Gig Workers Should Not Be Employees. They Deserve Better.
By: Shaker Islam
Tags: Prop 22, Uber, Labor, DoorDash, Gig Economy

Photo by Brett Jordan on Unsplash

It’s clear gig work as is isn’t working.

In the US, companies effectively have three type of workers: full-time, part-time, and contingent (i.e. independent contractor). It’s time we create a fourth that’s crafted for gig workers.

Let me explain.

Prop 22, though controversial, was a small step in creating better protections for gig workers, but it didn’t go far enough. We need to create a new class of employment for Gig Workers at the federal level that has similar benefits as Prop 22, as well as the following regulations for gig companies:

Note: I’m specifically not mentioning health insurance because I believe the best option for everyone, not just gig workers, would be a multi-payer healthcare system, similar to Germany. But I digress…

Gigs should be public

In other words, the money offered for each gig should be public and all gigs should be publicly accessible. What this means is Uber, Lyft, Instacart, etc. can have their own mobile apps, but the core functionality for gig workers can be replicated by anyone who wants to aggregate gigs from any gig company through a public API. Additionally, gig companies should not restrict workers from working for competing companies, and gig workers should be able to do multiple gigs at the same time (granted that they adequately do the job).

This would have a number of impacts for gig workers.

First, this would greatly simplify the life of a gig worker. Today, many gig workers cycle through several apps to look for the best deals. This is time intensive and prone to error, especially for those actively driving or on bikes. If all gigs are in one app, gig workers could easily pick up a DoorDash order first and then GrubHub next. And it’d be much simpler to compare offers from all companies, depending on the type of work you want to do and when.

Second, gig workers often spend a lot of time waiting for gigs. There may not be much demand for, say, grocery delivery during non-peak hours, which is costly for gig workers who need money. However, this problem is greatly diminished if gigs from several companies are accessible in one app, because gig workers won’t have to know the peak times for every type of gig. You could imagine that non-peak times for Lyft could be peak times for, say, TaskRabbit to do odds & ends during the day. Wait times would be driven down across the board, leading to more work & dollars for gig workers.

Lastly, we know that salary transparency means higher wages for workers. This will happen for gig workers too, since it’ll be difficult for tech companies to convince workers to accept cheap gigs. Why take up a $5 offer from Uber if Lyft is currently offering $10? Gig workers do this calculation today on-the-fly, but the information they have is limited and they don’t have the resources that tech companies do. Making gigs public would break this information asymmetry and force all gig companies to compete on price.

You could imagine a number of other effects that’d occur, like labor watchdogs spotting pay inequities, clearer company financials, new gig companies competing, etc…

Pay gig workers with equity

There’s a lot of talk about how little gig workers get paid compared to the CEOs of these gig companies. Realistically, we’ll never be able to close that pay gap. But one of the ways people build wealth is through equity, and if gig workers could be easily paid with equity they could potentially build far more wealth than they could before.

Here’s an example.

In DoorDash’s S-1, there were ~35 million shares outstanding with a strike price of $2.41. At the time of writing this post, $DASH is at $200 per share. That’s an 82.9x increase in value. If you were a Dasher that earned $3000 in DoorDash stock at any point before their IPO, you could’ve turned that $3000 into $248,700. That’s the kind of money could change someone’s life overnight.

DoorDash and others have intermittently offered stock bonuses to gig workers in the past, but nothing consistent. What we really need is for gig workers to be able to choose to be paid in stock, cash, or a split that they choose.

Additionally, we should make it simple for private companies to pay gig workers in equity without dropping a huge tax burden on workers¹. Not only could this be a huge boon for gig workers down the line, but it’ll also increase competition and create a new set of gig companies that seek to partner with gig workers from the very beginning.

Yes, paying gig workers in equity increases their risk exposure — stocks are much riskier than cash, especially if it’s all in a few gig companies. But these gig companies can also set guardrails so that workers aren’t overexposed, e.g. add large warnings if a worker wants to be paid >5% in stock. Gig companies can and should provide resources to improve the financial literacy for gig workers that want to be paid in stock.

Fortunately, there’s some movement towards this reality, but we’ll see if it really comes to fruition.

Provide a path to full-time and part-time employment

While a large percentage of gig workers prize flexibility and optionality, there may be some who seek the stability of traditional employment. Gig companies have more than enough data to determine who would and wouldn’t make sense as full-time employees based on previous gigs someone has done.

Some think this is what AB5 proposed. Despite AB5’s list of questionable exemptions, AB5 would have applied to all gig workers, thus denying the workers that want flexible hours. It was an all-or-nothing approach. I’m proposing we give workers a choice.

Others will defend gig companies, saying that it’s not cost-effective to have gig workers be employees. It’s unlikely that employees, full-time or part-time, are always unprofitable for gig companies, given that employees will be much more reliable than gig workers who decide when to work. Reliable and consistent employees are very useful for companies that deal with surging demand because they can project how many drivers/dashers/etc. they’ll have on any given day. These types of projections are crucial for giving customers a consistent experience.

To those that remain unconvinced, remember that Domino’s — basically the gold standard in food delivery logistics — hires full-time and part-time employees while consistently turning a profit. If they can do it, so can Uber. No excuses.

Protections for inactive time

In Prop-22, there are many provisions around “active time” — i.e. the time the gig worker is working on gig (and not waiting for one). Clearly, gig companies will favor gig workers who work more often — in other words, they’ll always take the work they’re offered. As a consequence, companies might be less kind and give worse offers to gig workers who work less in general.

This might make sense in the eyes of a corporation, but it ignores real life. Real people don’t just wake up to drive around passengers — they lead real lives. They need time with their friends and family, vacation, sick time… they need to live. Which is why we should ensure gig workers aren’t unfairly penalized for not working. If someone takes some time off and comes back to work, their status shouldn’t be demoted and they should have just as fair a shot at gig work as they did before.

Whether or not gig companies actually treat gig workers this way right now is besides the point. We should have legislation that prevents this type of abuse from ever happening.

Think this is buffoonery? Hogwash? Gobbledygook?

Tell me! Respond to this post here on Medium or twete me @__smiz. I’m happy to chat and update this post as I get new information.

Thanks to James Dennin, David Crespo, and Thomas Mathew for reading drafts of this.