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The Gig Economy’s False Promise | NY Times

Instead of freedom, workers at companies like Uber have encountered low wages and coercion.

www.nytimes.com|The Editorial Board

The promises Silicon Valley makes about the gig economy can sound appealing. Its digital technology lets workers become entrepreneurs, we are told, freed from the drudgery of 9-to-5 jobs. Students, parents and others can make extra cash in their free time while pursuing their passions, maybe starting a thriving small business.

In reality, there is no utopia at companies like Uber, Lyft, Instacart and Handy, whose workers are often manipulated into working long hours for low wages while continually chasing the next ride or task. These companies have discovered they can harness advances in software and behavioral sciences to old-fashioned worker exploitation, according to a growing body of evidence, because employees lack the basic protections of American law.

A recent story in The Times by Noam Scheiber vividly described how Uber and other companies use tactics developed by the video game industry to keep drivers on the road when they would prefer to call it a day, raising company revenue while lowering drivers’ per-hour earnings. One Florida driver told The Times he earned less than $20,000 a year before expenses like gas and maintenance. In New York City, an Uber drivers group affiliated with the machinists union said that more than one-fifth of its members earn less than $30,000 before expenses.

Gig economy workers tend to be poorer and are more likely to be minorities than the population at large, a survey by the Pew Research Center found last year. Compared with the population as a whole, almost twice as many of them earned under $30,000 a year, and 40 percent were black or Hispanic, compared with 27 percent of all American adults. Most said the money they earned from online platforms was essential or important to their families.

The use of independent contractors is hardly an innovation. Traditional businesses like garment factories, construction companies and trucking have often misclassified employees as contractors to avoid offering benefits, paying payroll taxes and abiding by labor laws. What makes this different is that gig economy businesses are arguing that their use of the independent contractor model is in fact better for workers.

Driving mostly for supplementary income on a transitory basis conflicts with the notion, promoted by the company, that Uber, and gig work more generally, are a major feature of how people will earn a living in the future.