Note

The Online Platform Economy through the Pandemic

Verified Person
· Views 87

Just a decade ago, the Online Platform Economy comprised a handful of marketplaces connecting independent sellers to buyers of physical goods. Today, we rely on platforms to find transportation to the airport, someone to walk our dog, a place to stay on vacation, and gifts for our family members. Purchasing goods and services from independent suppliers through platforms has become a routine part of daily life. In this report, we documented how families interacted with online platforms to earn money with a focus on the period between our last report in 2018 through the COVID pandemic ().

Three forces at play during the pandemic make this a particularly interesting period to study the Online Platform Economy. First, workers experienced record-level job losses, especially lower-income workers. As we have previously documented, workers turn to the Online Platform Economy—transportation platforms in particular—as a source of income when they experience job loss (). This might suggest that we would see new entrants into the Online Platform Economy during the pandemic or an increase in reliance on platforms as a source of income. At the same time, the pandemic made many in-person services like ride sharing much less attractive to consumers (and suppliers) which may have stemmed the inflow of new platform workers and suppliers. Similarly, non-pharmaceutical interventions like social distancing protocols limited consumers’ ability to travel and engage many in-person services. This potentially curtailed demand for many platform services and caused participants to leave their platforms.

Second, Congress dramatically expanded unemployment insurance benefits both in terms of generosity of payments and who is covered. The Pandemic Unemployment Assistance (PUA) program specifically covered gig workers and other self-employed workers who faced a loss of income. In addition to covering platform workers, PUA may have also provided coverage to workers who, absent PUA, wouldn’t have qualified for UI and may have turned to platform work to support themselves.

Third, the pandemic effected many lifestyle and behavior changes, including work-from-home, increased online purchasing, and increased food delivery. These changes may have increased the feasibility of, and demand for, platform work or shifted platform participants from one sector or platform to another.

This report aims to answer four questions. First, how did supply-side participation in the Online Platform Economy change during the pandemic? Second, to what extent were changes in participation driven by experienced workers versus those new to platform work? Third, how much did platform participants rely on unemployment insurance during the pandemic? Fourth, how much of platform workers’ total income comes from the Online Platform Economy?

As with previous work, we study supply-side participation in the Online Platform Economy by tracking payments from platforms into de-identified personal checking accounts (). Specifically, from a universe of 30 million Chase deposit account customers, we select families who are active users of their Chase account and track payments received from 38 online platforms between April 2018 and June 2021.[i]

We define the Online Platform Economy as platforms that (1) connect independent suppliers to consumers of goods and services; and (2) mediate payment. We disaggregate the Online Platform Economy into four sectors: two labor sectors in which participants sell their time or skills, and two capital sectors in which participants sell goods or lease property.

Labor platforms include:

  • The transportation sector, in which drivers transport people or goods.
  • The non-transport work sector, in which workers offer a growing variety of services including dog walking, home repair, telemedicine, and many others.

Capital platforms include:

  • The selling sector, in which independent sellers find buyers of goods like hand-crafted products or used books.
  • The leasing sector, in which lessors find lessees to rent homes, parking spaces, and many other types of assets.

Given the proliferation in platforms and the payment mechanisms by which participants can receive their platform earnings, we view the unique strength of our data asset as quantifying high-frequency trends (rather than levels) in platform participation and revenues, and how they are related to other aspects of a family’s financial life.

We find that nearly 8 percent of families earned income from the Online Platform Economy during the year before the pandemic, though growth in participation has slowed since March 2020. Transportation and leasing platforms took the biggest hits during the pandemic due to the departure of existing drivers and lessors, while selling platforms have continued to grow. Families with platform income prior to the pandemic, drivers in particular, were much more likely to receive unemployment insurance in 2020 and 2021 than those without. Platform income as a share of total income has been declining, but median earnings has stayed constant, suggesting an increase in overall income among platform participants during the pandemic.

We conclude that the Online Platform Economy is a crucial source of income for many families even after the shock of the pandemic. During the pandemic, the Online Platform Economy served as not just a fallback source of income in a time of potential need but also, in its own right, a source of potential risk. New workers continued to start platform work during the pandemic, allowing them to remain attached to the workforce.  Many others exited platform work potentially due to a fall in consumer demand, heightened public health risk, or the availability of expanded unemployment benefits. Indeed, Online Platform Economy workers appear to be particularly vulnerable to economic shocks with extremely high rates of unemployment insurance receipt during the pandemic. Of all platform workers, drivers appear to be the group of biggest concern for policymakers from a welfare perspective. They are the most numerous group, have the lowest family incomes, were the most likely to have received unemployment insurance during 2020. The continued rise of the Online Platform Economy raises the importance of strengthening the social safety net for contingent workers and reducing the administrative burdens associated with platform income.

Disclaimer: The content above represents only the views of the author or guest. It does not represent any views or positions of FOLLOWME and does not mean that FOLLOWME agrees with its statement or description, nor does it constitute any investment advice. For all actions taken by visitors based on information provided by the FOLLOWME community, the community does not assume any form of liability unless otherwise expressly promised in writing.

FOLLOWME Trading Community Website: https://www.followme.com

If you like, reward to support.
avatar

Hot

No comment on record. Start new comment.