The JP Morgan Chase Institute recently released a new study, Bridging the Gap: How Families Use the Online Platform Economy to Manage their Cash Flow.
The key finding of the study is "participation in the Online Platform Economy functions as a cash-flow management tool for many families."
In particular, JP Morgan found many use online platform work to supplement their income when they lost a job. Key quote from the study:
"Taken together, our findings indicate that the Online Platform Economy— and particularly its transportation sector—play an income-smoothing function for families between jobs."
Regular readers may remember this was one of the key findings in our On-Demand Workforce Workforce study conducted with Intuit and released in 2017.
In that study, we found 21% of online platform workers reported they participated in this type of work to get through financial hardships or shocks, such as a job loss or major medical expenditures.
We also found 41% of the workers surveyed had faced a financial shock over the prior year. See the Aspen Institute's write up of the study for more details.
These findings are important because policymakers tend to focus on long term, full-time gig workers. This means they could easily pass laws that limit the ability of people to use online work platforms in times of financial need and/or to supplement their income.
Key quote from the JP Morgan Chase Institute study:
... as policymakers weigh approaches to improve the pay, benefits, and protections of platform workers, they ought to take into consideration potential impacts those same approaches might have on the very characteristics of platform work—low barriers to entry and high flexibility—that allows families to use it to smooth their income.
We agree with and echo the importance of low barriers to entry and high flexibility.
Income volatility is growing and more Americans are facing financial hardships and shocks than in the past. It’s also clear that our traditional safety nets are not working as well as they need to.
Online platforms and gig work have become an alternative safety net for many. We have to make sure in our zeal to protect workers, we don't take away this important income-generating alternative.
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