March 2023
I returned home for both the holidays and to wait out the worst of the winter weather. Since I had at least two months of down time, I decided to explore whether I could make money in the low barrier to entry sector (if you have a pulse, you qualify – not the kind where you need an advance degree and a professional background which is used to just be called freelancing) of the gig economy. I found an article written by a somewhat recent law grad who left law firm life to pursue gig work which at the time or his writing was supporting his rather minimalist lifestyle. Turns out gig work in the upper Midwest affords some better opportunities than in the Bay Area where competition for gigs is a bit fierce as many people need to work at least one side hustle in addition to their full time job to afford some of the luxuries in life, like food and rent. After trying multiple gigs and talking with folks who have tried others, my conclusion is that most gig work may be okay as a source of supplemental income (but expect to earn less than minimum wage), or I don’t know, for someone who lost their job and wants to eat while they search for something else. It could also work for a couple who considers delivering food together a fun date night or a teen whose parents pay for the car and gas and insurance, but if you want to survive as a gig worker in California without another source of income, it is going to be rough going.
There are a lot of ways to go in the entry level gig world. You can take surveys, collect data, collect and charge scooters at night, be a study participant, act as a mystery shopper (food and retail), take insurance and other types of property photos, work for a day at a restaurant, drive for Uber of Lyft, deliver food for Uber, Doordash, Grubhub, or Instacart, shop for any of these delivery services, walk dogs, check in on pets, take care of pets overnight, move stuff for Lugg, among others. Realize that there are consequences to being classified as an “independent contractor”. More on that below. Also, while you can choose when you will work there is no guaranty that you will earn any money during your “gig” shift. So if you are going to use one of these services instead of doing things like cooking or shopping for yourself, please TIP the driver/worker well – because that is where they make the bulk of their earnings. This seems to be the case for more and more industries in the United States where we have collectively agreed as a society, unlike Europe where the employer pays the salary so tips are not needed to bring a service worker’s pay up to standard) to subsidize service worker pay through tipping.
Most of my gig experience was delivery driving, taking surveys, and trying to be a mystery shopper and study participant. Driving was the easiest to land as there are a lot of people that are unwilling to leave their house and pick up their own food or beauty products (everything form orders at 7-11 to pick up candy and soda to a McDonald’s hamburger or a single item from Ulta). The mystery shopping did not work out as the nearest shops were at least 30 miles away and pay $10 each which with gas would result in losing money. The survey taking, which was fun at first and something I could do on a BART ride into San Francisco yielded no pay as to hit that first few dollars is easy but gets harder and harder to get to $5, the minimum payout. It also resulted in my becoming paranoid about having given away information so instead of making money, I spent $200 on an identity protection service after taking several surveys. And for studies, I found they asked so many screening questions to see if you qualified for their study that they it seemed they were getting all the information they needed without having to pay. Some other gigs were not great since I would soon be traveling again, like dog walking (though I often find myself dog sitting) – no one wants to find the person their pet bonds with only to have them leave. So, that left me with driving. The car I have locally is too old for Uber and renting a car would result in a loss, so that left food delivery. Most of the rest of my post is going to be about what is problematic with the gig economy rather than how great and freeing it is, bear with me just to you understand the impact of these services and on those who serve you.
Let’s talk wages – you may make less than minimum wage and expect inconsistent earnings. When you see the average hourly posted wages for these jobs, what is left out is the added costs of being “independent”. Since a gig worker in California is now classified as an independent contractor, that individual must pay the 15.3% taxes the employer normally pays (in addition to its own tax on earnings), only a portion of which is deductible. Workers also do not receive the typical reimbursement for expenses such as gas, wear and tear on their car, and increased insurance rates (an employer will typically reimburse at the IRS rate, currently 62.5 cents per mile). Now some of these can be deducted from taxes though that requires carefully tracking mileage or expenses (for instance DoorDash will only track the miles to drive one way). Gig workers also do not receive the typical employment benefits offered by large employers such as health insurance, or workers compensation if injured on, or become sick because of, the job and are not eligible for unemployment or disability pay, sick leave or family leave. Some studies found that the actual hourly wage after subtracting the costs of these and other typical employee benefits like reimbursement for miles driven ($25 for each 40 miles), the 15.3% gig workers must contribute on the employer side ($30 per hour becomes $25.41 per hour), paid sick leave and unemployment insurance, were in the range of $6.20 to $6.50 per hour post Prop 22. I can tell you that I have worked shifts where my mileage write off alone exceeded my gross earnings.
