E
conomy
The Pandemic Exposes Dangers of the Informal Economy And It Is Not Just Developing Countries That Are in Trouble by Pascale Joassart-Marcelli The novel coronavirus has wreaked havoc on the global economy, shuttering businesses, disrupting supply chains, and causing millions of people to lose their jobs. But the pandemic has been especially devastating for the world’s two billion or so informal workers, who constitute roughly 60 percent of the global labor force and often earn less than 2$ per day. These workers, particularly in developing countries, face a looming economic calamity. Unlike workers in the formal economy, who benefit from legal and social protections, informal workers earn their living without a safety net. They are mostly women and mostly self-employed, engaged in occupations as varied as street vending, domestic work, transportation, and garbage collection. Some also work as off-the-books day laborers in factories, farms, and other formal businesses that don’t extend full rights or protections to all of their employees. Measures taken by many countries to fight the pandemic—including lockdowns implemented without significant assistance for those whose jobs are affected— have threatened the livelihoods of informal workers and pushed them further into poverty, hunger, and homelessness. In just a few weeks, millions of informal
jobs have been lost and millions more have been put at risk. But the crisis in the informal economy is not affecting just poor countries—it is hurting rich ones, too. Nearly a fifth of all workers in the United States are informal, and they are particularly vulnerable to the health threat posed by the new coronavirus as well as to its economic consequences. The popular image of the informal American worker may now be a laborer in the technology-enabled “gig economy”—such as a driver for Uber or Lyft—but the shift toward a larger informal economy began under U.S. President Ronald Reagan. Regulations on employers loosened after 1980, allowing businesses to gradually offload risks onto subcontractors, day laborers, and other flexible workers. Lack of worker protections now makes the coronavirus crisis particularly acute in the United States: it is not just a health crisis or an economic crisis but a deeper social crisis decades in the making.
THE RISE OF THE INFORMAL WORKER Throughout the developing world, the pandemic has exposed entrenched social inequalities. In India, where
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