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How The Gig Economy Hurts Black, Indigenous, and People of Color

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Gig apps have a flashy design, on-point marketing and messaging, and provide to people what they want above all else – convenience and on-demand service. But at what cost?

Gig workers are often denied basic employee protections like protection from racial discrimination, benefits, and livable wages.

Big gig employers like Uber, Lyft, Instacart, and more have been undermining a century worth of worker protections and are benefiting from cheap labor because of it.

But Daniella, bu-what, how, why are you talking about this now? Aren’t you white? Don’t you often promote these gig jobs? – Yes, I am White and Latina and wasn’t as aware of this when I first started writing about side hustles. I later learned of my own ignorance and am working to make others aware (as well as constantly checking my own awareness). I have worked gig jobs myself and still see some benefit in working them.

However, for me, I do these on the side of my day job where I get benefits like employer tied healthcare, access to a 401k with a percentage match, a salary, and basic worker protections like worker’s comp, social security, and unemployment insurance. Most of the workers in the gig economy work full-time and get none of those things.

No Protections Against Racial Discrimination

In addition to that, because of the general underlying discrimination that exists in America in almost every facet of our lives, they aren’t the same for me as they are for someone who is BIPOC (Black, Indigenous, and People of Color). There are mean people out there that tip people less based on the color of their skin (or rate less on apps that have rating systems). Or worse, “tip bait” them like what has been happening with Instacart where they put a large tip on the order only to change it to a much smaller tip when they receive the order.

There are always those opportunists out there that will take advantage when they can and this is rampant in the gig economy. And without basic racial discrimination protections like employees have, Black, Latinx and other People of Color will suffer.

VIPKID is notorious for discrimination against teachers despite being voted one of the greatest places to work in 2020 by Glassdoor. It is completely legal for students’ parents to discriminate against teachers on VIPKID and Qkids based on the color of their skin, causing them longer times to get set up teaching and tutoring on the platforms.

To those on the other side of the app ordering their groceries on Instacart, waiting for their Uber, booking a teacher on VIPKID, or booking someone on TaskRabbit to put together their new Ikea cabinets never think about who is actually delivering that convenience. Because in reality, it isn’t that app that is doing the real work, it is a person.

Let’s start thinking about who those people are and how we can start helping them.

Gig Employer’s Lack Transparency

There is a looming lack of transparency throughout the gig economy as a whole that hides inequalities, especially when it comes to societal issues like widening the pay gap (including the gender, race, gay, and trans, and other wage gaps) and underrepresented minority groups in the workforce. This is entirely due to gig employers and the way they run this show.

Because of the fact that none of their employees are not actually their employees – they are independent contractors -the company makes more money and has less liability for their workers. They issue 1099’s to workers instead of W2’s, pay no employment taxes for their workers, and are both financially and socially separated from their workers in the eye of the law.

More broadly, research shows that workers in the gig economy are more likely to be non-white compared with their representation in the US working population as a whole: black workers make up 17% of gig workers and Latinx workers 16%.

CNN

When you have a workforce that you don’t classify as your actual employees, you don’t report your workforce demographics the same way most employers do so the full picture of that data is not available.

Workers Lack Benefits

Gig workers are not employees, so they don’t get all of those natural benefits companies provide to their W2 employees like:

  • Payroll taxes
  • Employer contributions to Social Security
  • Healthcare
  • Workers’ compensation protections
  • Paid time off
  • Unemployment insurance benefits
  • Discrimination protections

But what about the law? Shouldn’t all workers be covered against things like discrimination?

Yes and no. The law isn’t complete on this since Title VII of the Civil Rights Act of 1964 prohibits employment discrimination based on race, color, religion, sex, or national origin but this only applies to employees and there are no such protections for independent contractors.

Many Work Full-Time

Many workers in the gig economy work full-time in the gig economy.

When you drive for one delivery app, you end up signing up as a worker for the competing apps to check gigs available on the multiple platforms.

Even though they pay better than many minimum wage jobs, many workers don’t realize the real pay gap it presents when they aren’t tied to a specific employer for taxes, insurance, etc. Especially those in marginalized communities with little access to financial education.

When a person is presented with the promise of the flexibility that the gig economy offers along with the lure of “being your own boss” (similar to the pull MLMs have) vs. working a minimum wage job with an annoying boss, they are going to go for the more flexible option. If you are someone in a marginalized community who has been denied the same access to financial education and literacy programs that more privileged white communities have (like where many of these tech CEOs came from), you can be easily exploited.

They know this and they take advantage of it.

Close to one-third of Latinx adults, and a little more than one-quarter of black adults, earn an income through the gig economy (compared with just above one-fifth of white adults). Data from the Gig Economy Data Hub, a project by the Aspen Institute Future of Work Initiative and Cornell University’s Industrial and Labor Relations School, shows that contract workers, on-call employees, and agency temps — positions that offer lower pay and less flexibility than more traditional gig-economy workers — are more likely to be blacks and Latinx.

