The gig economy has exploded in the past few years, and many people are choosing to be part of that economy rather than work as traditional salaried employees. Gig workers and freelancers currently represent a significant portion of the American working class.
However, when it comes to classifying gig workers and freelancers, most will be classified as unemployed. The classification has led to unemployment numbers that may not be entirely accurate.
Ohio is a state in particular that has posted high unemployment in the recent past. Unemployment rates have increased significantly all over the country, primarily due to people quitting their jobs.
Job Openings and The Great Resignation
The great resignation refers to the bulk movement of workers quitting their jobs since the Covid-19 pandemic. Over four million workers have reportedly quit their jobs for various reasons.
The unemployment rates are skewed as gig workers and freelancers who leave traditional jobs to work on their own accounts are usually considered unemployed. According to the US department of labor, many in low-wage positions such as waiters and bartenders quit their jobs in favor of government stimulus paychecks.
Freelancers and gig workers are self-employed professionals who choose to earn an income in different ways than have been available in the past. Proof of income is usually essential to ascertain employment. Gig workers and freelancers can generate their own pay stubs using a pay stub maker to show evidence of income.
Therefore, a professional in Ohio working on their own account as a gig worker or freelancer could be making an income, but labor statistics will officially classify them as unemployed.
The great resignation has led to a sharp decline in employment rates as many businesses cannot find employees to work for them in the traditional sense. It is understandable; who would like to be an employee while they can perform the same job working on their own account with much more freedom?
In the US, job openings increased to about 11 million in July of 2021. The rise has been continuous and shows no signs of slowing down.
The available workers for the job openings are few, which is reflected as increased unemployment in labor statistics. Many businesses in the country have reduced production and are declining orders due to the labor shortage and the inability to fill open job positions.
Many of these businesses will have to acquire the services they need from freelancers and gig workers instead of employees as they typically would. Although gig workers will do the work the firms need, the records will still show high unemployment rates because they are not employed by the company they work for.
Another factor that has skewed unemployment statistics in Ohio and the rest of the country is the number of gig workers and freelancers filing for unemployment claims. The number of gig workers and freelancers filing for unemployment benefits has increased tremendously since the beginning of the pandemic.
Gig workers and freelancers can currently apply for unemployment benefits under Pandemic Unemployment Assistance which has been designated explicitly for self-employed, independent contractors who are unemployed due to the Covid-19 pandemic.
Considering that about a third of the American labor force participates in the gig economy, if they collect unemployment benefits, it will significantly affect the unemployment statistics.
Many gig workers and freelancers claim to have benefited from the government stimulus packages. Many of them file claims while still working in the gig economy.
In conclusion, many gig workers have had to file claims for unemployment benefits to have an income since the Covid-19 pandemic. It has led to inaccurate representation of unemployment in labor statistics. A reevaluation of the statistics is necessary to establish the true nature of unemployment in Ohio and the United States.