Gig Labor Is Impoverishing Workers

A new survey finds that US gig workers face much greater economic hardship and insecurity than conventional low-wage retail and food-service workers. Lacking most labor law protections, many make less than minimum wage and can’t afford to pay basic bills.

A bike messenger carries a DoorDash bag during a delivery in New York, US. (Michael Nagle / Bloomberg via Getty Images)

A new national survey of gig workers in the United States finds that around one in seven make less than the federal minimum wage. Some 30 percent rely on the Supplemental Nutrition Assistance Program (SNAP) and cannot pay the full amount of their utility bills. On a range of measures, gig workers report greater economic hardship than W-2 employees in low-wage retail and food-service work.

A report on the survey was published by the Economic Policy Institute (EPI), with the survey itself conducted by the Shift Project, which is a joint project at Harvard Kennedy School and the University of California, San Francisco. In the spring of 2020, the Shift Project elicited responses via Facebook and Instagram advertisements, targeting gig workers at the likes of DoorDash, Instacart, Lyft, and Uber, as well as W-2 employees at fifty-eight large retail and food-service companies including Arby’s, Chick-fil-A, Home Depot, Kroger/QFC, McDonald’s, Publix, Starbucks, Target, Walgreens, and Walmart. The surveys included questions about demographics, job characteristics, and economic security issues, with respondents comprising 288 gig workers and 4,201 service-sector workers.

While so-called gig companies tout the advantages of flexible labor arrangements that classify their workforce as independent contractors rather than employees, the survey shows that this workforce suffered significantly greater economic hardship than their W-2 counterparts in low-wage service-sector work. Deprived of labor standards that come with employee status, such as wage and hour protections, antidiscrimination laws, workers’ compensation, health and safety protections, unemployment benefits, and the right to organize and collectively bargain, many gig workers are unable to make ends meet.

The survey finds that 14 percent of gig workers earned less on an hourly basis than the federal minimum wage — which remains a measly $7.25 an hour — compared to 0 percent of service-worker respondents. Twenty-nine percent of gig workers earned less than the state minimum wage that would be applicable were they a W-2 employee, whereas only 1 percent of the W-2 sample reported earning less than their state’s minimum wage. Twenty-six percent of gig workers earned less than $10 an hour, compared to 11 percent of those in the W-2 sample.

Sixty-two percent of gig workers, or roughly three out of every five, lost earnings because of “technical difficulties clocking in or out,” compared with 19 percent of W-2 service workers. While wage theft is rampant in the low-wage food-service and retail sectors, these workers at least have legal recourse for such violations on the basis of their employee status; not so for gig workers.

The survey also finds that 19 percent of gig workers go hungry because they cannot afford to purchase an adequate amount of food. Thirty percent of gig-worker respondents said they had used SNAP benefits within the month prior to the survey, which was twice the rate of their W-2 counterparts. Thirty-one percent of gig workers reported not paying the full amount of their utility bill in the month prior to the survey.

“While the technology these companies utilize may be innovative, a business model that creates profit by denying workers basic wage and hour protections is far from inventive. Corporations have long looked for ways to exempt themselves from worker protection laws and spend hundreds of millions of dollars each year to deny their workforce union representation,” said Celine McNicholas, general counsel and director of policy and government affairs at EPI, in a statement. “The reality of working for these digital platform companies is far from the great ‘gig’ they advertise. Policymakers must address the reality of gig work and prevent these companies from denying their workers basic protections through misclassifying their workforce.”

The numbers on how much of the US workforce is engaged in gig work remain fuzzy. The Bureau of Labor Statistics (BLS) produced a Contingent Worker Supplement (CWS) to the Current Population Survey to gain some sense of the matter, finding that in 2017, around 10 percent of US workers’ sole or main job consisted of alternative work arrangements such as independent contracting, on-call arrangements, and employment arrangements through temporary agencies or contracted firms. That data does not capture the many workers who engage in gig work as a supplemental source of income, and other studies have found that the number is closer to 16 percent of the US workforce, but even this conservative estimate constitutes a significant proportion of the country’s workforce.

The survey confirms what many gig workers have long insisted: this work arrangement subjects them to greater economic hardship and insecurity as a matter of course. These workers are locked out of existing labor standards and denied coverage under the National Labor Relations Act, and the result is an atrocity. Gig workers’ circumstances are dire, and there is no time to waste in reclassifying them as employees and holding gig companies accountable for the misclassification on which their business models rest.