How Independent Jobs, Like Driving For Uber, Make Income Inequality Worse

The rise of “on-demand” jobs is fueling inequality, according to an article in the Washington Post. The biggest problem with these kinds of jobs, which include driving for Uber, renting rooms with Airbnb, doing odd jobs through Taskrabbit, or even writing up blog posts for various business clients found through sites like eLance, is that they just don’t generate enough income for people to earn a living. Yet, they’re growing much faster than the jobs in the traditional sector.

For a long time, anecdotal evidence has shown that earning a living this way doesn’t work, but statistical evidence hasn’t really existed until now. The Post cited a study by Request for Startups, which surveyed 897 people working for 78 different companies. They found that nearly 43 percent of the people who worked these kinds of jobs left because of insufficient pay. The two next most common reasons were not enjoying the work, and no longer needing that kind of work.

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Unfortunately, very few protections exist for these workers. They fall outside of labor laws in most countries, and the sector itself is set up in such a way that it’s up to these workers to ensure they’re paid fairly, rather than putting that onus on those doing the hiring. There is also quite a bit of anecdotal evidence suggesting that people who aren’t skilled or trained in certain fields, but insist on freelancing in those fields, are bringing down the market rates for those who are. That, too, contributes to these workers’ inability to earn a living.

Furthermore, even when clients do pay well, the jobs themselves are generally temporary and infrequent. A $1,000 job sounds absolutely fantastic, until you realize that it’s the only $1,000 job you’re likely to get that month. When your average job only pays $100, and you can only get one or two of those per week, you’re basically screwed.

Freelancers can’t afford their living expenses, they can’t afford health insurance or life insurance, and companies often take advantage of the fact that freelancers will work for considerably less than a standard employee simply because they need the work. Add to that the idea that these kinds of jobs are considered great ways to earn extra income, but not a living, and you have the makings for all sorts of problems with this sector of the workforce.

The article in the Post says that the OECD believes it’s not a good idea to try to get rid of these kinds of jobs. They provide flexibility to people who need it, and they provide a way of earning an income to people who can’t work traditional jobs for one reason or another.

Instead, the OECD says that governments need to start seeing these workers as workers, including making sure that temporary work is compensated at the same rate as the same work in a permanent job (equal pay for equal work). They also suggest restructuring safety nets to help such workers afford things like health insurance and other necessities.

Here in the U.S., that won’t go over well with conservatives, who think getting a well-paying job is just the easiest thing in the world. Regardless, it would be nice if these workers were brought under the protection of labor laws, at the very least. It would also be nice if they were able to actually earn a living, but since these workers are cheap when compared to traditional employees, don’t expect companies and clients to suddenly start compensating them fairly anytime soon. To them, income inequality isn’t a problem, and if you’re independent, too bad.

Featured image by StartupStockPhotos. Licensed under Public Domain via Pixabay

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