The boom or bust nature of the Southern Nevada economy jeopardizes our growing gig economy. “Gig workers” are self-employed individuals who file 1099 forms instead of W2 forms to the IRS, where the employer withholds payroll taxes from their employees’ earnings. Payroll taxes fund government safety-net programs, notably unemployment insurance. However, 1099 workers do not receive many of the benefits that W2 workers do since they do not pay into those safety-net taxes.

The self-employed economy - which encompasses many occupations in Southern Nevada - is vital to supporting the leisure and hospitality sector. A gig worker is considered to be any type of employee who fulfills short term commitment jobs; a magician performing on the Las Vegas Strip, an Uber driver chauffeuring tourists, or a freelance artist painting murals in the Arts District are a few examples of this type of worker. They are also commonly referred to as independent contractors, projected based workers, or temporary hires. For some, their “side hustle” is a job that provides an additional, and oftentimes necessary, source of income to make ends meet apart from their nine-to-five job.

What happens to the self-employed when the service industry virtually collapses, and they are ineligible for unemployment insurance? There is no safety net for these workers because they do not pay traditional payroll taxes. Without the Pandemic Unemployment Assistance (PUA) federal relief program, hundreds of thousands of Las Vegans would have witnessed a whole new shutdown, but this time to their income.

While PUA relief is only temporary, unemployment and underemployment of the gig economy will remain a long-term threat. Imagine PUA as a piece of duct tape on a leaky faucet; it gets the job done short term, but an impending catastrophe lies ahead if the issue is not fully repaired.

Demand for services fulfilled by the gig economy came to a near halt in March 2020 with the onset of the COVID-19 recession. In Las Vegas, gig workers rely on tourists, in the same way that musicians rely on fans: without one there cannot be another. This led to a mad scramble for answers and financial assistance from the Nevada Department of Employment, Training, and Rehabilitation (DETR), the state government resource for unemployment insurance. After many frustrating DETR website crashes and hours spent on phone queues, thousands of gig workers realized they were ineligible for state unemployment insurance.

Given the volume of Americans in similar situations, President Trump enacted the PUA federal relief program to provide income for those left in the shadows by state unemployment agencies. PUA grants became available to states in March, yet it was not until mid-May when Nevada began offering PUA applications to laid off gig workers; we were the last state in the country to set up a claim filing system. As of Nov. 7, DETR reports, 631,572 PUA initial claims have been filed in Nevada, demonstrating the dire need for this relief funding.

The gig economy is continuously growing in the United States; however those workers should not count on receiving employer benefits or an extension of PUA anytime soon.

Proposition 22 passed in California earlier this month; now app-based drivers will be classified as independent contractors rather than receive employer benefits under their respective company. The massive campaign was the most expensive in state history, totaling  $220 million in advertising. Those in favor of Prop 22, mainly big companies like Uber and Lyft, made up 90 percent of the spending. Despite the politics, this new law is the reality app-based drivers in California will have to navigate moving forward in the pandemic. Those who have a hard time finding work for these on-demand jobs, especially in small towns, will witness their income dwindle with minimal benefits to fall back on. It does not help that the PUA program is set to expire at the end of 2020.

Moving forward, where can gig workers seek financial assistance?

The future of the gig economy in a time of economic uncertainty raises many questions for state governments. While it offers flexibility for workers to not be tied down to just one company, it provokes concerns on violating labor laws on the firm’s behalf. As an independent contractor, employees are not entitled to unemployment insurance, healthcare, workers compensation, or even a minimum wage. In the COVID-19 economy, workers should not have to worry about losing these basic rights on top of financial stress they might already experience.

Looking toward Nevada, gig workers still face the imminent threat of unemployment or underemployment. The PUA duct tape will be ripped off at the end of next month and it will leave hundreds of thousands of Nevadans in the same situation they were in from March to May. This relief cut will create a flood of financial stress for hundreds of thousands of gig workers in the state. With the loss of PUA in mind, Nevada legislators should strongly oppose passing a bill similar to Prop 22.

The “side-hustlers” need support during these trying times, and driving away their financial assistance and benefits is no way to invigorate the gig economy.

Katie Gilbertson is a junior at UNLV majoring in Economics with a Brookings Public Policy minor. She is also a researcher at Brookings Mountain West and the Lincy Institute, an independent think tank focused on the Mountain West region. Feel free to contact her at [email protected]