For gig workers, Uncle Sam’s virus relief legislation might help a lot. Or not at all

From a 2016 McKinsey report, still among the best gig economy analyses I’ve read (click for report).

The gig economy is complicated and it’s about to get a lot more complicated.

Gig workers are helped by the enormous coronavirus relief bill that’s expected to be signed into law soon, but like all things gig economy, the law is likely to raise more questions than it answers. Self-employed people qualify for expanded unemployment insurance, and for loans designed to help small businesses hurt by this crisis.  But how much help will gig workers really get?

It’s complicated.

Why? We begin with the hardest question of all. What’s a gig worker? While the Uber economy has been touted as  a solution to the fast-moving digital economy for years, the American government has precious little insight into gig work. How confusing is this problem? When people try to estimate the size of the gig economy, the range is laughable — from a modest 10% of the workforce, with no real increase since 2005  —  to more than one-third of the workforce, thanks to car-sharing apps and the like.

Much of the disconnect results from the definition.  Are all freelancers gig workers? Are all sole proprietors or solopreneurs gig workers? What about part-time gig workers who supplement their income with a few nights of Lyft work?

This all sounded academic until the coronavirus hit. Not now. When Uncle Sam starts sending out checks and approving loans, that aid better not skip over one-third of consumers.  How will their aid eligibility be calculated?  I’m trying to get answers to critical questions like these, but here’s what I know so far (corrections welcome):

Eligibility is easy enough to establish. Anyone who paid self-employment taxes is eligible for standard SBA Economic Injury Diaster Loans (think hurricanes), Gerri Detweiller tells me. That same standard seems to apply both to unemployment benefits and new, forgivable small business loans created by the Senate CARES legislation (Coronavirus Aid, Relief, and Economic Stimulus – isn’t that cute?).

Unemployment benefits included in the bill are pretty good. They amount to state benefits plus $600 each week, which could add up to $1,000 or so each week, depending on your state limits.  The problem for gig workers is how will Uncle Sam define “unemployed.” Most gig workers I know have several gigs. They drive for Uber AND Lyft AND deliver food.  If 80% of those rides dry up, is that driver unemployed, or will she or he be ineligible? That’s unclear.

Both the old disaster loans and this new class of loans might help gig workers, but there’s plenty of caveats. The application isn’t trivial.  There will surely be a bottleneck. Disaster loans come straight from the SBA, and there’s a 45-day wait, Detweiller says. These new loans will come from banks, and are backed by Uncle Sam, so the lending standards will be very relaxed.  A good credit score alone is good enough. They have generous terms, and some won’t have to be paid back (based on employee retention). That doesn’t help a gig worker. Banks have the right to advance $10,000 within three days. That could help a gig worker. The money has to be spent on salaries, rent, and other coronavirus-related costs.  How will gig workers define this? I don’t know.  Could an Uber driver pay rent for their personal apartment with a small business loan? Or only if they qualify for a home office deduction? That’s unclear to me.

Get paid: One important benefit to know: Small business aid allows companies to use loan/grant money to pay bills they owe sole proprietors. That’s important.  Get the money you have coming to you when your clients get their aid.

One important element of the economy is invisible in this law: the cash economy. We all know plenty of gig workers supplement their income with under-the-table cash tips and payments. Wait staff, delivery drivers, and other workers survive on the occasional tax-free payment.  Some live entirely on cash.  Most will find themselves shut out of a lot coronavirus relief. Maybe, long-term, you agree with that approach. But short term, this will be devastating to those households and hurt the economy as a whole, not to mention the coronavirus health battle we are facing. If it’s smart to pay people to stay at home to flatten the curve, it’s not smart to leave out the most vulnerable workers from that plan.


About Bob Sullivan 1408 Articles
BOB SULLIVAN is a veteran journalist and the author of four books, including the 2008 New York Times Best-Seller, Gotcha Capitalism, and the 2010 New York Times Best Seller, Stop Getting Ripped Off! His latest, The Plateau Effect, was published in 2013, and as a paperback, called Getting Unstuck in 2014. He has won the Society of Professional Journalists prestigious Public Service award, a Peabody award, and The Consumer Federation of America Betty Furness award, and been given Consumer Action’s Consumer Excellence Award.


  1. This is super helpful, Bob! Thanks for diving into this thorny issue. So far, it seems like this story is flying under the radar of most news outlets — or the people covering it are just as uninformed about the “gig economy” as most Congress people.

    I have some big questions that I hope we can all find answers to — fast.

    1. What about solopreneurs who have an LLC or S-Corp and/or file under EINs instead of their social security numbers? Are they gig workers or small businesses? In some states, new laws (such as California’s AB5) have forced sole proprietors to form LLCs or S-Corps, but those so-called companies are just comprised of one person doing consulting work — the same as they did when they were 1099 workers. Did compliance with new state laws ruin their chances to apply for unemployment disaster benefits?

    2. Even if people are self-employed 1099 workers, how do they qualify for extended unemployment benefits? It seems like that could be different for every state. I’ve been talking to freelancers in Oregon about this all week. The only thing it says on the state government website is, “Unlike regular unemployment, self-employed individuals may be eligible for benefits.” It doesn’t say what circumstances would allow you to qualify or what documentation you need. There’s no way to apply online. People calling in are on hold for hours. Will people answering the phone actually know now to do this? So far, nobody knows.

    2. As you pointed out, it’s not clear if a small business that operates at home could use an SBA loan to pay rent or a mortgage, even if they work from home. What are the parameters of who qualifies for these loans? How will the SBA have the bandwidth to process millions of new loans in a short timeframe? Will workers at the SBA just be making their own judgments on a case-by-case basis?

    3. Your reporting indicates that “A good credit score alone is good enough” for small businesses to apply for SBA loans. I assume that means business credit, which many (most?) solopreneurs don’t have. In fact, banks often won’t even extend business credit to them. I’ve been through that gamut before. When you are a solopreneurs, banks will only base your business credit on your personal credit and the “benefits” are so paltry it’s not worth doing. Banks’ business loan interest rates are typically much higher than most personal credit cards. All this suggests to me that there is actually is NO SUPPORT whatsoever for millions of small businesses.

  2. I fall into the sole proprietor class, and most of my sales are to those participating in winter events that were canceled, so business is down 70%. I was first worried because I paid in advance for more product from China, and that has been delayed beyond this season, lack of sales make that a loss, the inventory, if it ever arrives, will have to await next year. It is indeed going to be confusing.

  3. Hi Bob,
    Thanks for your article highlighting some major concerns. I myself have been a full-time Uber/lyft driver for almost 2 years. I am uncertain if I qualify for any of the loans because not one article I’ve read has specifically mentioned “gig workers” as those that would qualify. I did receive an email from Uber letting us know there are disaster loans that would help us pay car payments etc.
    Personally, my business related expenses that I would need a loan for are : car payment, car insurance, cell phone (health insurance?). These are things that I have to have to drive for Uber/Lyft.
    I have no guidance on what documents I need to prove anything although I suspect in would be direct documentation from Uber/Lyft. We get end of year summaries that breaks down yearly earnings (before their fees), their fees, tips (through the app), rides given, miles driven. In addition, we can go back at anytime and have access to timeline breakdowns such as monthly, weekly even daily.
    For what its worth, I am not at all “lazy”, that is not why I have chosen to drive full-time. I have actually been a sales rep for one of the worlds major companies. This fit my needs during the time I have driven.
    I pay taxes just like other americans and I feel as though we have been thought of as “less than” in most circumstances.
    Anyway, thanks for accepting comments.
    Be safe

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