Gig workers could increase unemployment claims by another 10%: economist

The week ending March 28 saw unemployment claims shatter expectations with 6.6 million workers filing for benefits amid the coronavirus crisis.

Under the recently signed CARES Act, gig workers, or independent contractors, are eligible for unemployment benefits for the first time ever. It’s part of the PUA program, or Pandemic Unemployment Assistance. According to one economist, jobless claims could increase by another 10% as gig workers file for unemployment.

Economist Lawrence Mishel says gig workers could “ratchet up” the number of workers applying for unemployment by another 8%-10%. 

The Distinguished Fellow at the Economic Policy Institute (EPI) told Yahoo Finance’s YFi PM that the amount of jobless claims has been “otherworldly,” and that another 600,000 gig workers could be added to that figure in the coming weeks. 

But, he explained, the absolute number doesn’t compare to the sheer scale of the crisis in the country.

NEW YORK, NEW YORK - MARCH 18: A dog walker and a pack of Cavalier King Charles Spaniels are seen in Central Park as the coronavirus continues to spread across the United States on March 18, 2020 in New York City. The World Health Organization declared coronavirus (COVID-19) a global pandemic on March 11th. (Photo by Cindy Ord/Getty Images)

“The specific numbers are less important than the overall scale,” he explained. “The fact that we’ll hit 20% unemployment is all you need to know when we hit 10% during the financial crisis.” (Treasury Secretary Steven Mnuchin said last month that unemployment could hit 20% without government action.)

While 600,000 gig workers might not seem particularly high, Mishel explains that many gig workers turn to freelancing as a means of part-time work to “get them over the hump.”

“Many have a ‘W-2 job’,” he said

But as companies increasingly furlough and lay off workers, gig workers might find themselves needing unemployment.

Thousands of calls

How much each worker qualifies for is determined by the state, but the coronavirus stimulus allows for an additional $600 per worker in unemployment every week in addition to the unemployment benefits administered by their individual state. 

But despite the bill being signed by President Donald Trump last week, gig workers across the country have found that they haven’t yet been able to apply to receive unemployment benefits, because of delays in creating and implementing the PUA program.

“We are still waiting on guidance from the federal government as to when we can roll out the application,” said Rhode Island’s Department of Labor and Training spokesperson Angelika Pellegrino.

Pellegrino says the state has created a sign-up list for those that plan to apply under the new program. Roughly 11,000 people have already signed up. There are just over 41,000 self-employed workers in Rhode Island, Pellegrino explained, “all of whom are potentially eligible to collect in the state.”

In Nevada, where roughly 3.5% of workers surveyed described themselves as a “contingent worker,” meaning they don’t expect their jobs to last, applications from gig workers have not yet been processed. 

“We are still working to come up with efficient ways to make those programs,” explained Rosa Mendez, spokesperson for the state’s Department of Employment, Training, and Rehabilitation. 

In Texas, over 1 million calls were made to the Texas Workforce Commission in just 24 hours, a spokesperson told Yahoo Finance. Previously, daily call volumes were roughly 13,000 on average. According to the Gig Economy Data Hub, 3.8% of workers surveyed in Texas did not expect their jobs to last. The state is currently working on “upgrading” their systems to comply with the new federal legislation. 

California, where just under 5% of workers surveyed don’t expect their jobs to last, hasn’t been tracking how many gig workers have been calling in. But the state says it’s been “working quickly with state partners” to develop a new program to help unemployed Californians. 

As states manage to create and process applications for unemployment benefits for gig workers, it’s unclear just how many will be applying for unemployment in the coming weeks. In 2017, the Bureau of Labor Statistics (BLS) estimated that roughly 7% of the American workforce is a gig worker, a number total just under 11 million. With thousands of gig workers waiting to apply for unemployment, it’s clear that the number of jobless claims will steadily start to rise from the 6.6 million figure released this week.