Summary: While the gig economy offers flexibility and the potential for higher earnings, it also harbors several significant drawbacks that might make you reconsider diving in. Here are ten concerning statistics that reveal the darker side of the gig app economy. I hope this can be a frame of reference for those who do research and those who use data-driven ways to look at gig work.
1. Earnings Below Minimum Wage
There was a time when I was looking to earn extra income, and I went to pick up an order, which was already picked up. The order was from a popular fast-food chain restaurant, and I was disappointed that someone already picked up the order. I could have called the app company I was working for but was in a hurry to keep going. I thought I would be credited for that order like I usually was, but I was not. After that order, I waited for 45 minutes and did not receive any order, I was multi-mapping, but the wait time was longer than average. I was just waiting for free, even below minimum wage.
Those who earn a minimum wage receive pay for the time they are waiting for customers to help or interact with them. Many gig app drivers must be paid for their wait time or time to pick up an order. Granted, if you drive doordash earn by time, and an item is delivered, there is pay for your time, but that is not true when you don't have any orders and are waiting in the parking lot.
To be fair, as of 2024, several states and cities in the United States have implemented minimum wage laws for gig app workers. These regions have enacted these laws to address the financial instability and lack of benefits associated with gig work. Which is a good sign for those involved in gig work in the future. Here are the notable examples:
California:
- Proposition 22: Passed in 2020, it ensures that app-based drivers are classified as independent contractors rather than employees. Under Prop 22, drivers are guaranteed to earn at least 120% of the local minimum wage for "engaged time" (time spent actively completing a task) plus $0.30 per mile driven. This proposition also includes healthcare subsidies and occupational accident insurance but exempts drivers from full employee benefits like paid sick leave and the state minimum wage (Legislative Analyst's Office (LAO), 2020).
New York City:
- New York City has a minimum wage for app-based delivery workers, starting at nearly $18 per hour before tips in July 2023, increasing to almost $20 per hour by 2025. This ensures better financial stability for gig workers (NYC, 2023).
Seattle:
- Seattle requires a minimum wage of $19.97 per hour for app-based delivery drivers. Companies like DoorDash have adjusted their pay to comply with this regulation, sometimes paying drivers up to $26.40 per hour (Granicus, Inc., n.d.).
- Additionally, Seattle's Paid Sick and Safe Leave ordinance ensures that app-based workers accrue paid sick leave based on the number of days worked (Minear & Griffin, 2023).
Minnesota:
- Minnesota passed a bill in 2023 that mandates a minimum wage for Uber and Lyft drivers, requiring these companies to pay at least $1.45 per mile within the Minneapolis-St. Paul region and $1.34 per mile outside this area and $0.34 per minute. This law is expected to enhance financial security for gig workers in the state (Browing, 2023).
Unfortunately, a standard for wages is not the case in every state. A significant number of gig workers earn less than the minimum wage. In 2022, 1 in 7 gig workers in the U.S. earned less than the federal minimum wage of $7.25 per hour, and 29% earned less than their state’s minimum wage (Zipperer et al., 2022). This makes it difficult for gig workers to achieve financial stability.
2. Lack of Benefits
Gig workers often need access to traditional employment benefits. "
3. Financial Instability
A key statistic in a study by Dmitri K. Koustas is that households' net balances (total liquid assets in bank accounts and checking accounts, net of credit card debt) decline by over $400 in the period before starting a gig job, stabilize when starting a gig economy job, and recover slightly over the past period. This statistic highlights households' financial distress before entering the gig economy, indicating that many individuals turn to gig work as a response to economic hardship (Koustas, 2019).
Pre-gig work conditions are essential for the context of why people enter into this line of work. Without adequate help over just four months, there can be struggles. An additional study highlights significant financial challenges faced by gig workers.
A study by the Commonwealth revealed that 16% of Americans have earned money through gig platforms, with this figure rising to 25% among those with low incomes. Additionally, gig workers are more likely to experience financial instability, with 80% of Cohort 2 experiencing financial hardships of over $1,000 before joining the pilot program (stipend during the study). Furthermore, the study shows that gig workers often need more savings, with 41% of Cohort 1 and 44% of Cohort 2 having no savings when they joined the program (Commonwealth, 2022).
"As a gig worker, I counted at least five times I faced a significant setback working in the gig economy. "- Brian
I propose a stipend for all gig app drivers to help them every three months, divided by the end of each quarter to ensure they can sustain themselves and their finances.
4. Underemployment
Despite the promise of flexibility, many gig workers still need to be employed. Nearly half (49%) of gig workers earn less than $50,000 annually, and many work fewer hours than they would prefer (Daugherty, 2024). For example, 41% of gig workers spend less than 10 hours weekly on their gigs (Lang, J.J., Yang, L.F., Cheng, C., et al.).
Three critical statistics in a study by BMC Psychology highlighted the following:
Income Trends: "The relationship between W-2 and 1099 income is reliably inverse—when participants lose income from their W-2 jobs, they need to pick up 1099 work to supplement".