This data — and the fact that as the coronavirus continues to spread, many essential blue-collar workers lack protective gear, hazard pay, and health benefits — helps explain why we are seeing reports that the virus is wreaking havoc in neighborhoods of color.

CNN

How This Hurts Finances

Because of the whole structure of the way the gig economy is set up, it’s hurting workers’ finances more than you may think.

The fact that there is no protection against racial discrimination absolutely affects pay and finances. People tip and rate workers less due to their own bias and discrimination on top of the lack of benefits as an independent contractor.

58 percent of full-time gig workers said they would have a hard time coming up with $400 to cover an emergency bill — compared to 38 percent of people who don’t work in the gig economy. Both numbers are alarming, but the gap suggests that this informal economy is far more destabilizing than Silicon Valley investors care to admit.

Vox

That same 58 percent that doesn’t have $400 to cover an emergency bill, also has no unemployment benefit they can utilize if they lost their gig job(s). Because of the lack of benefits and insurance, this hurts their finances and access to extra money and assistance when they need it.

Many gig workers’ retirement also suffers as they don’t have access to employer-sponsored retirement plans like 401ks and their employer isn’t paying into their Social Security as an independent contractor (gig workers have to pay into this themselves as a part of their self-employment tax).

Laws are Different from State to State

Since the gig economy has only been around for the past 10 years or so with Uber popping on the scene in 2009, many laws lacked to support their workers and specific business model.

Due to the rising demand to supply these workers with more benefits, protections, and wages, many laws have sprung up to try and help this effort.

New York implemented rules that went into effect in January 2020 where ride-hailing companies were required to pay their workers around $17.22 an hour.

There was also Assembly Bill 5 introduced in California to force gig companies to classify their workers as actual employees. Many of the gig employers sued against this and some were successful while others are pushing new ballot initiatives.

Uber and Postmates,  for example, unsuccessfully sued to try to prevent the law from being enforced. Meanwhile, Uber, DoorDash, Lyft and Instacart are pushing a ballot initiative that would ensure drivers and couriers remain independent contractors.

Techcrunch

They passed an ordinance in Seattle, WA that allows ride-hailing drivers to collectively bargain.

These new laws will continue on a trend throughout the U.S. from state to state and it is up to you to help the guidance of these laws (or the gig companies pushing new ballot initiatives will get what they want).

Resources to Help

Inform yourself and keep informing yourself. Newer industries like the gig economy and this new age of convenience will need to be carefully followed and held accountable. Inform yourself through books, reliable news, podcasts, etc. Learn the history of your own local laws and inform yourself to make informed decisions when voting within your own local community.

Call your city council. Your city council represents the local community and has a responsibility to respond to the citizens who elected them.

They control things like the annual budget, tax rates, ordinances and resolutions, regulate public health and safety, and regulate business activity through licensing and regulations (among many other things).

Not only call your city council members but also call your mayor and state representative. Let them know the improvements that need to be made. You can find their information using this site and relevant links.

You can also participate in groups like Gig Workers Rising and other groups of people fighting for many of the similar things.

And vote! In every election in your local community, no matter how small – you need to vote in it. But you want to make these decisions and requests informed so educate yourself over and over again.

I recommend the following books which I recently ordered:

For relief for gig workers and freelancers, this Forbes articles has some great information.

Conclusion: Not All Side Hustles Are Created Equally

It is much easier to start a side hustle on the side of a day job when you have that income from a day job for any upfront costs and the benefits from being classified as an employee with your day job. That isn’t the case for many working in the gig economy full-time, BIPOC, and others in marginalized communities.

As you see new laws pop up in your local community, work with your local officials to let them know how it affects you and what you think would work better. Constantly demand fair wages and resources to the gig employers you work for and continue to advocate for yourself through community action, donating your time or money, and voting.

What other ways do you see the gig economy hurting its workers who are Black and POC? Let us know in the comments below and any other resources you recommend.

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1 thought on “How The Gig Economy Hurts Black, Indigenous, and People of Color”

  1. Avatar

    It is a tough problem, very much like minimum wage increases. The intent is kindness, but the impact can go either way. If it becomes cheaper to replace retail workers with machines(WalMart self check out) due to the higher minimum wage then you don’t get what everyone wants, higher paid workers, you get unemployed workers. And as for Uber, they lose money every year, billions I think, so those jobs are already very much at risk. I don’t know the answers but the problems are very real. You have done a great job of pointing out the problems and suggesting some actions. Weirdly my last Uber ride was in a Tesla, how can that guy ever pay off a car that expensive on Uber low fees? I never worked gigs until I retired and because I’m a very privileged person with a very lucrative niche I’m among the small subset of people who get overpaid for their time. But as you point out that isn’t the case for most gig workers.

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