Being on demand can be rigid, not flexible
SAN FRANCISCO — Working for on-demand startups like Uber and TaskRabbit is supposed to offer flexible hours and higher wages, but many workers have found the pay lower and the hours less flexible than they expected. Even more surprising: 8 percent of those chauffeuring passengers and 16 percent of those making deliveries said they lack personal auto insurance.
Those are among the findings from a survey about the work life of independent contractors for on-demand startups, a booming sector of the tech industry, released last week.
“We want to shed light on the industry as a whole,” said Isaac Madan, a Stanford master’s candidate in bioinformatics who worked with two other Stanford students and a recent alumnus on the survey of 1,330 workers. “People need to understand how this space will change and evolve and help the economy.”
Currently about a third of the nation’s workers, or 53 million Americans, are freelancers, according to a 2014 survey from the nonprofit Freelancers Union and Elance-oDesk, which connects such workers with jobs. Only a fraction of those are in the on-demand economy, but it’s a rapidly growing segment.
On-demand, often called the sharing economy, refers to companies that let users
summon workers via smartphone apps to handle all manner of services: rides, cleaning, chores, deliveries, car parking, waiting in lines. It includes many of the Bay Area’s hottest private companies: Uber, Lyft, TaskRabbit, Homejoy, Postmates. Almost uniformly, those workers are independent contractors rather than salaried employees.
That status is the main point of contention in a recent rash of lawsuits in which workers are filing for employee status. While the survey did not directly ask contractors if they would prefer to be employees, it found that their top workplace desires were to have paid health insurance, retirement benefits and paid time off for holidays, vacation and sick days — all perks of full-time workers. Respondents also expressed interest in having more chances for advancement, education sponsorship, disability insurance and human-relations support.
The workers surveyed were heavily male (72.7 percent), white (57 percent) and young (67.5 percent were millennials ages 18 to 34). Half had college degrees. More than a third (34.6 percent) were Californians; the next biggest proportion (11.4 percent) were from New York.
The Stanford survey found that on-demand workers earn a median of $18 an hour before expenses. The most lucrative endeavors were chauffeuring passengers and passive income through Airbnb hosts (both $25 an hour), followed by deliveries at $19 and manual labor like housecleaning at $15 an hour. That tops San Francisco’s new minimum wage of $12.25 an hour and the statewide minimum wage of $8 an hour.
The companies also tout flexibility to set one’s own hours as a prime benefit of working as an independent contractor. The survey found that while such flexibility was a key lure for new workers, with three-quarters citing it as the reason they started, the reality was many said they had to work earlier, later and longer hours to meet peak demand. Of those who planned to quit, 43 percent said the pay was insufficient, while 26 percent said the schedules weren’t flexible enough.
The survey results “underscore that schedule flexibility and work-life balance will be critical for the workforce of the future,” said NYU business Professor Arun Sundararajan, who studies the on-demand economy. He thinks that about half of workers will be freelance over the next decade, either exclusively or as supplemental income.
Flexibility was key for Vallejo, Calif., resident Rachel Powell, 30, who does on-demand catering for Zesty.com and then drives for Lyft after dropping off her two sons, ages 8 and 10, at school. “I can work my schedule around my kids,” said Powell, who styles herself as “Sweet Lyft,” handing out home-baked goodies to her passengers. “If they have a school play or sporting event, I can be there for them.”
Still, she wishes she got sick days and vacation days, dislikes dealing with self-employment taxes and finds the erratic income sometimes challenging. Her daily goal is to drive for Lyft until she makes $100 (before expenses); some nights that takes 90 minutes, but often it can take four hours. Overall she estimates that she works some 60 hours a week to make $1,000.
Powell expects to continue at least two more years until her kids are out of elementary school and then may return to her previous profession as an accountant.
Attrition is common, the survey found. In fact, half of the respondents said they plan to stop doing contractor work within a year. Not surprisingly, the less they earned, the more likely they were to be considering jumping ship. Only 29 percent of respondents said they planned to continue for three or more years, and many said they would continue only if their earnings increased.