Like many San Francisco residents, Mike struggles to make ends meet each month. A musician by trade, he has turned to the gig economy to piece together small income streams to cover his monthly expenses. Taking advantage of the region’s vibrant start up environment, Mike earns $300 to $500 per month doing user testing for various apps and websites, opportunities he finds advertised on Craigslist. To fill gaps in income, he works as an independent contractor, relying on his social network to pick up occasional administrative jobs for nonprofits.

While Mike enjoys the freedom of the gig economy, each month is a financial struggle that sometimes demands 16-hour work days. Usually he can bring enough money in “nine months out of ten” through his efforts. However, he sacrifices playing in music events, and the cost of living continues to rise making it harder for him to meet his financial needs. He says that he would need to make $1,000 more per month to have the quality of life he would like, an amount that would give him peace of mind knowing he has the funds to cover fixed, non-discretionary expenses such as rent and transportation.

Working as an independent contractor comes with additional challenges. A 1099 worker has less job protections and access to benefits than a traditional W-2 employee. Independent contractors like Mike do not pay into Social Security Disability Insurance (SDI) or Unemployment Insurance (UI), so they don’t have access to benefits when they are unable to work. Life events like illness, injury, childbirth or a sick family member means a loss in wages, with little to no safety net. Gig workers also lack access to employer-subsidized health insurance plans and employer contributions to workplace retirement plans.

Many gig workers like Mike are also disconnected from the financial mainstream. Mike opened a checking account to take advantage of a $200 cash promotion for opening an account, but his income streams come in small check amounts that he usually cashes or gift cards that he sells at a discount for cash. He remains underbanked, relying on check cashers to cash his checks and other fringe financial products to meet his short-term needs.

In 2016, the Rockefeller Foundation and the Bridgespan Group reported that at least 36 million workers are engaged in independent work, or roughly a quarter of the U.S. workforce. This number could reach between 33-50% of the workforce by 2020. Earlier this August, OFE teamed up with the Alameda County Community Asset Network to host an event, Prevailing Financial Challenges in the Bay Area, that focused on issues facing gig workers and provided local resources to non-profits reaching these clients.

As we anticipate more and more workers entering and relying on the gig economy, we see a need to innovate to provide households like Mike’s access to portable benefits, from paid sick leave to retirement benefits, and tools to help them manage the volatility in their income and expense flows.

This conversation with Mike is part of a series of interviews OFE is doing to better understand the financial lives and decision-making of low income families. These interviews provide an opportunity to dig deeper into the financial lives of households that live, work or reside in San Francisco and glean insight that can inform OFE’s design of tools, products and services to meet the needs of families in our city.

If you or your organization serve independent contractors, like Mike, check out the following resources: