COVID-19 is still here … so why is unemployment for gig workers going away?
A cursory look around your town will tell you how little things have changed since the end of March, when the COVID-19 world got geared up for its first round.
The legislation passed at that point, the CARES Act, awarded unemployment compensation to independent contractors. The base amount was supplied by states, and supplemented by an extra payment of $600 per week from the feds.
That safety net felt rather secure for many of us … but now that July is ending in just a few days, and the supplemental payment is scheduled to end with it, what’s going to happen? We don’t know what’s in the final version of the plan, but we do know there will be changes in the unemployment picture for most drivers.
On Monday July 27 the Republicans released their ideas, and now the “sausage making” will begin. In this post we’ll tell you what we know and what we don’t know. You can rest assured that as news develops, we’ll keep you up to date on what’s going on.
Let’s look at …
- 3 things we know
#1 It will be a battle
#2 There will be pressure to cut unemployment compensation
#3 There will almost certainly be another stimulus check
- 3 things we don’t know
#1 Whether the final legislation will include federal supplements to state unemployment
#2 If drivers and other independent contractors will still be able to receive unemployment compensation
#3 Whether the two sides will come to terms in time for unemployment compensation to keep flowing
3 Things We Know
#1: It will be a battle
Before it even begins, the legislative battle looks something like a prize fight, with a contingent from each of the two major political parties in each corner. The bell indicating the start of the first round rang on July 27, when the Republican side brought out their vision of the potential legislation, The first punch, thrown by the Democrats, was a left hook to the ribs, accusing the Repubs of being manipulative by holding out for so long before releasing their ideas to the public.
It does seem odd that they waited so long, since the provisions in the CARES Act are due to expire so soon. The Democrats have plenty of ideas about how they want the money to be spent, and they’re eager to begin the discussions.
The Republicans, because this is a Senate bill and they hold the majority, put the package together. This time it’s not totally focused on unemployment compensation or business success. To give you an idea of where they’re going, it’s called the Health, Economic Assistance, Liability Protection, and Schools (HEALS) Act.
That title, and certainly the acronym, has a positive ring to it. It sounds like it will focus on money for the healthcare sector (testing and tracing), liability limitations that make it easier to do business (less risk of “that ride with your driver gave me COVID!” lawsuits), money for schools, and yes, some money for those of us who find cash hard to come by during this pandemic.
To be fair to Senate Republicans, there were probably other reasons for their delay aside from trying to secure a position of advantage. There were battles raging behind the scenes, and those were pretty rough. For instance, not everybody on that side of the aisle is happy about spending another trillion dollars on anything.
#2 There will be calls for less unemployment compensation
One of the most heated points of dispute was the extra $600 in unemployment benefits; specifically, that it served as a disincentive for people to go back to work. Although one could easily get defensive over such a remark, if we drivers are being honest, it would be hard to say that the benefits we collected were not more than we expected.
Under ordinary conditions, when a person is an actual employee, only a certain percentage of the working salary is awarded in the weekly unemployment check. It was a gift for independent contractors to get unemployment benefits at all, and the $600 extra every week was really sweet.
In fact, with that additional $600 per week supplement, many of us were making more than we would have earned while working. Sure, much of what we got from those payments will probably go back to the government as taxes, but that’s another topic.
What’s important to know is this: Since the Republicans noticed that amply subsidized workers don’t get overly excited about getting back to work, they will not be including the $600 subsidy as part of the new package.
That doesn’t mean there won’t be any supplemental payment, but it will likely be substantially less. The current Republican proposal is a $200 subsidy per week through September 30.
#3 There will probably be another stimulus check
The Republicans came out of the gate with an offer for another $1,200 stimulus check. It wound up being this amount because senators viewed it (believe it or not) as a way of keeping costs down. The President was pushing hard for a payroll tax cut and a stimulus check. The less freewheeling among the group probably figured the stimulus check would be enough for now, and easier to pass through both houses of Congress.
Remember, House Democrats passed their own bill earlier this summer, with a price tag of $3 trillion, but it was DOA in the Senate. Still, there’s a wish list left over from that bill, and the Dems will fight for it and probably win some of what they want. But not before the Battle Royale over the ultimate contents of the HEALS Act is done raging.
Get an ample supply of popcorn, and hope they decide to “stimulate” us more … but do rest assured there will likely be a check in the picture.
3 Things We Don’t Know
There are good reasons why the process of creating legislation is likened to the art of sausage making. We probably don’t want to know everything that’s in it, and there’s a lot of “filler” that isn’t really necessary.
It’s not our place to get into political debates about government spending, but we do want to make the point that this is a messy process. With that in mind, don’t expect the final bill to look exactly like the Republican or Democrat proposals. Rather, it will be a hybrid with components of both.
Here are a few unknown factors that have yet to be hammered out.
#1 Will the final legislation include federal supplements to state unemployment?
The House Democrats’ Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, which was the $3 trillion bill mentioned earlier, called for aid to state and local governments. It’s true that many of these governmental jurisdictions are in fiscal troubles too deep to fathom—but there will be a big fight (“debate” is too mild for the current political climate) over whether they should be bailed out with federal taxpayer dollars.
