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Why some gig workers are getting less in unemployment benefits

David Brancaccio, Nova Safo, and Alex Schroeder May 14, 2020
Heard on: Marketplace Morning Report
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Gig workers have received unemployment benefits many would not have been entitled to before pandemic assistance began. Olivier Douliery/AFP via Getty Images
COVID-19

Why some gig workers are getting less in unemployment benefits

David Brancaccio, Nova Safo, and Alex Schroeder May 14, 2020
Gig workers have received unemployment benefits many would not have been entitled to before pandemic assistance began. Olivier Douliery/AFP via Getty Images
HTML EMBED:
COPY

State claims systems have been overwhelmed with unemployment insurance applications, causing delays. But even for those who have managed to apply, a new problem has emerged: Some are getting less money than others, simply because of how their work is classified.

Marketplace’s Nova Safo has been looking into this, and he points out that Congress has tried to shored up the unemployment system by making gig workers eligible for benefits through the Pandemic Unemployment Assistance program.

“Before that, you needed a traditional job with an employer and a W-2 to get unemployment insurance benefits,” Safo told “Marketplace Morning Report” host David Brancaccio.

The problem is, a lot of gig workers also have some W-2 income, maybe from a part-time or temporary job, in addition to their self-employment. If that’s the case, those workers are ending up in the “traditional” unemployment system, with only their W-2 earnings — which are limited — used to determine their unemployment insurance benefit amount. Their self-employment income is not used at all in that calculation.

Jennifer Cogan, a San Francisco-based tango instructor, says this has affected her.

“So if I was eligible clearly for PUA, I would qualify for $386 a week,” she said. “If I am forced onto regular UI, I qualify for $87 a week.”

That’s quite the difference. Cogan also works as an outdoor backpacking and cycling guide, work that has all but stopped since the outbreak started. She had actually just gotten a promotion in that job, work that was slated to start on March 16. San Francisco’s shelter-in-place order started March 17.

So she was only on the job for one day, but her employer paid her through the end of month amid the lockdown. That was the pay classified under W-2 earnings. It’s what’s prevented her from getting the rest of her insurance benefits.

“I haven’t done the math on that, but it’s like thousands and thousands of dollars,” Cogan said.

Cogan is currently working on an appeal. She says she’s “one of the lucky people” because her husband is still working. But she’s hoping the government can find a fix for situations like hers.

“I think it’s important that Congress recognizes that people don’t fit into two clear categories anymore, like they did perhaps in the past — either you’re a worker for another company or you’re a self-employed individual. There absolutely are people who make money from a variety of those two incomes, aka this hybrid worker,” Cogan said. “And that’s super important that they recognize that and adjust law accordingly to compensate those individuals.”

There are rumblings in Washington, conversations in Congress and among experts, over efforts to solve this issue with a legislative fix.

“The right approach would be for Congress to step in and say, ‘Look, states should look at a worker’s income regardless of the source,'” said Indi Dutta-Gupta, co-executive director of the Georgetown Law Center on Poverty & Inequality.

That would make them eligible for the maximum benefit amount.

COVID-19 Economy FAQs

What are the details of President Joe Biden’s coronavirus relief plan?

The $1.9 trillion plan would aim to speed up the vaccine rollout and provide financial help to individuals, states and local governments and businesses. Called the “American Rescue Plan,” the legislative proposal would meet Biden’s goal of administering 100 million vaccines by the 100th day of his administration, while advancing his objective of reopening most schools by the spring. It would also include $1,400 checks for most Americans. Get the rest of the specifics here.

What kind of help can small businesses get right now?

A new round of Paycheck Protection Program loans recently became available for pandemic-ravaged businesses. These loans don’t have to be paid back if rules are met. Right now, loans are open for first-time applicants. And the application has to go through community banking organizations — no big banks, for now, at least. This rollout is designed to help business owners who couldn’t get a PPP loan before.

What does the hiring situation in the U.S. look like as we enter the new year?

New data on job openings and postings provide a glimpse of what to expect in the job market in the coming weeks and months. This time of year typically sees a spike in hiring and job-search activity, says Jill Chapman with Insperity, a recruiting services firm. But that kind of optimistic planning for the future isn’t really the vibe these days. Job postings have been lagging on the job search site Indeed. Listings were down about 11% in December compared to a year earlier.

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