What Will An Independent Contractor Look Like Post Pandemic?


A glimpse into how the CARES Act and other current events could change the gig economy.

The Coronavirus will have long lasting impacts in decreasing the prevalence of the "gig" economy. "The rules are going to change significantly in the next few years, and we can thank the coronavirus for putting the final nail in the coffin", the Hill reported. This change will impact small business owners who heavily utilize freelancers for certain activities and will require large adjustments to their business models.

"For a couple of decades, the gig economy was booming. Sites like UpWork, TaskRabbit, Fiverr and Freelancer added millions of independents looking for work, either to supplement their existing incomes or for their livelihoods". These companies were able to benefit from not having to pay many of the costs that employers normally would such as employer taxes, health insurance, and retirement plans.

The gig economy has grown so much in the last decade that it is now an integral part of the economy as a whole. The hill states "a report from fintech platform PYMNTS finds that as much as 40 percent of U.S.-based workers generate a large part of their income via freelancing." It is also stated that independent contractors increased by 15 percent in the last decade according to the ADP Research institute.

Both politicians and independent contractors are being forced to pick sides on where they stand on this issue. The contractors suffer as they do not have access to many of the benefits such as retirement plans and health insurance. However, there is certainly an increased flexibility and liberty that comes from the independent title and the freedoms it brings.

"Whether or not you agree, it makes no difference. The laws are going to change. Right now, the federal classification of independent contractors is based on a set of guidelines from the IRS that is subject to wide interpretation." The Hill reports that despite the Trump administration not focusing on this issue, the states are.

California has started to limit the number of workers that transportation companies such as Uber and Lyft can use. Joe Biden has publicly supported this legislation and plans to back similar legislation if elected. The CARES Act, a result of the coronavirus, has also begun expanding the rights of independent contractors.

This decision shows that at a Federal level the nature of independent contractors will change, and businesses must adjust. Whether the workers themselves will advocate for these changes is irrelevant as they have already begun.

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Economics, Finance and Investing