A bit on Prop 22. To put things in context, in 2019, delivery and ride sharing companies spent approximately $224,000,000.00, to pass Proposition 22 in California, the largest expenditure on a ballot initiative in U.S. history. So the profits to be had going forward are quite large. The in the weeds provision that the law could only be amended by the state legislature with a seven-eighths supermajority vote, a near impossibility and an end run around the process since fewer than 59% of voters voted yes, a simple majority, was later found to be unconstitutional, that, and the prohibition on allowing drivers to unionize. As for the two promises made in the legislation of guaranteed minimum earnings and healthcare – these only accrue during “active hours” which are not the hours you are working which includes waiting for orders to come through the app and driving back to your zone, but rather only when you are actively delivering something.
But all that flex time stuff. Flexibility, yes, but the ability to work whenever you want, not really. For example, most drivers are only permitted to work during peak hours, so a couple of hours at lunchtime and a few hours in the evening and again in the middle of the night, and some extras on big game days or certain weekends. So, you don’t really get to work whenever you want and even when you are permitted to work during a non-peak time, you very well will sit around most of the time in your car unpaid and having incurred the cost to drive every 10 minutes to a new “peak zone” asking what went wrong in your life that you are doing this. And then a money losing order may float in and if you don’t take it, there are penalties. So, to avoid being penalized, you accept the 7-11 pickup which pays $4.50 in total.
Some other considerations for drivers and those of you ordering when considering tipping and rating. Some food (and people) smells last longer in a car than others, some restaurants don’t start orders until the driver arrives (which leads to long periods of unpaid sitting around waiting for an order), some buildings have no guest parking requiring the driver to often park illegally and risk a ticket and then search around in the dark and sometimes the rain trying to find the apartment, and each minute on the road increases the risk of a collision. And for ratings, anything less than a 5 out of 5 is basically a fail. Finally, the gambling in gig. As I was describing my early interactions with the app, my friend pointed out that they had gamified it. My first order paid $20 (before factoring in the 18 miles of round trip travel and 15 minute wait for hotdogs). The next was less than $10 and the next even lower, then every once in awhile a high paying order pops up (marked with a diamond though I did have a $4.50 order marked as “high paying order” once). It is kind of like hitting the ball in golf with the sweet spot on the club that keeps you coming back for more or that winning hand in blackjack that gets you to play another hand. The house almost always wins.
This experience has been a study in the on demand culture we now have notwithstanding environmental effects and who we value as a society. Immediate gratification and subsidized delivery, highly valued, drivers and the environment, not so valued. Hence, the passage of Prop 22 where voters feared losing their lower cost private transportation options. Next time you order, think about whether you really need that deli sandwich from 15 miles away when there is a deli down the street from you, or the hamburger meal or fried chicken sandwich three towns over. Or that single item from Amazon available from the store down the street but you have Prime and delivery is free, so why not. The amount of emissions spewed into the air to do this is huge. Most of the orders I received were one or two meals and I would say averaged 30+ minutes round trip to deliver (some were less and many were longer). I get that sometimes you can only find an item online or the store that carries it is far away so buying online makes sense. And maybe you are home and unable to leave for whatever reason so need your food delivered. And maybe the bus or train is not running when or where you need it to. All I am suggesting is that you give it some thought before you reach for your phone and tap.