 

The big concern, according to NELP's Gerry, is that millions of unemployed workers are losing support just as the Delta variant is spreading, raising questions about the economic recovery and a potential rise in hardship among workers who had been on PUA. 

"This is what advocates feared what would happen — that the economy wouldn't be back where we thought we should be," Gerry said. "And we don't know what [the Delta variant] means for schools again in the fall."

She added: "Not only does the PUA benefits apply to gig workers and Uber and Lyft drivers, but women and parents who have children in remote school. PUA was a lifeline for those people."

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