The Gig Economy and Low-Wage Workers
The term “gig work” was originally coined in the 1920s, when jazz musicians went from performance to performance and were paid accordingly. It began to be used more widely in the Great Depression of the 1930s when millions of people took odd jobs to make ends meet. With corporate restructurings in the 1980s — and the advent of the internet in the 1990s — gig work began to take root in the U.S. workforce.
For millions of low-wage workers, the gig economy means working through a tech platform company that closely controls and monitors their work activities through an online app while offering none of the benefits of employment. A 2021 survey by the Pew Research Center found that 9% of U.S. adults — or more than 23 million Americans — had earned money in the previous 12 months from online gig platforms offering ride-sharing, shopping, delivery, and other services.
These platforms generally pay low wages, in many instances less than the minimum wage, while offering no right to sick time, freedom to organize, and other employee protections from dangerous conditions and abuse. Gig workers routinely report losing earnings because of technical difficulties, with one survey finding that 62% of workers had lost pay at least once because of technical difficulties clocking in or out of their platform app.
While ride-sharing apps like Uber and Lyft and food delivery services such as Instacart and Doordash attract much public attention, academic researchers say the gig economy is expanding to cover more and more aspects of daily life, “including a proliferating sector of home services like cleaning, ‘handyman’ jobs, and ‘Uber for family’ care work.” Uber-style apps are also being introduced into nursing care, with promises of flexible work and attractive pay, but there are serious concerns about worker abuse and shoddy patient care.
A 2024 analysis of passenger app and delivery drivers’ wages in the Los Angeles, San Francisco, Boston, Chicago, and Seattle metropolitan areas found that gig drivers in those cities make significantly less than minimum wage when all work time, gas, and vehicle wear and tear are factored in. In California, the median wage for a passenger app driver was about $5.97 per hour without tips and $7.63 per hour with tips. Meal delivery drivers made even less: $4.98 an hour without tips and $11.43 with tips, well below the state minimum wage of $16.00 an hour.
Pew reports that “Hispanic adults stand out for participating in the gig labor force: 30% have ever earned money in this way, compared with 20% of Black adults, 19% of Asian adults and 12% of White adults. And Americans with lower incomes are more likely than those with middle or upper incomes to have ever earned money through these kinds of sites or apps.” 42% of current or recent gig workers who have lower incomes say it has been their main job over the past year. That translates into 7% of all adults with lower incomes, according to Pew.
A survey by the Economic Policy Institute found that one in five gig workers (19%) went hungry in the month prior to the survey “because they could not afford enough to eat.” Thirty percent of gig workers used SNAP, a federal food benefits program for low-income families, within a month of the survey.
Pressing for greater employee protections for gig workers should be a priority for investors concerned about human rights and worker rights. However, the gig economy is likely to present continuing challenges to the traditional employer-employee business model. Brandeis University professor and labor expert David Weil says public policy on the question will require “weighing the benefits gig work can provide some workers with greater economic independence against the continuing need to protect and bestow rights for the many workers who will continue to play on a very uneven playing field in the labor market.”
Current laws and regulations regarding gig workers are a mixed bag. In Europe, for example, the EU Parliament and the Council of Europe reached an agreement in March 2024 on a proposed Platform Workers Directive that “introduces a presumption of an employment relationship (as opposed to self-employment) that is triggered when facts indicating control and direction are present.” The new rules also “ensure that a person performing platform work cannot be fired or dismissed based on a decision taken by an algorithm or an automated decision-making system. Instead, platforms must ensure human oversight on important decisions that directly affect the persons performing platform work.”
In the U.S., however, workers lost a major battle in July 2024 when the California Supreme Court upheld a four-year-old ballot measure called Proposition 22 that allowed app-based services like Uber and Lyft to classify workers as independent contractors rather than employees. Proposition 22 allows app-based transportation services in California to classify drivers as independent contractors if they are paid at least 120% of the minimum wage while passengers are in the car and receive expense reimbursements and subsidies to pay for health insurance. Similar to California, drivers have been able to recently secure some gains in wages — but not employee status — through legislation in New York City, Massachusetts, Washington State, and Minnesota.
“As the platform companies attempt to spread their Prop 22 wage model in other locales, lawmakers and labor representatives shaping or re-defining minimum employment standards must consider the racialized consequences of this formative reality.”
Worker groups involved in the California court decision have vowed to continue legal challenges and to organize for unionization. In 2023, the U.S. National Labor Relations Board issued a ruling that could make it easier for gig workers to unionize. The ruling takes into account a variety of factors, including the extent of employer control over working conditions and whether a worker is being supervised.
Veena Dubal, a professor of law at the University of California, Irvine, and a close observer of California’s Proposition 22 debate accuses the online platforms of employing “algorithmic wage discrimination,” a practice in which individual workers are paid different hourly wages — calculated with everchanging formulas using granular data on location, individual behavior, demand, supply, or other factors — for broadly similar work.” She argues that the companies supporting Proposition 22 strategically used racial politics as a resource to eliminate access to employment protections, creating a “new racial wage code” that does not guarantee workers any net earnings. Yet in their campaign materials, the gig companies presented “freedom narratives” of workers and argued that gig work facilitated economic independence for racial minorities. “As the platform companies attempt to spread their Prop 22 wage model in other locales, lawmakers and labor representatives shaping or re-defining minimum employment standards must consider the racialized consequences of this formative reality,” Dubal says.
Online platforms in the U.S. get dismal ratings for their records in guaranteeing minimum thresholds for gig workers, according to Fairwork, an “action-research” project coordinated by the Oxford Internet Institute and the WZB Berlin Social Science Center. In August 2023, Fairwork released a report assessing 13 of the largest digital labor platforms in the U.S. against five principles: fair pay, fair conditions, fair contracts, fair management, and fair representation. Of the 13 platforms, 10 were awarded zero points out of a potential 10 while two platforms were awarded two points. “The findings indicate that none of the digital labour platforms assessed for this research are taking adequate measures to guarantee minimum thresholds of decent work to their workers,” Fairwork says.