The Gig Economy Doesn’t Always Pay

by Stephanie Medina/Boyle Heights Beat and Rachel Livinal/We’Ced

Instacart shopper uses her smartphone to shop for groceries. (Photo by Cyrus McCrimmon/Getty Images)

For many young people in California, working in the gig economy is an ideal job.

It lets you work when you want, which is convenient for those working around class schedules and other responsibilities. So driving for Uber, delivering groceries for Instacart, or picking up someone’s burrito at Chipotle is becoming more common.

Young people aged 16-25 make up the largest group of workers in the gig economy, about 27 percent, according to the Bureau of Labor Statistics (BLS). But what exactly everyone is doing isn’t clear, as the gig economy covers numerous jobs, from ride-hailing app drivers to substitute teachers.

Gig economy workers typically live in urban areas, namely the San Francisco Bay Area, where many online platform companies were founded, federal data shows.

While these jobs have skyrocketed in San Francisco, Oakland, and Los Angeles, young adults in rural communities like Merced in California’s Central Valley don’t reap the same benefits. Some can’t able to afford a car and others complain there’s just not enough demand to make a profit.

Mary Dagsi, an 18-year-old Merced high school senior, says she drove for DoorDash, but it only took her a month to realize the margin of profit was insignificant. Dagsi recalls earning $50 after working six hours, which is far below California’s minimum wage of $12 an hour.

“It’s so little money and people don’t really give tips,” she said. “It took a long time for orders to come through, and it’s very long hours for so little money.”

Dagsi was also concerned about her safety. “It’s just delivering food, but you could be delivering food to a murderer,” she said.

Safety and financial concerns are common among gig workers, but for many like Dagsi, there aren’t many options when looking for work. The latest numbers from the state’s labor department show Merced County’s unemployment rate is 6.5 percent, nearly double the state rate.

That suggests more people are having greater difficulty finding alternative employment both in and out of the gig economy.

Richard Works, Ph.D., an economist with BLS, writes the lack of other work is one reason why the power of the gig economy lies in the hands of the companies that run them, not the people who work in it. That “disproportionate market power” also involves companies giving workers limited information about what goes on behind the scenes of their jobs and crafting platforms to benefit those companies, not the workers.

“The devaluation of productivity in wages is substantial if employers are exploiting the capacity to set wages,” Works wrote.

In other words, the gig economy is sold to workers as giving them the freedom to be their own bosses, but they don’t have the power to determine their own salary.

Despite limited opportunities, college students like Esmeralda Nuñez are finding creative ways to earn money. At 19, she’s too young to drive for Uber or Lyft, but she’s found an alternative by meeting a need and reaping the benefits.

She gives rides to her fellow UC Merced students and delivers food to them on campus. Her rates usually range from $5-8 for a one-way trip. Her pricing is based on what Uber and Lyft are charging at the time and she adjusts for the cost of gas. A customer can text her for a ride or request her to pick up food. Nuñez accepts either cash or payment through Venmo.

“I actually did it as a last resort. I applied to a couple of places in Merced, such as movie theaters, Target, Michaels, and even though I have a good work ethic, and really strong work history, I didn’t get hired because they don't have space for it,” Nuñez, a second-year psychology major minoring in Spanish, said.

Back when she lived in the Bay Area, where she’s from, she worked at a movie theater and Steve and Kate’s Camp, a day camp for children ages 5 to 14.

“In the Bay Area, they’re always hiring wherever you go, but in Merced, it’s very difficult to find a job whether you have the background for it or not,” she said. “There’s just not enough people, which means fewer jobs as well.”

Nuñez thinks part of that difficulty in finding a job in Merced is somewhat because she’s not from there.

“It seems people prefer to employ locals that they’ve known for years because many of the businesses here are family-owned,” she said. “You really get hired through references versus if you’re a college student coming from another city.”

Still, Nuñez says working outside of the typical app-based gig economy has its advantages, including handling her finances.

“As for DoorDash and Postmates, they don’t take off taxes from your income, so at the end of the year I’d end up owing the government the majority of the money earned,” she said.