Non-traditional workers have been at the forefront of the national discussion in recent weeks, driven in part by the passage of the CARES Act, which includes unemployment benefits for gig workers, freelancers, and the self-employed. Long before the COVID-19 crisis began, financial security and lack of emergency savings have been an issue for many Americans: 39% of Americans are unable to handle a $400 unexpected expense. According to the U.S. Financial Health Pulse 2019: Trends Report, 47% do not have savings to cover the recommended three months of living expenses, and 12% have less than one week of living expenses saved. The unpredictability of non-traditional work can often magnify these challenges. Previously, Commonwealth found that these workers are significantly more likely to have volatile incomes and less likely to have access to benefits than traditional workers. In light of the economic repercussions of the COVID-19 pandemic and the well-built plans of many microentrepreneurs being derailed, the need for an emergency cushion for these workers has never been more urgent.

The 2.5 million creative entrepreneurs on Etsy who sell handmade goods, vintage items, and other products and supplies are part of this growing segment of workers operating outside of traditional work arrangements. Like many independent contractors and gig economy workers, sellers enjoy greater flexibility and the ability to earn extra money, even enough to make their creative business their primary source of income. Still, as a new report from Commonwealth found, Etsy sellers struggle with key financial concerns and would like engagement from Etsy in helping them strengthen their financial security.

Commonwealth’s non-traditional work research identified five distinct personas of non-traditional workers, including creative and other entrepreneurs and freelancers or “passionistas” like Etsy sellers. The ability to pursue their passion is what they value the most. Non-traditional work either allows them to earn money doing something else while they develop their passion, or it is how they earn money by engaging in their passion. These individuals believe the benefits outweigh the drawbacks, providing them with the ability to choose work suited to their professional desires, household circumstances, and personal needs.

Last year, recognizing the challenge and importance of emergency savings for their sellers, Etsy joined BlackRock’s Emergency Savings Initiative (ESI) to learn more about their sellers and what kind of savings solutions would help them the most. Etsy partnered with Commonwealth, an ESI industry expert, to survey their sellers’ financial concerns and needs. The survey findings come at a precarious time for small business owners and gig workers. However, this proactive measure provides much-needed insight into how Etsy sellers manage their financial situations and how the platform can step in to provide support.

Read on for four key takeaways from the research, or download the full report here.

Key Report Takeaways

As creative entrepreneurs, Etsy sellers have unique income streams and financial circumstances. Along some measures, Etsy sellers are more financially secure than the average American—for example, they express more confidence in their ability to meet their financial goals. And yet, they experience some of the same income instability and report similar, significant financial concerns as other non-traditional workers.

Like many Americans, Etsy sellers struggle to save for emergencies
Although 61 percent of sellers have experienced a financial emergency over $400 in the past year, almost a third (30%) of sellers are not saving for emergencies.

Emergency expenses often run into four-figures
23 percent of Etsy sellers’ most recent emergency expenses cost over $2,000.

Sellers experience income volatility that makes emergency expenses even harder to cover
37 percent of sellers have occasionally varied or highly unpredictable income. This instability only increases the difficulty of overcoming financial emergencies.

Sellers are interested in receiving help from Etsy in addressing their emergency financial concerns
Up to 38 percent of sellers are interested in receiving help to pay off debt, save for a specific purchase or expense, and save for emergencies. 28 percent are interested in receiving help specifically around emergency savings.

In the face of a new health and economic crisis, all workers, traditional and otherwise, are looking for a place to turn, and traditional employers, gig platforms, financial institutions, and others all have an opportunity to step up to help. Cross-sector collaboration will be key to addressing a need for financial security in these unprecedented economic circumstances.

To learn more about our work with Etsy and BlackRock’s Emergency Savings Initiative, contact us at esi@buildcommonwealth.org, sign up for future updates by signing up for our newsletter, and follow BlackRock’s Emergency Savings Initiative at savingsproject.org.

Commonwealth

Commonwealth strengthens the financial opportunity and security of people living on low to moderate incomes (LMI) by discovering ideas, piloting solutions, and driving innovations to scale. For nearly two decades, Commonwealth has designed effective innovations, products, and policies enabling over half a million people to accumulate more than $2 billion in savings. Commonwealth understands broad changes require market players to act. That’s why we collaborate with consumers, the financial services industry, employers, policymakers and mission-driven organizations. The solutions we build are grounded in real life, based on our deep understanding of people who are living on LMI and how businesses can best serve them. Additional information is available at buildcommonwealth.org; follow on Twitter @buildcommwealth.

BlackRock’s Emergency Savings Initiative

BlackRock announced a $50 million commitment to help millions of people living on low to moderate incomes gain access to and increase usage of proven savings strategies and tools—ultimately helping them establish an important safety net. The size and scale of the savings problem requires the knowledge and expertise of established industry experts that are recognized leaders in savings research and interventions on an individual and corporate level. Led by their Social Impact team, BlackRock is partnering with innovative industry experts Common Cents Lab, Commonwealth, and the Financial Health Network to give the initiative a comprehensive and multi-layered approach to address the savings crisis. UPS, Uber, Mastercard, Etsy, Brightside, Arizona State University, and Acorns have joined BlackRock’s Emergency Savings Initiative to help their employees, customers, gig workers, and college students take the essential first step towards long-term financial well-being. Additional information is available at savingsproject.org.