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Gig labor rebounds, but some gig workers are battling inflation

The pandemic recovery is winding down and the Fed is trying to curb economic growth to fight inflation.

Gig workers are an increasingly large part of the workforce, although their wages and numbers are not included in the Labor Department’s survey of traditional employers. How are they doing in this fast-paced economy?

At the start of the pandemic, everything from carpooling to music productions was shut down, along with the rest of the economy. Even so, the timing hasn’t been too bad to be a gig worker, freelancer or independent contractor, said UNC sociologist Alexandrea Ravenelle.

For starters, for the first time ever, the government has provided generous unemployment benefits that non-traditional workers are generally not eligible for.

“For some gig workers, it was life changing. It gave them time to stop hustling, save money for a change, and think about what they wanted to do with their lives,” Ravenelle said.

And things have improved as the economy has reopened and people are on the move again, said Adam Ozimek of the Economic Innovation Group.

“Self-employment has recovered much faster than wage employment, and that’s a sign that you have both increased supply and increased demand for gig workers,” he said.

Gig workers face high price inflation, just like everyone else. But they might be able to respond with some income inflation, said Liya Palagashvili of George Mason University’s Mercatus Center.

“If you’re a freelance musician on Upwork, or you’re a tutor, you may be able to increase the hourly rate you charge,” she said. “Some construction workers who are on Uber and Doordash, for example, can’t set their own prices, can they? Those prices are dictated by the companies via an algorithm.

Meanwhile, rideshare and delivery drivers are spending 50% more than a year ago on gas to fill up. But as Ravenelle points out, while you and I may be paying more for a ride now, “just because the platform raises the price doesn’t mean the driver makes more money.”

If the Fed’s fight against inflation leads to higher layoffs and unemployment, more people are likely to turn to gig work to replace lost income.

This in turn could lead to greater competition between gig workers – for rides and food deliveries and students to tutor at the same time as consumer demand for these services declines.

And if the economy slows enough to slip back into recession, there won’t be a generous federal backstop for the unemployed like there was last time.

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