For gig workers, Uncle Sam's virus relief legislation might help a lot. Or not at all

From a 2016 McKinsey report, still among the best gig economy analyses I've read (click for report).

The gig economy is complicated and it's about to get a lot more complicated.

Gig workers are helped by the enormous coronavirus relief bill that's expected to be signed into law soon, but like all things gig economy, the law is likely to raise more questions than it answers. Self-employed people qualify for expanded unemployment insurance, and for loans designed to help small businesses hurt by this crisis. But how much help will gig workers really get?

It's complicated.

Why? We begin with the hardest question of all. What's a gig worker? While the Uber economy has been touted as a solution to the fast-moving digital economy for years, the American government has precious little insight into gig work. How confusing is this problem? When people try to estimate the size of the gig economy, the range is laughable -- from a modest 10% of the workforce, with no real increase since 2005 -- to more than one-third of the workforce, thanks to car-sharing apps and the like.

Much of the disconnect results from the definition. Are all freelancers gig workers? Are all sole proprietors or solopreneurs gig workers? What about part-time gig workers who supplement their income with a few nights of Lyft work?

This all sounded academic until the coronavirus hit. Not now. When Uncle Sam starts sending out checks and approving loans, that aid better not skip over one-third of consumers. How will their aid eligibility be calculated? I'm trying to get answers to critical questions like these, but here's what I know so far (corrections welcome):

Eligibility is easy enough to establish. Anyone who paid self-employment taxes is eligible for standard SBA Economic Injury Diaster Loans (think hurricanes), Gerri Detweiller tells me. That same standard seems to apply both to unemployment benefits and new, forgivable small business loans created by the Senate CARES legislation (Coronavirus Aid, Relief, and Economic Stimulus - isn't that cute?).

Unemployment benefits included in the bill are pretty good. They amount to state benefits plus $600 each week, which could add up to $1,000 or so each week, depending on your state limits. The problem for gig workers is how will Uncle Sam define "unemployed." Most gig workers I know have several gigs. They drive for Uber AND Lyft AND deliver food. If 80% of those rides dry up, is that driver unemployed, or will she or he be ineligible? That's unclear.

Both the old disaster loans and this new class of loans might help gig workers, but there's plenty of caveats. The application isn't trivial. There will surely be a bottleneck. Disaster loans come straight from the SBA, and there's a 45-day wait, Detweiller says. These new loans will come from banks, and are backed by Uncle Sam, so the lending standards will be very relaxed. A good credit score alone is good enough. They have generous terms, and some won't have to be paid back (based on employee retention). That doesn't help a gig worker. Banks have the right to advance $10,000 within three days. That could help a gig worker. The money has to be spent on salaries, rent, and other coronavirus-related costs. How will gig workers define this? I don't know. Could an Uber driver pay rent for their personal apartment with a small business loan? Or only if they qualify for a home office deduction? That's unclear to me.

Get paid: One important benefit to know: Small business aid allows companies to use loan/grant money to pay bills they owe sole proprietors. That's important. Get the money you have coming to you when your clients get their aid.

One important element of the economy is invisible in this law: the cash economy. We all know plenty of gig workers supplement their income with under-the-table cash tips and payments. Wait staff, delivery drivers, and other workers survive on the occasional tax-free payment. Some live entirely on cash. Most will find themselves shut out of a lot coronavirus relief. Maybe, long-term, you agree with that approach. But short term, this will be devastating to those households and hurt the economy as a whole, not to mention the coronavirus health battle we are facing. If it's smart to pay people to stay at home to flatten the curve, it's not smart to leave out the most vulnerable workers from that plan.