REDWOOD CITY, Calif., Oct. 22, 2020 /PRNewswire/ -- Flourish, a global venture capital firm focused on early-stage fintech investments that enhance financial health, today unveiled The Digital Hustle: Gig Worker Financial Lives Under Pressure, United States Spotlight. The report is based on surveys of 700 gig workers across five cities: Atlanta, Chicago, New York, Philadelphia, and San Francisco.
The United States Spotlight is fifth in a series of Flourish's year-long global study of more than 3,000 gig workers from Brazil, India, Indonesia, South Africa and the U.S., all countries with some of the largest and fastest-growing gig economies. In August 2020, Flourish partnered with digital worker platform company Steady to better understand how U.S. gig workers' financial lives were impacted and their hopes and concerns for the future.
Gig workers in the U.S., employed in service roles, such as e-hailing and delivery, were hit hard by the COVID-19 pandemic, with 68% reporting a decline in total income. Nearly 3 out of 5 workers earned less than $1,000 per month, compared to 1 in 5 before the lockdown. A majority of U.S. respondents – 89% – were concerned about COVID-19, and at the time of the survey, respondents were most worried about the impact to their livelihoods, although health risks were also a meaningful concern.
"With the onset of COVID-19 and the accompanying economic fallout, our research found that the majority of workers in the digital gig economy are living on the edge, piecing together temporary and inconsistent work and struggling to make ends meet," explained Emmalyn Shaw, managing partner at Flourish. "The pandemic and ensuing economic dislocation significantly impacted this population and highlighted their limited financial resilience."
Steady CEO Adam Roseman said, "As COVID-19 continues to redefine nearly every aspect of daily life, earning a stable income is much harder to achieve for tens of millions of hourly and gig workers. Consistent and coordinated government and private-sector support will be needed."
Black and Latinx Communities Disproportionately Impacted
Fifty-nine percent of respondents reported that if they lost their main source of income, they could not cover household expenses for a month without borrowing money. Black and Latinx communities were disproportionately impacted by the crisis, evidenced by respondents' high levels of concern and the heavier burden of supporting additional financial dependents. Black workers were hit the hardest financially, with 61% now earning less than $1,000 per month.
Worker Sentiment and Financial Impact Vary by City
The United States Spotlight reveals that worker sentiment and financial impact varied meaningfully by city, depending on the regional course of the pandemic. In Atlanta, Chicago, and Philadelphia, more than half of the workers reported a large fall in income, while San Francisco workers, who also reported a large income decline, indicated a somewhat more positive outlook. In New York, workers reported less economic hardship and lower levels of concern.
Yet, U.S. gig workers showed signs of grit and resilience as they coped with the economic impact of the crisis:
- 63% used savings and 55% borrowed money, combining loans from multiple sources, with a heavy reliance on friends and family.
- 39% found new or additional work, with over a third of new work coming from online or app-based platforms.
- Of the 62% who reduced consumption, half cut back on food.
Some Relief with Financial Aid
In the U.S., government relief payments through the CARES Act were a lifeline for many.
- 77% of respondents received financial aid through the CARES Act, and while still struggling, these recipients had stronger financial resilience, less decline in quality of life, and a greater sense of hope.
- More than half of respondents applied for unemployment benefits since the crisis began, although most struggled to navigate the application process. For most, finding work with better pay is their top financial goal.
To read the full United States Spotlight report, visit: https://flourishventures.com/perspectives/the-digital-hustle-gig-worker-financial-lives-under-pressure-us-spotlight-2020/
"The important role that gig workers play in our society cannot be overemphasized," said Shaw. "As the world continues to grapple with the challenges of the current crisis, financial institutions, fintechs, and policymakers have an opportunity to learn from our most vulnerable workers and identify financial services that will help them survive this crisis and thrive in the future."
Flourish is a global venture capital firm investing in entrepreneurs whose innovations advance financial health and prosperity for individuals and small businesses. Our global fintech portfolio includes more than 60 high-growth companies offering a range of leading-edge financial services including, in the U.S., challenger bank Chime, gig worker platform Steady, next-gen home insurance company Kin, and FreshEBT, an app for SNAP recipients, among many others. We partner with industry thought leaders in research, policy, and regulation to better understand the underserved and help foster a fair and more inclusive economy. Visit us at flourishventures.com or join our community through Twitter, LinkedIn or Facebook.
SOURCE Flourish Ventures