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When No One Has a ‘Job,’ Who Will Pay Workers a Minimum Wage?

Uber drivers joined a series of protests demanding a $15 minimum wage. What happens to the minimum wage in the gig economy?

In 24 cities around the country, Uber drivers are protesting along with fast food workers, janitors, airport workers, and many other low-wage professions as part of the "Fight for $15" general labor strikes. They're demanding widespread minimum wage increases to $15 an hour, raising the very important question: Is driving an Uber a "job"?

The idea that Uber and Lyft drivers are independent contractors and not "employees" of those companies is core to their business models, which protects them from having to pay a minimum wage or offer benefits to their drivers. It's also a contentious issue that's come up again and again in lawsuits in California and Washington, among other places. It's a question that America must grapple with as the sharing and "gig" economies begin to change the way we work.

Uber would not comment specifically about the drivers strike, but in an informational call on Monday, the company suggested that few of its drivers actually use Uber as their primary means of making a living. A paper released this month by the National Bureau of Economic Research (which was written by an Uber employee and a former Uber consultant) noted that only 10 percent of Uber drivers were unemployed before they started working for Uber. According to its own data, just one-fifth of Uber drivers rely on Uber as their only means of income, and two-thirds of Uber drivers have another full-time or part-time job. The paper found that, generally, Uber drivers are happy with the arrangement.

These earnings numbers—released by Uber—do not include gas money, car depreciation, or insurance. A Buzzfeed report using leaked internal documents from Uber found that the average driver in Houston, Detroit, and Denver all earn less than $13.50 per hour once expenses are taken into account. Image: National Bureau of Economic Research.

"Most driver-partners do not appear to turn to Uber out of desperation or because they face an absence of other opportunities in the job market," the paper concluded. "But rather because the nature of the work, the flexibility, and the compensation appeals to them compared with other available options."

That may be the case, but save for a few exceptions, employers must pay even their part-time workers a minimum wage. And according to Uber's own numbers and numbers compiled by Buzzfeed based on leaked internal Uber documents, many Uber drivers are making well below the $15 per hour that Fight for 15 is pushing for.

"I lean to the suspicion that there will be replacement of payroll jobs with the growth of gig jobs"

"There's this idea in the gig economy that you can hire employees and, as an employer, you're so far removed that you're not responsible for low wages or sexual harassment or benefits. That you have no responsibility at all when you pay people poverty wages," Kendall Fells, an organizer for Fight for 15, told me. "Look, this is where our economy is headed in the next 20 or so years—we have to make sure Uber and Lyft are good jobs."

"Whether it's your first, second, or third job, you should make a living wage," Fells said. "There's no city in America where you can survive on anything less than $15 an hour."

Image: Fight for 15

After years of prognostication from academic types, there's now finally hard evidence that suggest on-demand services like Uber and Lyft are fundamentally changing the nature of work. Earlier this fall, researchers at Brookings found what they call an "obscure Census Bureau dataset" about "non employer firms." These firms are businesses that earn at least $1,000 annually but employ no workers.

Economists Mark Muro and Ian Hathaway correlated the increase in non employer firms in the "rides" and "rooms" sectors with the entry of Uber and Airbnb in 50 cities around the United States. Cities that don't yet have Uber or have only recently gotten it have not seen a similar increase in non employer firms. While the data is not a direct measurement of Uber's effect on the jobs market, Muro told me the research suggests that Uber has indeed displaced traditional taxi driving jobs in many markets. The data also suggests that the cities where Uber first entered are still seeing the fastest growth in number of drivers.

"There's some evidence here in certain cities that it's not just filling unmet demand—clearly it may have an effect on payroll employment in the industry," Muro told me. "It feels like we're in the shallow end of the pool so far—some of the fastest growth is in some of the cities that already have the most Uber and Lyft drivers."

"I lean to the suspicion that there will be replacement of payroll jobs with the growth of gig jobs," he added. "It appears that the gig economy is a modest-sized activity that has an awful lot of momentum and looks poised to grow, especially in ground transportation."

As a society we must decide if these people are worth protecting with the same types of benefits that a traditional "job" confers. Should they be paid a minimum wage?

I've spoken with countless Uber drivers in New York City—many of them want to be paid for the time they spend driving without a passenger en route to pick up someone else. This seems like a fair request, but should they also be paid for the time they have their app on and are waiting for a ping? How would that even work? Many gig economy workers drive for Uber, Lyft, and Juno, and some of them also deliver food for Seamless and do jobs for TaskRabbit. If they're using all of these apps at once, waiting for a ping from any of them, who should be responsible for paying them for the time they're no the "clock?" Do they have a job, or don't they?