Financial Hardships: "At the program's close, most participants experienced financial hardship. Typically, these hardships were expected; participants needed support to pay rent, utilities expenses, and unpaid bills. For many, it was standard to experience multiple hardships over the four months".
Income Health: "Direct cash interventions can immediately decrease the need to use predatory products, such as payday loans or cash advances. However, overall usage of these products is higher for those who earn more income (i.e., those with more income that they need to access ahead of payday). This demonstrates the general inadequacy of wages for workers living on low incomes".
5. Inadequate Health Insurance
Access to affordable health insurance is a significant barrier for gig workers. A shocking 24% reported having no health insurance, with 58% citing prohibitive costs as the primary obstacle. Many gig workers are vulnerable to high medical expenses and financial crises (Aleksandric, 2024).
6. Social Isolation and Mental Health Issues
"Although gig workers obtained the manifest and financial
benefits of employment on mental health and life satisfac-
tion compared with the unemployed, they did not obtain
similar financial and social connection benefits compared
with traditional workers"(p. 7).
- How can this have an impact in the long term?
7. High Levels of Job Dissatisfaction
For me, the dissatisfaction stemmed from needing more income stability. The pay can go up and down, which doesn't support the thought of being at ease.
Edison Research had the following mentioned:
A few key statistics from this study include:
- Many gig workers experience low job satisfaction due to the instability and lack of security associated with gig work. Only 44% of gig workers consider their gig work their primary source of income, indicating that many rely on it as a supplementary source rather than a stable livelihood (Edison Research, 2023).
- Key statistics from a survey mentioned that 80% of respondents said they couldn't handle a $1,000 unexpected expense.
8. Unsafe Working Conditions
Driving, in general, can be dangerous for any length of time. I once met someone who hit a deer and was in bad shape. I also met someone who had a truck accident and went through a difficult time as a commercial driver. I had two close calls with some deer that could have ended badly, but they ran slowly enough to avoid running into them. I once saw a man running across the interstate, and if I was going faster, I could have run into him as he crossed the interstate.
One unexpected expense I discovered was windshield damage, which has a much higher chance of happening when you drive more. A flat tire just a few times can be a devastating setback, occurring a few times when driving.
Of course, I'm not the only river who has experienced these scenarios. Safety concerns are prevalent among gig workers. About 35% report feeling unsafe while working, and 19% have experienced unwanted sexual advances on the job. These issues raise significant concerns about the safety and well-being of gig workers (Tawiah et al., 2024).
Driving, in general, can be dangerous for any length of time. I once met someone who hit a deer and was in bad shape. I also met someone who had a truck accident and went through a difficult time as a commercial driver. I had two close calls with some deer that could have ended badly, but they ran slowly enough to avoid running into them. I once saw a man running across the interstate, and if I was going faster, I could have run into him as he crossed the interstate.
The Journal of Urban Health is a leading and respected publication that offers thorough analyses to improve urban populations' health and well-being. It is a forum for interdisciplinary research on the broad factors influencing health and health disparities, providing the necessary evidence to enhance policies, programs, and governance for urban health.
Some critical statistics were highlighted in a survey by the Journal Of Urban Health. About 21.9% and 20.8% of respondents (1 in 5) reported being injured and assaulted (Tawiah et al., 2024). Here are a few charts that visualize the data from the BMC Public Health peer-reviewed journal.
I remember the night clearly, I was having a good conversation with my passengers, and a driver came flying down the fast lane and did not see the car in front of them. The car slammed on the brakes and slammed into the divider on the right, then slid back in front of me, hit the center divider on my left, spun out, and then stopped right in front of me. I had passengers with me in two of the accidents that occurred, and fortunately, we could walk away because I was going at a slower speed.
A recent report found that at least 31 app workers were murdered in 2022, with 77% of these victims being people of color. This marks an increase from the previous five years, during which over 50 app workers were killed. The nature of gig work often exposes workers to unsafe situations, contributing to these high rates of violence (Avila & Montgomery, 2023).
Here is a chart that visualizes the fatalities:
9. The Fight Against Hunger
According to Zipperer, McNicholas, Poydock, Schneider, and Harknett (2022), "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 W-2 service-sector workers (15%)"(Bullet Point section, para, 3).
A recent study led by Despard, published in Work and Occupations, highlights the severe financial hardships faced by gig workers during the COVID-19 pandemic. The research, which included responses from 4,756 workers, found that approximately 33% of gig workers experienced food insecurity, 12% had skipped housing payments, and 33% had unpaid credit card debts. The study emphasizes that gig workers struggled more than traditional employees to make ends meet, with those having children, fewer savings, and multiple gig jobs being the most affected (Despard et al., 2023).
Drivers should not have to struggle with food insecurity at all! Hopefully, some type of deal can be worked out with food chains that allow drivers to receive leftover food at the end of their shift and let dashers have first dibs?
Conclusion
While the gig economy offers certain benefits, such as flexibility and the potential for high earnings in specific fields, these alarming statistics highlight significant drawbacks. The lack of income stability, benefits, and safe working conditions, combined with prevalent gender disparities and dependency on public assistance, paint a concerning picture of gig work. Addressing these challenges as the gig economy grows will be crucial to creating a more equitable and secure environment for gig workers.
