As governors and state officials lead response to the COVID-19 pandemic, the unique challenges facing on-demand workers have risen to the forefront. On-demand work is central to the crisis response due to social distancing measures. However, these on-demand workers are among those most likely to be severely affected both by the virus and by the longer-term economic impacts of this crisis. Policymakers interested in supporting these vital members of the workforce should find the information presented in this white paper particularly timely and relevant.
On-demand workers are concentrated in industry sectors that have seen significant job losses, including construction, education and health services, hospitality and leisure, and professional and business services. At the same time, many on-demand workers serve on the front lines of the crisis. These workers are at higher risk of exposure to the virus and are more likely to earn low wages and lack health insurance, sick leave and other benefits.
At the time of this writing, federal legislation is providing temporary benefits to on-demand workers who are not traditionally able to access such benefits. Signed into law on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act provides an unprecedented expansion of unemployment benefits to new classes of workers, including on-demand workers. As states work to implement these new provisions, it will be important to explore the benefits, costs and shortcomings of such programs and examine how similar, permanent programs can be designed to support on-demand workers.
In the near term, it is reasonable to expect an acceleration of growth in this sector during the economic downturn and recovery for two reasons. First, many laid-off workers will likely turn to on-demand work as a means of “income smoothing” to make up for lost wages as many businesses close and remain closed. Second, the pandemic has increased reliance on virtual services, delivery services and other roles that on-demand workers are already likely to hold. Reliance on these types of services will likely continue as social distancing requirements are slowly lifted or re-instated over the coming months.
Since 2018, the National Governors Association Center for Best Practices (NGA Center) and the Institute for Work & the Economy have led the State Collaborative Consortium to Understand and Support the On-Demand Workforce. The pandemic has brought the vulnerabilities and needs of this incredibly diverse segment of the workforce into sharp relief. As states work to build the resilience of their economies and workforces during this crisis, the information and strategies developed by the Consortium states will serve as valuable guidance.
As governors and states address the challenges posed by the changing present and future of work, they must account for altered relationships between workers and those who compensate them. New practices and technologies are challenging the ways work and employment are described and defined. New terms — the “gig economy,” “gig workers,” “independent economy,” “1099 economy” and “freelancers” — are increasingly in use. A common thread among these terms is the on-demand nature of the work they describe. To better prepare their states for this workforce of the future, governors recognize the need to better understand these evolving realities and the underlying trends that have brought them about.
A growing body of research indicates that as many as one in three Americans are engaged in on-demand work. Many of these workers value the flexibility that such work affords, yet many would also prefer a formal job that provides a stable salary, benefits and workplace protections. Further, evidence suggests that some on-demand workers face economic instability and fewer pathways to economic security and lack access to many of the protections and benefits of formal employment.
Drawing on the findings from the member states of the National Governors Association Center for Best Practices’ State Collaborative Consortium to Understand and Support the On-Demand Workforce, this white paper outlines the following issues:
- Describes why this issue matters to governors and their states’ economies and labor markets.
- Summarizes the current research findings on the size and composition of the on-demand workforce.
- Identifies key policy issues and opportunities for governors and states interested in supporting the on-demand workforce.
- Describes how effective state policies use the potential opportunities and benefits of on-demand work while mitigating the potential downsides and risks for workers.
All NGA COVID-19 memos can be found here, or visit COVID-19: What You Need To Know for current information on actions States/Territories are taking to address the COVID-19 pandemic; as well as advocacy, policy, and guidance documents for protecting public health and the economy.