New Study Reveals Gig Workers Need Unique Benefits to Reduce Financial Challenges

Despite rapid growth of the U.S. gig economy, the majority of gig workers remain underserved as they face a variety of unique and pressing financial challenges, and lack effective tools to help them achieve financial stability. According to new research led by nonprofit Commonwealth and supported by Green Dot Corporation (NYSE: GDOT), Gig Wage, and Steady, most of today’s gig workers face persistent income volatility and have little or no savings for emergency expenses. Additionally, the study focused on what employer benefits may be most effective in reducing the impact of income volatility on gig workers.

“The U.S. gig economy has seen dramatic growth and expansion, accounts for a significant portion of our jobs, and plays an important role in many of our lives,” said Greg Quarles, CEO, Green Dot Bank. “We are proud to partner with Commonwealth to learn more about the needs and challenges of this critical segment of workers and consumers so that we can build tools and experiences to better serve and empower them, both directly and through our partners.”

The research report, “Evaluating the Impact of Income Volatility Benefits on Gig Workers,” evaluated the impact of one of three financial interventions randomly assigned across two cohorts of gig workers. Participants were eligible for up to $1,000 in funds through either a weekly stipend, emergency grant, or emergency loan over a four-month period. Key findings of the Financial Benefits Project pre-pilot included:

• Gig workers have little to no savings for emergency expenses. Between the two cohorts, around 70-80 percent of gig workers had $1,000 or less in savings, and more than 40 percent had no savings at all.
• $1,000 provided short-term financial relief and reduced stress. At the start of the program, most participants did not have the resources to manage a $1,000 expense. For many, the $1,000 interventions provided short-term financial relief and reduced stress.
• Financial hardships were frequent and expensive. Three in four gig workers (76 percent) surveyed after receiving weekly stipends had experienced a financial hardship of more than $1,000, with a third (32 percent) experiencing three or more. 79 percent said their financial hardship prevented them from working.
• Financial support needed for necessities. Across all three interventions, gig workers cited their top financial hardships as paying rent, utilities, auto, or other basic expenses.

“Gig work has gained traction and appeal for a number of reasons — not the least of which is the flexibility and agency it can provide workers,” said Timothy Flacke, Co-Founder and Executive Director, Commonwealth. “But non-traditional work can create financial challenges. This important pre-pilot demonstrates that more research into the unique financial needs of gig workers is needed.”