Gig Economy - Great for Flexibility / Not So Great for Earnings

Jon York

Nov 30, 2018
What City & State do you work in?
New York City
An interesting article just came out yesterday in Forbes about the gig economy.
The cool thing is I think they really assessed it right. Their basic thesis is that: "The gig economy gets lauded for letting millions of Americans set their own hours and choose their work assignments as freelancers and independent contractors. But the gig economy — which includes people from Uber drivers to dog walkers to consultants — gets low marks for letting them earn a decent living and receive benefits such as health insurance and retirement plans. "

But then they reported on an interview with Maureen Conway who is the vice president for policy programs and executive director of The Aspen Institute’s economic opportunities program in Washington D.C. She says that, “the pay and benefits problems, however, are slowly starting to shrink.”

Hmm… that sounds like good news! And in fact, it would be in keeping with how things have historically evolved in our economy. New industries come along and usually start off with terrible conditions (think the railroads in the 1800s and working in factories in the early 1900s) but over time things gradually improve for workers. And usually without any government involvement at all.

So it could be that the gig economy will work out like that too. I just think it needs to do so very quickly because there are a lot of workers who are really dependent upon it and they’re suffering every month from the lack of a livable wage and a lack of benefits.

Conway hosted a panel recently called The Rise of Gig Work: Creating Flexibility and Stability for a New Era. She said there are some gig companies that are treating their workers much better than the likes of Uber and Lyft but she said many other gig companies are not following their lead. In fact, you could expect no companies to follow their lead unless they somehow become better known, more successful and richer than their competitors. Then you better believe everyone would follow their lead!

She held out Washington state and New York City as good models of state and local governments that are trying to do something for gig workers.

Washington state is trying to come up with a whole new model that would mandate that gig platforms would have to contribute to a benefits fund for gig workers. That actually sounds like the best and only workable idea. If gig workers are not going to be real employees, but rather independent contractors who are not entitled to any company benefits like health insurance, then why not have the gig companies contribute to a fund that would cover each independent contractor worker wherever they go and for whoever they work for.

Last week on a national teleconference which was organized by the labor advocacy group Working Washington, they pushed for a $15 an hour minimum wage for gig workers. Which seems about where everyone is heading – that gig workers should earn at least $15 an hour.

But New York City is even ahead of that. New York City recently passed a law which took effect on February 1st this year that said gig workers for Uber, Lyft and the other rideshare companies in NYC must be paid at least $17.22 an hour. That’s because they say if you take car expenses into consideration, along with vacation pay along with lack of benefits that a gig worker would actually have to earn $17.22 an hour in order to be at the same level as employees who earn $15 an hour as full-time employees and have things like vacation pay and benefits.

On another front, the National Domestic Workers Alliance launched a novel benefits program last year called Alia to help house cleaners. Under this program people who employee domestic employees (like house cleaners) would pay $5 into a fund for each cleaning job they hire someone to do. That sounds like a great idea too! The house cleaners could receive this $5 contribution from everyone they work for. So they can work for many different people and yet end up with similar benefits to full-time employees. is another good example. They have an interesting and different gig work platform. They use gig workers to work, not directly for customers like Uber & Lyft but to work for real employers – mostly restaurant owners. So, if a restaurant owner needs an extra waiter to come in real quick – he can just place an order on the app and some nearby restaurant worker who is on Hyr can accept the request and go work! It’s pretty cool actually. And those guys, according to Hyr are making around $20 an hour.

But that’s not all. Hyr has come up with a points program. When gig workers accrue points with Hyr they can choose how to use them. They can be used for paid time off, health or dental insurance or retirement savings! That’s like all the benefits of being a full-time employee. It’s great that Hyr is at least attempting to do this. I have no idea if it’s really fair or if they allocate as much to worker benefits as traditional employers do but at least they’re thinking in that direction and they’re trying.

The problem with that system though for gig workers is that it doesn’t give them benefits portability. If they want to go work for a second company later in the day and a third and fourth company the next day – these benefits won’t follow them. They’ll have to continue working with Hyr to accrue enough points to amount to anything.

So, it does seem that there needs to be some government involvement in the form of a universal and portable system that will cover gig workers no matter which companies they work for. But the good news is there are some companies that are starting to try!