How the ‘Polyemployment Paradox’ Hurts Gig Workers, Freelance Creatives, and Many More

Alexandrea Ravenelle knows what it’s like to face the polyemploment paradox.

Before earning her Ph.D. in Sociology at the Graduate Center, she worked for nonprofits and in public relations, and did some teaching on the side. When she got laid off from her full-time PR job, she received reduced unemployment benefits because she still had other gigs — her teaching positions that didn’t pay enough to live on.

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Keeping those gigs — which she chose to do so she could stay working and because she loved to teach — meant trying to stay afloat on less income than she would have received from her unemployment benefits if she’d never taken on those additional jobs in the first place.

This is what Ravenelle calls the polyemployment paradox: Workers who have struggled to find full-time employment with benefits are attempting to cobble together their own personal versions of the social safety net by working multiple jobs and taking on side gigs. Yet these efforts, intended to offer some degree of income security, can prevent workers from receiving unemployment benefits. “People try to get ‘secure employment’ by ensuring that they have all these different jobs, but if they lose the best-paying job — and they’re still working their other jobs — they may find that their ongoing work prevents them from receiving unemployment assistance,” Ravenelle says. “Sometimes your income drops, but your side hustle work disqualifies you from benefits.”

Gig workers who get by entirely through short-term, unpredictable work via platforms like Uber, Taskrabbit, and Craigslist are the most vulnerable, and they suffered the most when COVID-19 drastically cut the demand for their services, a topic that Ravenelle, who is a professor at the University of North Carolina, Chapel Hill, examines in her new book, Side Hustle Safety Net: How Vulnerable Workers Survive Precarious Times. In her research, she interviewed almost 200 gig and contract workers — a diverse group that included delivery workers, dog walkers, restaurant kitchen help, and freelancers in creative industries like film production and photography.

Many workers in fields that once promised full-time employment with benefits are now finding themselves working as independent contractors in jobs classified as 1099: a status that lacks the protections of W-2 jobs, in which workers are formally employed by a company or organization that deducts money for their taxes. Except for the short-term relief provided by the CARES Act — which gave partial unemployment benefits to 1099 workers laid off in the first year of the pandemic — workers with 1099 status are not eligible for unemployment benefits. Similarly, workers who have more than one W-2 job often lack full health insurance and other benefits, and don’t receive unemployment benefits if they lose one of their jobs.

Nearly all gig jobs are classified as 1099, and the gig economy extends far beyond DoorDash and Uber. Delivery gig-work platforms like Relay and Roadie — which is owned by UPS, the company with the largest Teamsters union workforce — operate as a shadow gig-work economy, Ravenelle says. Companies like Pared supply workers for restaurant jobs that might once have been filled by staff. “Your local flower shop is probably now doing their flower deliveries not with a staff member but with people they hire off of Roadie,” Ravenelle says. “The person who’s cutting up potatoes at a fine French restaurant might not be a staff member — and kitchens, we know, involve dangerous work.” When companies turn those positions into 1099 jobs, workers are ineligible for workers’ comp, paid time off, a guaranteed minimum wage, social security contributions, and health insurance.

Professionals in industry and the arts might have greater personal resources than DoorDashers who schedule their days in 30-minute increments, but in many ways they are no less vulnerable. Ravenelle’s research took her to sites where companies could hire, on a gig-basis, chemical engineers, writers and editors, and college professors. On Kolabtree, you can hire a sociologist with a Ph.D. to do gig work for $40 an hour.

Why are companies and organizations relying on 1099 workers? “A 1099 worker can cost a company anywhere from 20% to 40% less in terms of tax liability, workers’ comp payments, health insurance, and Social Security,” Ravenelle says. “The companies want to be nimble, they want to be flexible, and they don’t care that they’re pushing all the risk of slow periods onto these workers. The individuals who can least assume these costs are the ones who are footing the entire bill.”

The U.S. unemployment benefit system was created to ensure that a company that causes unemployment by laying off workers has to share in some of the cost to society, Ravenelle says. “What the 1099 does is put all of the cost of joblessness back on the individuals and communities,” she says.

The gig economy that emerged a little more than a decade ago was the subject of Ravenelle’s previous book, Hustle and Gig. She started on the work that led to Side Hustle Safety Net during the pandemic, when she wondered what would happen to all the gig workers who couldn’t access the hard-won workplace protections of previous generations.

To Ravenelle, the policy lessons are clear. “We should have many more W-2 jobs, and we should get rid of the 1099 status,” she says. Adjunct professors, delivery workers, writers for contract, and teachers doing 1099 work — as she has done herself — should protect themselves as best they can from the risks of precarious work, and should look for W-2 positions. “That’s probably going to be a better step for you in the long term,” she says. “But if you’re going to be in 1099 work for a long time, you probably want to look at ways that you can structure your finances, and maybe incorporate so that you can write off expenses.”

There is an existing solution for most of the problems faced by precarious workers. “We have created a way to have workplace protections, and that’s W-2 status,” Ravenelle says. Yet structural changes are also needed to account for how the polyemployed are supporting themselves. “We need to rethink our unemployment system to reflect that somebody might still have a part-time job, but they lost their main source of income. There should be supplemental unemployment assistance for them.”

Workers should also be aware of the risks looming in the near future, she says. Companies that rely on gig work are already seeking to cut employee-related costs further through AI and other new technologies. Uber plans eventually to replace its human drivers with self-driving cars, and Amazon wants to shift from independent-contract delivery drivers to drones. “That way they won’t have to deal with pesky demands for tips and bathroom breaks,” Ravenelle says. “They won’t have to deal with people.”

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