Critical Points:
Earnings Below Minimum Wage:
- In 2022, 1 in 7 gig workers in the U.S. earned bU.S. the federal minimum wage of $7.25 per hour, and 29% earned less than their state's minimum wage (Zipperer et al., 2022).
Lack of Benefits:
- Only 21.9% of nontraditional workers participated in an employer-sponsored retirement plan in 2020, with 67% of gig workers in the U.S. citing tU.S.bsence of group retirement plans as a significant drawback (Pew Trusts, 2021).
Financial Instability:
- Households' net balances decline by over $400 before starting a gig job, indicating financial distress. Many gig workers also have no savings, with 41% of one cohort and 44% of another having no savings when joining a study program (Koustas, 2019; Commonwealth, 2022).
Underemployment:
- Nearly half (49%) of gig workers earn less than $50,000 annually, and many work fewer hours than they prefer. For instance, 41% of gig workers spend less than 10 hours weekly on gigs (Daugherty, 2024; Lang et al., BMC Psychology).
Inadequate Health Insurance:
- About 24% of gig workers reported having no health insurance, with 58% citing prohibitive costs as the primary obstacle, leaving many vulnerable to high medical expenses (Aleksandric, 2024).
Social Isolation and Mental Health Issues:
- Gig workers often feel isolated and miss out on the social connections that traditional work environments provide. This can negatively impact their mental health and life satisfaction (Li & Wang, 2022).
High Levels of Job Dissatisfaction:
- Many gig workers experience low job satisfaction due to instability and lack of security. Only 44% consider gig work their primary source of income, indicating reliance on it as supplementary rather than stable livelihood (Edison Research, 2023).
Unsafe Working Conditions:
- Safety concerns are prevalent among gig workers, with 35% reporting feeling unsafe while working and 19% experiencing unwanted sexual advances. Additionally, 21.9% and 20.8% reported being injured or assaulted (Tawiah et al., 2024).
The Fight Against Hunger:
- About 19% of gig workers went hungry because they could not afford enough to eat, and 30% used SNAP benefits, twice the rate of traditional service-sector workers (Zipperer et al., 2022; Despard et al., 2023).
About the author:
Brian Clark is a gig app worker and student in computer science. He enjoys creative writing and the practical application of data in the real world. To read more about him, click here.
References
In Alphabetical Order (A-Z)
Aleksandric, M. (2024, January 5). 20+ Gig Economy Statistics for 2024: The State of Gig Work. FinMasters. https://finmasters.com/gig-economy-statistics/
Daugherty, K. (2024, May 13). Gig economy statistics to know [2024]. FinanceBuzz. https://financebuzz.com/gig-economy-statistics
Granicus, Inc. (n.d.). SEATTLE CITY COUNCIL - Record no: CB 120775. https://seattle.legistar.com/LegislationDetail.aspx?ID=6643819&GUID=EA421169-7D33-4B3F-B149-F7C0D74F5B12&FullText=1
Mayor Adams, DCWP Commissioner Mayuga Announce Nation’s First Minimum pay Rate for App-Based Restaur. (2023, June 11). The Official Website of the City of New York. https://www.nyc.gov/office-of-the-mayor/news/405-23/mayor-adams-dcwp-commissioner-mayuga-nation-s-first-minimum-pay-rate-app-based#/0
Minear, J. M., & Griffin, M. A. (2023, April 25). Gig workers get new protections in Washington. National Law Review. Retrieved June 21, 2024, from https://www.natlawreview.com/article/gig-workers-get-new-protections-washington
Proposition 22 [Ballot]. (2020, November 3).
https://lao.ca.gov/BallotAnalysis/Proposition?number=22&year=2020
Research, E. (2023, September 27). Americans and the gig economy. Edison Research. https://www.edisonresearch.com/americans-and-the-gig-economy/
Tawiah, P.A., Appiah-Brempong, E., Okyere, P. et al. Prevalence, risk factors and psychological consequences of workplace violence among health workers in the Greater Accra region, Ghana: a cross-sectional study. BMC Public Health 24, 563 (2024). https://doi.org/10.1186/s12889-024-17962-8
Trusts, P. C. (2021, October 14). Nontraditional workers lack access to workplace retirement options. The Pew Charitable Trusts. https://www.pewtrusts.org/en/research-and-analysis/issue- briefs/2021/10/nontraditional-workers-lack-access-to-workplace-retirement-options
Wang, S., Li, L. Z., & Coutts, A. (2022). National survey of mental health and life satisfaction of gig workers: the role of loneliness and financial precarity. BMJ Open, 12(12), e066389. https://doi.org/10.1136/bmjopen-2022-066389
Zipperer, B., McNicholas, C., Poydock, M., Schneider, D., & Harknett, K. (2022, June 1). National survey of gig workers paints a picture of poor working conditions, low pay. Economic Policy Institute. https://www.epi.org/publication/national-survey-of-gig-workers-paints-a-picture-of-poor-working-conditions-low-pay/
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