COVID-19

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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Some gig workers are seeing that none of their self-employment income is being used to determine what their unemployment insurance benefit should be. 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
Some gig workers are seeing that none of their self-employment income is being used to determine what their unemployment insurance benefit should be. Olivier Douliery/AFP via Getty Images
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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

When does the expanded COVID-19 unemployment insurance run out?

The CARES Act, passed by Congress and signed by President Donald Trump in March, authorized extra unemployment payments, increasing the amount of money, and broadening who qualifies. The increased unemployment benefits have an expiration date — an extra $600 per week the act authorized ends on July 31.

Which states are reopening?

Many states have started to relax the restrictions put in place in order to slow the spread of COVID-19. Although social-distancing measures still hold virtually everywhere in the country, more than half of states have started to phase out stay-at-home orders and phase in business reopenings. Others, like New York, are on slower timelines.

Is it worth applying for a job right now?

It never hurts to look, but as unemployment reaches levels last seen during the Great Depression and most available jobs are in places that carry risks like the supermarket or warehouses, it isn’t a bad idea to sit tight either, if you can.

You can find answers to more questions here.

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