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How the gig economy will be key to Utah’s COVID-19 recovery

In this posed picture, the Uber app is opened on a mobile phone, backdropped by other transport services in London, Monday, Nov. 25, 2019.
Associated Press

With the massive changes in the economy as a result of the pandemic, more employers and workers have started using services like Bacon to quickly get matched together to meet the changing demands of people in Utah and Texas. With many workers laid off from their standard full-time jobs, gig companies have seen huge increases in workers joining their platforms in recent months.

Unemployment numbers in Utah have started to move back towards pre-pandemic levels with the June rate down to 5.1% from the high of 10.4% in April (this is contrasted with the total U.S. unemployment rate of 11.1%.) One thing that will help keep the unemployment rates declining will be for policymakers in Utah to remove or avoid regulations that could put restrictions on gig companies.

For example, in California, the Office of the Labor Commissioner recently sued a gig company, Mobile Wash Inc., for not classifying its workers as employees and not providing nonpay benefits. Even though the intentions are to protect and benefit workers, regulations like this will have the negative consequence of significantly reducing total available jobs.

Strong gig companies provide a way to alleviate the negative effects that a pandemic can have on a state. For example, Bacon empowers workers to pick and choose which jobs they see fit their abilities and schedule best. Comparing their business model to an “Uber for all kinds of jobs,” Bacon is a gig economy platform that matches workers to employers in need of short term, temporary work.

People who work in the gig economy are essentially contractual or freelance workers, rather than having traditional employment. It is gaining in popularity, too — the number of gig workers has significantly increased in recent years, growing 15% since 2010 in the U.S.

Entrepreneurs typically have a knack for noticing how the world and the economy are constantly changing. The pandemic is no exception to this shaping; in fact, the pandemic has served as a catalyst towards ushering in change at an even faster pace. As some companies close their doors and others are seeing a surge in demand, the economy can often lag behind the dynamic environment it faces.

The more easily Utah can adapt quickly to an outside shock, the better equipped the state will be in dealing with economic downturns. This is where the gig economy comes in.

Gig economy platform companies give people the ability to more easily adapt to a changing environment. By providing short term work with independent contracting, the gig economy gives workers the opportunity to quickly and easily be connected with jobs that are in high demand. Without having to go through a normal hiring process, which can be costly and time-consuming, the gig economy shortens the timespan of matching workers with jobs.

Economists often explain how changes from factors such as technology, personal preferences, social norms or resources continually pull the economy in many different directions. New trends such as demand for masks, more online orders, and less travel and entertainment result in a system that relies on strong technology platforms to help people adapt to the dynamic environment.

Food delivery gig platforms like GrubHub, Postmates, DoorDash and UberEats have seen huge increases in demand since the start of the COVID-19 pandemic. As restaurants close down and people try to limit leaving their homes, food delivery gig economy platforms are accommodating the demand for new delivery drivers while supporting (and saving) restaurant businesses in the process.

The gig economy is the most flexible employer one could ask for. People who want some extra side cash or want to treat a gig as a primary job alike have the ability to use the platform. The gig economy has helped workers and resources swiftly move towards the new direction where they are most demanded.

Services like Bacon also provide the chance for workers to stick with a specific job on a path toward full-time employment. This short term flexible work provided by the gig economy thus lead to a more robust economy overall that is better equipped for handling short term unemployment spikes.

As long as Utah continues to follow its own policymaking path and steers clear from regulatory paths pursued by states like California, it will boast an innovation-supporting economy that can quickly adapt to problems. Supporting innovative gig companies will provide more Utahns with easier access to jobs which is extremely important during this pandemic.

Nick Grose is a policy research intern with the Libertas Institute, a free-market think tank in Utah. He is currently working on a master’s degree in economics at George Mason University.

Correction: The original byline of this guest opinion misspelled the author’s last name as Gross. It is Grose.