Low Wages, High Risk: May Day Strike Underscores COVID-19 Impact on Essential Workers in the Gig Economy

The COVID-19 crisis has touched off an explosive public health crisis in the U.S. In doing so, it has also exposed the dark underbelly of an economy that relies on underpaid gig workers and other part-time, low-wage workers to keep essential services going. As May Day approached closer on our calendars, many of these workers have become frustrated with the fact that they are often putting themselves at risk of infection, while their services enable many other people to stay safe at home. Hence the call for a May Day Strike.

The pluses and minuses of gig work

Back in 2015, Triple Pundit took a look at the emerging gig economy through the eyes of Ai-Jen Poo, Director of the National Domestic Workers Alliance.

She noted that gig work has made important contributions to the economy and does have some important benefits. She cited flexibility, work-life balance, extra income, and monetization of existing assets like cars and living space.

However, as any traditional freelancer knows, there are challenges. Gig-by-gig income is inconsistent, work-related costs must be factored in, and there are few if any of the protections afforded to regular employees.

This has been an ongoing complaint of drivers working for app-based transportation companies. Protections afforded to full-time employees, such as severance pay, disability leave, paid time off, sick days, workers compensation and health insurance are not available for gig workers.

It’s clear companies need to find a middle ground. Companies wish to preserve the innovation and options, and workers in turn just want fairly compensated work with the protections other employees take for granted. But the problems gig workers keep confronting day after day aren't getting better from their perspective - and therein are the calls for today's May Day Strike.

Gig work as a pyramid scheme

Five years on, it is clear that Ai-Jen Poo’s vision of a middle ground is further away than ever. The problems she and other critics have cited in regards to gig economy platforms have worsened with the growth of additional app-based systems that consolidate independent labor on a mass scale.

It is a mathematical formula for extreme income inequality. In contrast to traditional freelance or contract work, the app-based formula enables those at the top of the pyramid to reap substantial rewards, while providing no incentive to redistribute wages and benefits to those at the bottom.

In 2019, a Federal Reserve report on economic well-being noted that gig work can serve as a “coping strategy” for households on shaky financial ground. However, the report also suggests that gig work is more of a preserver of the status quo rather than a ladder up.

“Signs of financial fragility—such as difficulty handling an emergency expense—are slightly more common for those engaged in gig work, but markedly higher for those who do so as a main source of income,” the report stated.

The problem is not confined to app-based companies like Uber, Lyft, and Instacart. They draw most of the media attention, but the Federal Reserve report noted that the overwhelming majority of gig workers do not use the Internet for work.

In a related trend, over the past years traditional companies have been transitioning to the gig model. They have been relying more heavily on part-time employees, temporary workers, and contractors, creating what some critics have called a “caste system” separating regular employees from those with lower wages and little or no benefits.

Adding to the problem is the emergence of “on-call” scheduling and other alternatives to regular part-time work.

“Unpredictable work schedules are associated with financial stress for some,” the Federal Reserve wrote, further explaining that “one-quarter of employees have a varying work schedule, including 17 percent whose schedule varies based on their employer’s needs.”

“One-third of workers who do not control their schedule are not doing okay financially, versus one-fifth of workers who set their schedule or have stable hours,” the Federal Reserve added.

Workers on the front lines of COVID-19 seek fairness in May Day Strike

The COVID-19 crisis has thrown all of these issues into sharp relief. Many of these same workers, including grocery and pharmacy clerks, delivery workers, and warehouse workers, continue to put themselves at risk of infection simply by doing their jobs — jobs they cannot afford to give up.

With more than a little irony, many of those jobs involve providing essential services to others, including persons who are able to work from the safety of their homes during the outbreak, and who can afford to pay for services that enable them to stay safely at home.

The disconnect between worker risk and compensation has begun to draw more public attention. Adding fuel to the fire, organizers have announced a nationwide walkout and sickout protest on May Day focusing on Amazon. Instacart — against which workers protested last month — Target, Shipt (a division of Target), Whole Foods, Walmart and FedEx are also reportedly the target of gig workers seeking hazard pay and improved health and safety standards as a result from this May Day Strike.

Regardless of the outcome of today’s protest action, the twin issues of worker risk and compensation are not going away.

As some employers push for an early end to stay-at-home orders aimed at slowing the spread of COVID-19, workers faced with a true life-or-death situation are all the more likely to push back. We'll see today if the May Day Strike resonates with citizens.

Image credit: Mick Haupt/Unsplash