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How Well Is the Gig Economy Working for Gig Workers?

The Aspen Institute looked into progress on the pay and benefits fronts

By Richard Eisenberg

The gig economy gets lauded for letting millions of Americans set their own hours and choose their work assignments as freelancers and independent contractors. But the gig economy — which includes people from Uber drivers to dog walkers to consultants — gets low marks for letting them earn a decent living and receive benefits such as health insurance and retirement plans.

Gig Economy
Credit: Adobe

The pay and benefits problems, however, are slowly starting to shrink, according to experts at a gig economy workshop held by The Aspen Institute in Washington, D.C. last week.

Improvements for Pay and Benefits for Gig Workers

“I do see some pathways. There are some people showing it can be done,” Maureen Conway, The Aspen Institute’s vice president for policy programs and executive director of its economic opportunities program, told me in an interview after the event.

Conway, who hosted the panel (The Rise of Gig Work: Creating Flexibility and Stability for a New Era), was quick to add a word of caution, however. “We do many events like this one featuring companies we think are leading, in terms of their practices. Unfortunately, many companies are not following.” The gig economy, Conway added, is “in some ways emblematic of the issues of instability in work in America today.”

But The Aspen Institute’s panelists described a few glimmers for gig workers:

States and Governments

Libby Reder, senior fellow with The Aspen Institute’s Future of Work Initiative, said a few state and local governments, like ones in Washington state and New York, are trying to improve gig worker pay and benefits.

Washington state, Reder said, is attempting to come up with “a whole new model” through legislation that would let gig platforms contribute to benefits funds for gig workers and set governance requirements for administrators. Last week, a national teleconference organized by the labor advocacy group Working Washington instituted a campaign for a $15-an-hour minimum wage for gig workers.

While a patchwork of state regulations might be less preferable than federal rules, Reder said, “states are laboratories of our democracy. If we don’t try a few things out there, we won’t be able to think about a comprehensive solution.”

Benefits for House Cleaners

Also, she noted, the National Domestic Workers Alliance last year launched a novel benefit program called Alia to help house cleaners. It won The Workers Lab 2018 Innovation Fund award.

“Employers of the house cleaners can pay into a benefits fund (usually $5 per cleaning) for the cleaners to draw paid time off and, in some cases, insurance coverage,” said Reder. Cleaners in California and New York can access accident insurance, critical illness insurance, life insurance or disability insurance, but not general health insurance.

House cleaners can receive Alia contributions from multiple employers or clients and take the Alia Benefits Credits with them when they leave a job or client, making them portable. Alia plans to add insurance options in other states in coming months and to adjust the product for nannies and caregivers.

A Points Program to Accrue Benefits

Joshua Karam, co-founder and CEO of Hyr gig platform for the restaurant and hospitality industry, noted that his workers earn good money — “just shy of $20 an hour, on average.” Also, he noted, Hyr’s U Points program lets its gig workers choose where to allocate their points — accruing them for paid time off, health or dental insurance or retirement savings.

So far, Hyr is available in New York City, Miami and Los Angeles; Boston, Chicago, Toronto and other Canadian markets will be added soon.

Helping Gig Workers Manage Taxes

And Jake Biscoglio, vice president of strategic growth initiatives/new market development at Prudential Financial, talked about the tool — Covered 1099 — his firm launched two weeks ago to make it easier for gig workers to save for, and pay, their taxes.

“We found a main pain point for gig workers was saving for taxes — the awareness that it needs to be done, the discipline to do it and the time off between gigs,” said Biscoglio. “Covered 1099 automates the process as you get income, so money goes into the account to pay for the taxes.”

Covered 1099 replicates the traditional employees’ W-2 experience for independent workers whose earnings show up on 1099 forms. Its “Tax Estimator” lets gig workers set aside money the tool believes will be due for taxes and then use that cash to pay quarterly estimated taxes. (Covered 1099 is not permitted for New York state residents.)

The “taxation piece is important, because gig workers are responsible to file their taxes and many are used to the withholding that comes with W-2 jobs,” said Karam. “They don’t know what they don’t know.”

The Struggle for Policymakers


Reder noted that policymakers are “struggling” to close the gap between laws and regulations regarding pay and benefits for traditional workers and new ones needed for “the business models we see today” of gig-economy platforms and their independent contractors.

And Conway told me she didn’t see anything coming out of Washington in the year ahead to help gig workers’ pay or benefits “because we’re fairly gridlocked.”

Gig Work: Still Challenging

Despite the new and promising ideas described at The Aspen Institute panel, gig work remains challenging for many. A 2017 study from the Freelancers Union and the gig platform Upwork found that 63 percent of freelancers dipped into their savings once a month.

Panelist Lyndsey Cameron, a researcher who has interviewed ride-sharing gig workers and been one for about three years, said: “It’s tough to earn daily bread. But [being a driver] gave me a lot of flexibility.”

In a recent Fast Company article on the gig economy, gig drivers lamented that they have been earning less money from their work lately as companies hiring them have tried to cut costs. One Instacart driver said he averaged nearly $20 an hour before November, but in January, was averaging well under $15 an hour. And, the article noted, about 1,600 Instacart drivers have signed a petition complaining about their 30 to 40 percent pay declines.

For many drivers at companies like Uber and Lyft, Cameron said, “the money they earn is supplemental income, but it’s not to go to Hawaii. It’s to buy medicine and pay utility bills.”

Gig Workers: Empowered or Exploited?

Cameron said her research found that whether gig workers feel empowered or exploited depends on their backgrounds.

“If you’re a first-generation immigrant expecting to work your way up and had done low-paid, low-skill work before, you’re more likely to feel empowered,” she said. “The people who feel more exploited are ones who had been laid off from manufacturing or pink-collar jobs and wanted to stop their downward social mobility.”

But, Cameron said, “the gig economy is a really good thing for workers who are fifty-plus.” In fact, she noted, she was drawn to her gig research because her mother lost a job in her 50s and then did gig work for about six years.

Where the Gig Economy Is Headed: People 45+

Angela Heath, an audience member who recently led the online Gig Worker Summit and is CEO and Gig Income Guru for consultant TKC Incorporated, told me she believes people 45+ “are where the gig economy is headed.”

And, she noted, the gig economy encompasses far, far more than Uber drivers. “There’s a continuum of gig platforms, including some for the nation’s top talent,” such as consultants, said Heath, author of Do the Hustle Without the Hassle. “We found at our summit that many of these gig workers didn’t know how to build their businesses.”

Heath plans to offer another online gig summit — GigCon — for all types of gig workers later this year.

Photograph of Richard Eisenberg
Richard Eisenberg is the former Senior Web Editor of the Money & Security and Work & Purpose channels of Next Avenue and former Managing Editor for the site. He is the author of "How to Avoid a Mid-Life Financial Crisis" and has been a personal finance editor at Money, Yahoo, Good Housekeeping, and CBS MoneyWatch. Read More
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