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 1443 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

  4. Let me say that i have been very skeptical from the start, the longer it drags on the more rules keep changing and more hoops are added to make it impossible for anyone who makes very little money each year no matter what the method may be. It seems now that being affected by the virus has changed gears from what was considered to be due to shutdowns and the like which have made getting supplies and even finding a way to pretty much do anything to make money has vanished. you would think that closing 90% of all markets would be enough to cause a disturbance to all cash flow except grocery stores and then it could be assumed that everyone has seen a loss of revenue due to the governments decisions and actions.
    At 1st the bill looked like it was in an understanding of this and seemed to be acknowledging this fact, but as the days pass there have been so many adjustments to who and how the money will become available, it has turned into basically just a collection of information that the government has done to find out just who they can turn around and audit this year for taxes.
    the only way anyone will get any money is if they were directly in contact with the virus, meaning, if you were careless and caught it or you were stuck taking care of someone who caught it, you are good to get funding. this is a far cry from what the plan was aimed for. there are some others like parents who had to stay home to care for children due to school closings which does not stipulate if that is for 1 or 2 income families to begin with. so if the home had 1 income and 1 parent was already home do they qualify, what about those that collected assistance?
    My friend told me about the chance to get some money for selfemployed and suggested I file for unemployment in Arizona which I have done many times over the years as a union worker when i worked for others. I know how it works and doubted there was any chance of getting anything from the government except for a nice fat AUDIT for back taxes. I was careful on what i reported to ne sure to be as truthful as i could just incase this is all simply a larger plan by Trump to get a running tally on just how many selfemployed workers there really are and seize the moment while they have all the information gathered up as given by desperate people who saw this as the government’s understanding of all who suffered in some way due to Trumps decisions. I didn’t expect to see a penny of any money and laughed at my buddy as he made me a $10 bet that wed both ne getting some type of new unemployment benefits checks.
    of course they denied us both and then he reminded me of the other money that is just for selfemployed, when i read the new wording i was not included in any of that benefit package either. I still have this gut feeling that this entire cares act is simply in place to fool many people into coming out into plain view and becoming a target for an audit based on their applications and then a few days later sealed with a signature on the paperwork that the unemployment office sends out even though they know you’re denied benefits. its a good thing i dont check my mail very often because i got all letters at once and signed none of them. 2 were asking me to sign and the 3rd was my denial of funds with no mention of what was possibly going to happen with any money whatsoever. the first 2 said sign these and well be in touch with you about the extra benefits that you could be elidgeable for through the cares act. The AZ UE website has no information about anything that pertains to the care act. their website goes in a circle with nothing more than 2 paragraphs that are linked to each other. 1 takes you to the other, thats it.
    so i strongly believe this has been a very keenly developed plan to trick people who have become desperate or greedy (and simply want free money whether they need it or not) enough to send in their names and addresses along with possible amounts of money that they made without understanding the consequences they may be facing have they not been truthful or purposely not filed taxes for previous years. Im positive that there will be record number of audits given this year as a direct result of the care act. I for 1 do not need their money, i did think at one time that this was going to be a much more serious problem than its mow understood to be. i believe this was intentionally presented in that fashion to once again try to scare the general public and make them do things they would otherwise not do, like buy up all the toilet paper?1? Who thought up this idea, and whats the reason behind it and why cant they simply make more while everyone’s stupid enough to buy it at super high prices? I did some work at paper mills and dont see what the problem is, its not magic, its a simple process and they can just make more maybe even finally start using more recycled materials if theres a problem getting the wood pulp from forests that nearly border the plants properties!
    It all comes down to common sense, or lack there of for most people, its funny how the writer talks about buisness loans and the paycheck payment loans and all the other unknown forgiving cares act stuff that 99% or us never knew existed but for some reason if you go take a look at these benefite and see who snayched up all the cash youll find that most of them had to have been tipped off or friends of Trumps to begin with. Those business benefits were gone before they were even available, rather odd how the big money was released do quickly and without any anouncement while the money for the masses, which is about the same amount has been draging on for months and has seen endless modifications along the way to make sure it remains tied up for as long as possible. this way Trump can simply decide to reopen all businesses and just forget about giving any money out if possible or keep it to a minimum. What once seemed like a good idea and was looking like our government had really felt for us all has turned once again into another two faced liar which will be turning this entire act of caring into a new way to cause more grief and collect more money from families who make very little to begin with.
    We all know what we need to do this next election, lets just see how this all unfolds, it seems Trumps giving money to people he knows will be voting for him and denying it to all others. Take a look at how the money is being dispensed, which states are 1st to receive and which are actually paying the full amount. this plan is supposed to run till 12/30/2020.

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

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