How many of us have used Uber, Lyft, DoorDash, child care, lawn mowing or snow removal services, seasonal delivery, cake decorators? Or maybe we’ve offered these kinds of temporary services. If so, we have been participating in the Gig Economy, with workers labeled as independent contractors. The gig economy is worth $455.2 billion this year. Businesses would have us believe that gig work is healthy for the U.S. economy, but many argue that it is exploiting segments of our population, especially immigrants, the poor, and the young.
As independent contractors, gig workers lose rights to a minimum wage, overtime pay, and a safe and healthy work environment. They are not protected against discrimination and harassment. And they lose access to unemployment insurance, workers’ compensation and paid sick leave.
Gig work consists of income-earning activities outside of standard, long-term employer-employee relationships. For decades teenagers have picked up extra money doing these types of jobs. It became a major part of our nation’s economy after the Great Recession of 2008, when so many Americans lost their jobs and were looking for temporary work to keep themselves afloat. After COVID in 2020, we saw another upsurge of gig work, this time including people who were looking for more flexible employment.
The Bureau of Labor Statistics says that gig work accounts for 10% of our labor force, about 20 million workers. The Federal Reserve defines gig work to include any work that is temporary and variable in nature as either a primary or secondary source of earnings; researchers using this definition figure that it is currently around 35% of the labor force.
Gig workers can range from high-paid professionals working on a project-to-project basis to low-wage workers whose earnings are highly variable, who work in nonprofessional or semiprofessional occupations and who accept – by choice or necessity – volatile hours and a short-term time commitment from the organization paying for that work.
Young immigrants are often employed in retail and service jobs. They sometimes have limited education and English skills, and face extra costs like sending money to dependents back home and paying off debts they undertook to travel to the United States. Undocumented workers face the additional burden of not having papers that allow businesses to hire them. Often their bosses don’t pay them the full amount owed, and the workers have no recourse. While breaking into the U.S. economy as a foreigner can be difficult, the gig economy offers quick, accessible work without having to meet many of the legal requirements.
Gig work is controversial. It has some benefits, especially flexibility. That makes it great for students, retirees, and parents who want part-time work or odd hours. People can try out different types of work or companies without making a full-time commitment.
Drawbacks are even greater, even exploitative. Research by the Economic Policy Institute in 2020 showed that 15% of workers earned less than the federal hourly minimum wage of $7.25; 29% earned less than their state’s minimum wage (including in Nebraska). Businesses have been classifying workers as independent contractors to avoid paying benefits or paid time off. There is no job security. No safety requirements or equipment. No time-and-a-half for overtime or holidays. And no way to file a complaint.
“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 at Harvard University. “The economic insecurity of gig workers shows that precarious labor is the reality of the gig economy.”
The Department of Labor (DOL) must hold companies accountable for misclassification of workers, identifying them as employees rather than independent contractors. DOL should ensure that workers have access to fundamental workplace protections guaranteed to them by the law and enforcement of existing federal wage and hour laws.