TECH­NOL­OGY & IN­NO­VA­TION

The Washington Post Sunday - - BUSINESS - BY ABHA BHATTARAI abha.bhattarai@wash­post.com

Side hus­tles are the new norm. Do they pay?

The “gig economy,” pop­u­lar­ized by the likes of Lyft, Airbnb and TaskRab­bit, has for years been pro­moted as an ef­fec­tive way for Amer­i­cans to make money on their own terms. But new data shows that the ma­jor­ity of gig work­ers — 85 per­cent — make less than $500 a month, on av­er­age, through those ser­vices.

The home-shar­ing site Airbnb yielded the high­est monthly re­turn to its users, with a me­dian in­come of $440, more than dou­ble the $210 a month earned by the me­dian Lyft driver, ac­cord­ing to San Fran­cisco-based loan provider Earnest, which an­a­lyzed tens of thou­sands of loan ap­pli­ca­tions to study the im­pact of gig-economy jobs. (Earn­ings on other pop­u­lar plat­forms in­cluded a monthly me­dian of $40 on craft-sell­ing site Etsy, $70 on de­liv­ery app Post­mates, $110 on ser­vices mar­ket­place TaskRab­bit and $155 on rideshar­ing app Uber.)

“We’re start­ing to see that th­ese gigs are fill­ing in the gaps for a lot of peo­ple — a lit­tle bit of ex­tra money here for a stu­dent loan pay­ment or a few hours of work there to cre­ate ad­di­tional in­come,” said Cather­ine New, a se­nior ed­i­tor at Earnest. “But big­ger pic­ture, you also see that peo­ple are hav­ing to work two or three jobs to make ends meet.”

Nearly 1 in 4 Amer­i­cans earns money from the dig­i­tal “plat­form economy,” ac­cord­ing to a re­cent sur­vey by the Pew Re­search Cen­ter. And in­creas­ingly, their ex­pe­ri­ences — and their earn­ings — are split be­tween those who are sup­ple­ment­ing their in­comes with side gigs and those who rely on those piece­meal earn­ings to eke out a liv­ing.

There are “pro­found dif­fer­ences” in the ways peo­ple use the gig economy, says Aaron Smith, as­so­ci­ate di­rec­tor of re­search on In­ter­net and tech­nol­ogy is­sues at Pew.

“A young pro­fes­sional who oc­ca­sion­ally sup­ple­ments her in­come by rent­ing out her apart­ment on Airbnb is much dif­fer­ent from a sin­gle mother who works for a ride-hail­ing ser­vice in be­tween child-care obli­ga­tions,” Smith writes in the re­port.

Black and Latino work­ers, and those with lower house­hold in­comes, tend to take on la­bor-in­ten­sive tasks — driv­ing pas­sen­gers for Uber or Lyft, for ex­am­ple, or de­liv­er­ing gro­ceries through In­stacart or Post­mates, the sur­vey found. Their wealth­ier, white coun­ter­parts were more likely to make money by rent­ing out rooms in their homes through Airbnb or sell­ing hand­made or used goods on­line on sites such as Etsy.

“In the case of gig work, work­ers who de­scribe the in­come they earn from th­ese plat­forms as ‘essen­tial’ or ‘im­por­tant’ are more likely to come from low-in­come house­holds, to be non-white and to have not at­tended col­lege,” the re­port says. “They are also sig­nif­i­cantly more likely to say that they are mo­ti­vated to do this sort of work be­cause they need to be able to con­trol their own sched­ule or be­cause there are not many other jobs avail­able to them where they live.”

In ei­ther case, ex­perts say a slow job-mar­ket re­cov­ery, grow­ing in­come in­equal­ity and stag­nant wages — com­bined with bal­loon­ing stu­dent-loan debt — have ex­ac­er­bated fi­nan­cial bur­dens for many Amer­i­cans, lead­ing to the grow­ing pop­u­lar­ity of side gigs. As a re­sult, plat­forms such as Uber, which has more than 1 mil­lion drivers, have grown rapidly in re­cent years.

“While we con­tinue to be at what is con­sid­ered full em­ploy­ment, the qual­ity of each of those jobs has been dwin­dling, caus­ing peo­ple to seek out new ways to sup­ple­ment their full-time in­come,” said Arun Sun­darara­jan, a pro­fes­sor at New York Univer­sity’s Stern School of Busi­ness. “There is a lot more vo­latil­ity in the world of work to­day than there was 20 or 30 years ago.”

At the same time that it has be­come harder to find a sta­ble source of in­come to sus­tain a fam­ily, it has also be­come eas­ier than ever to down­load an app that al­lows you to drive around pas­sen­gers, rent out your bed or stand in line for con­cert tick­ets in ex­change for money, said Sun­darara­jan, au­thor of “The Shar­ing Economy.”

But, he added, the find­ings also raise con­cerns about whether th­ese ar­range­ments are in the best in­ter­est of work­ers. Twenty per­cent of Amer­i­cans feel that gig-economy jobs place “too much fi­nan­cial bur­den” on work­ers, ac­cord­ing to Pew, while 23 per­cent said such jobs al­low com­pa­nies to take ad­van­tage of work­ers, who are often left to shoul­der many of the risks and costs associated with part-time gigs. (About onethird of gig work­ers said there had been in­stances where they had not been paid for their work, ac­cord­ing to Pew.)

“La­bor laws, health in­surance, a pre­dictable sched­ule, paid va­ca­tion — all of those things are set up with the ex­pec­ta­tion that you’ve got a full-time job,” Sun­darara­jan said. “Long term, we need to adapt. We’re no longer in a world where there’s just one em­ployee-em­ployer re­la­tion­ship.”

PA­TRICK T. FAL­LON/BLOOMBERG NEWS

Uber rep­re­sen­ta­tives re­view ré­sumés at a Los An­ge­les job fair in Jan­uary. In a re­cent study on gig-economy jobs, the ride-shar­ing app’s me­dian in­come was $155 a month.

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