About 1 in 7 gig workers (14%) earned less than the federal minimum wage on an hourly basis and more than a quarter (29%) earned less than the state minimum wage, according to an Economic Policy Institute report examining a national survey from the Shift Project, a joint project at Harvard Kennedy School and the University of California, San Francisco.
The survey of gig and service-sector workers reveals that gig workers at companies like Uber, Lyft, DoorDash, and Instacart are paid low wages and face economic insecurity at high rates. One in 5 gig workers (19%) went hungry because they could not afford enough to eat. Thirty percent used the Supplementary Nutrition Assistance Program (SNAP) within a month of the survey, twice the rate of service-sector workers (15%). Nearly one-third (31%) of gig workers did not pay the full amount of their utility bills in the month prior to the survey. Further, more than half (55%) of gig workers intended to find a new job in the next three months, compared with 36% of service-sector workers.
Digital platform companies have constructed a business model on the premise that they do not employ their workforce. These companies treat workers who perform the services they offer not as employees but as independent contractors. By classifying their workforce in this way, they deprive workers of fundamental rights under federal and state labor and employment laws, including wage and hour protections, anti-discrimination protection, workers’ compensation, unemployment benefits, and the right to organize and collectively bargain. This leaves independent contractors in a far more vulnerable status, as compared with employees, when it comes to basic rights and protections on the job.
“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. “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.”
Both groups of workers responded to surveys elicited from Facebook and Instagram advertisements. The surveys—conducted in the spring of 2020—included modules on demographics, job characteristics, and economic security issues and resulted in a sample of 288 gig worker respondents and 4,201 service-sector employees.
As the report explains, one key to improving conditions for these workers is enforcement of existing federal wage and hour laws. The Department of Labor must hold companies accountable for misclassification and ensure that workers have access to fundamental workplace protections guaranteed to them under federal law.
Second, policymakers should ensure the right to a union for gig workers. Under current federal labor law, independent contractors are not covered under the National Labor Relations Act and are thereby restricted from forming a union. Passing the Protecting the Right to Organize (PRO) Act would better protect workers’ fundamental right to organize and collectively bargain by requiring employers to follow the “ABC” test, which is a strong, protective test to determine employee status and combat misclassification.
“Gig workers experienced high levels of hardship and profound economic insecurity, even compared with low-wage hourly workers employed by large service-sector firms,” said Daniel Schneider, Professor of Public Policy and Sociology at Harvard University. “The economic insecurity of gig workers we surveyed shows that precarious labor is the reality of the gig economy.”