This could play into how much money is available for unemployment compensation, especially for independent contractors. Remember that our companies, Uber, Lyft, Postmates, DoorDash, Grubhub, Instacart, and the rest are not paying into the state tax coffers—which means the states are fully subsidizing the cost of their portion of gig workers’ unemployment compensation.
If the states don’t receive additional subsidies to cover this and other costs, will they be able to keep paying us unemployment benefits? Then … if they can’t pay those bills, will the feds have to pitch in to make sure the money keeps flowing to drivers and other independent contractors, potentially with that supplemental payment? We don’t know the answer, but it’s a question we certainly have a big interest in.
#2 Will drivers and other independent contractors still be able to receive any unemployment compensation?
This takes question #1 a bit further, considering whether states will be willing to continue compensating unemployed gig workers at all. Remember, because of COVID-19, states temporarily extended unemployment benefits to independent contractors. If they don’t get any aid from the feds, and Congress doesn’t include a supplemental payment in the HEALS Act, it will be up to the states to pay gig workers.
Right now, what’s being proposed by Republicans is that all recipients of unemployment be paid no more than 75% of their regular earnings. Will the states be able to manage that without federal assistance?
It’s totally possible that the states will turn to our companies, pockets turned inside-out and empty, telling them they’re no longer able to foot the bill for their contractors’ lost wages. This could expedite the process of the companies considering drivers as employees, or … it could leave drivers without a source of income unless they’re willing to go back to work and risk getting COVID while earning far less money than they used to make.
#3 Will the two sides come to terms in time to keep unemployment compensation flowing?
No one can be certain about the answer to this one, but our guess is “probably.” Despite the mud-slinging and name-calling that stands in for civil discourse these days, there will most likely be some solution.
As we mentioned, the Republicans want to extend the extra unemployment payment through September 30th, but reduce it to $200 per week. After that, there would be a payment of up to $500 that, when added to the state unemployment benefit, would be limited to 70% of lost wages. In the Democrats’ CARES bill, the amount would have stayed at $600 per week, and most likely would have continued quite a while past September 30th.
There are other items the two sides must compromise on, including whether states, hard pressed by COVID-19 expenses and a lack of tax revenue, will get direct aid. There’s also a proposal to grant student loan relief, plus how much will be allocated for additional health care and education costs.
Despite all the differences, both sides are motivated to do something to keep their constituents afloat despite the continued decimation of the economy and the looming uncertainty of the future. And, as it’s an election year, we can realistically look forward to a solution, signed and delivered by the time Congress disbands for (yet another!) vacation on August 4.
If they don’t, we’ll need to come up with a Plan B.
What can drivers do if unemployment compensation dries up?
Truth is, unemployment has already been drying up in certain places over the last few months. In Pennsylvania, for example, a message popped up on the weekly claim screen. It said the regulations had changed, and independent contractors would no longer be eligible for the CARES Act compensation unless they met certain conditions.
The new requirements included: having the coronavirus, living with someone who has the virus, being in quarantine because of the virus, or having health conditions that create a high risk of catching the virus. Doctor-signed verification was necessary. This knocked many drivers back out into the streets, or wherever else they could make some money. There’s a possibility that new regulations along these lines might be more strictly enforced after the new legislation passes.
What, then, can a driver do?
Unless you’re truly at risk for getting COVID-19, you’ll have to find ways to work. If you stick with driving, and you don’t want to do rideshare, you might want to go to a pure delivery model. That would restrict the number of people with whom you’d need to interact.
If you haven’t been out to drive rideshare since March, rest assured there are protective measures in place to help drivers be somewhat safer. Drivers and passengers must wear masks; drivers have to sanitize their cars daily; and before they can even get the app to open for rides, they must verify they aren’t carrying or suffering symptoms of COVID-19.
In a recent Gridwise article, we discussed how companies are making PPE available to their drivers. They are also making some effort to ease the burden of enforcing rules on passengers. Uber recently sent this card for drivers to hang on their seats to display to their passengers.
This notice reminds riders of their responsibilities, and helps drivers who struggle to enforce these common sense practices with their passengers. Now, there’s no doubt about what the “rules” are. And we LOVE the part that says “Tip your driver”!
Following safety measures, and possibly either switching to delivery or making yours a hybrid gig, will go a long way toward getting you back in action and restoring your income.
At Gridwise, we want you to stay safe. Do what is healthiest and best for you, but we hope you’ll accept the reality that unemployment compensation isn’t going to last forever.
When you do get back into action, remember that if you download the Gridwise app, you’ll have the ultimate assistant for rideshare and delivery drivers right there with you. Get airport and event information, track your earnings and mileage, and take advantage of great perks for drivers. Also, you can click right into our amazing blog articles, and find the fast track to the always informative and entertaining Gridwise YouTube channel!
What do you plan to do if unemployment compensation can’t cut it for you anymore? Leave us your comments and pass your great ideas on to the rest of us in the Gridwise community.