The nonprofit Commonwealth in collaboration with Green Dot Corporation, Gig Wage and Steady recently released a research report that showed the precarious financial state of most gig workers. Also presented were the challenges gig workers face that slow their headway to financial stability—and the tools and resources to help them.
Titled, “Evaluating the Impact of Income Volatility Benefits on Gig Workers,” the report surveyed and compared gig workers versus service-sector employees. The stark difference between the two groups’ financial health was shown. Gig workers had a greater percentage of workers earning less than minimum wage, lost earnings due to technical difficulties and have used SNAP benefits.
“The U.S. gig economy has seen dramatic growth and expansion, accounts for a significant portion of our jobs, and plays an important role in many of our lives,” said Greg Quarles, CEO, Green Dot Bank. “We are proud to partner with Commonwealth to learn more about the needs and challenges of this critical segment of workers and consumers so that we can build tools and experiences to better serve and empower them, both directly and through our partners.”
To appreciate their financial circumstance, gig workers struggle to fully cover their utility bills. As concerning is their lack of financial security in the face of an emergency or crisis. If one were to occur, many do not possess the necessary savings to address. This leaves them vulnerable to persistent income volatility that keeps them in a cycle of financial insecurity.
“Economic empowerment is everything. This research and data are foundational to unlocking key insights to building technology and services that can truly provide a financial social safety net to tens of millions of everyday hard-working people,” said Craig J. Lewis, Founder & CEO of Gig Wage, a finTech payroll platform created specifically for the 1099 economy.
The study tested three actions that could have a meaningful impact on gig workers’ financial security. Participants were given $1,000 in funds over a four month period via either a weekly stipend, an emergency grant or an emergency loan. Assigned randomly across two cohorts, participating gig workers were profiled, showing: 70-80% had $1,000 or less in savings and over 40% had no savings at all.
The following was found:
• The $1,000 provided short-term financial relief and reduced stress for many,
• 76% receiving stipends experienced a financial hardship of more than $1,000, while 32% experienced three or more and 79% confided that financial challenges prevented them from working, and
• Gig workers’ top financial hardships were: paying rent, utilities, auto, or other basic expenses.
The Financial Benefits Project pre-pilot profiled 138 gig workers across two cohorts. The profiles revealed 51% identified as African American/Black, 74% as female, and 62% earning less than $40,000 a year.
Commonwealth, a national nonprofit with the mission to build financial security and opportunity for financially vulnerable people, particularly underrepresented groups, works with partners to help gig workers gain financial stability. Co-Founder and Executive Director Timothy Flacke, speaks to the future of gig worker financial health.
“Gig work has gained traction and appeal for a number of reasons — not the least of which is the flexibility and agency it can provide workers,” said Flacke. “But non-traditional work can create financial challenges. This important pre-pilot demonstrates that more research into the unique financial needs of gig workers is needed.”
To read the full report, visit here.
