Tips 105 – The Gig Economy Scam

Wage Basics

Tips 105 – The Gig Economy Scam

The rise of the so-called “Gig Economy” creates more problems with the tipped wage that need to be addressed. In 2019, more than 15 million people in this country worked in non-traditional employment arrangements. This number continues to increase as companies like Amazon, Uber, DoorDash, and Caviar take a larger market share of the food service and retail sectors.

By pitching potential employees the opportunity to become “entrepreneurs” rather than delivery workers, they found a way to legally reclassify their workforce as “independent contractors.” They don’t earn a fair income, but they do have the freedom to hustle their way to a fair wage as they become dependent on tips, and lose perks or protections afforded traditional employees. These perks include a minimum wage, rights to unionize, unemployment insurance, workers’ comp, and overtime pay, among others. The old way where a business would hire delivery workers to perform the same service could never compete. But hey, at least this way you can download an app!

In many cases, companies are forced to make increasingly ludicrous claims about the nature of their business in order to dodge the fact that their “independent contractors” are very clearly employees in everything but name. And as these companies grow, they have more power and money to hire lobbyists at the state and federal level to preserve legal loopholes they exploit. It’s a positive feedback loop of human misery.

Work of this nature is incentivized during “peak” periods, often when hazardous weather conditions make delivery more dangerous. If not, they can expect compensation for as low as $1 or $2 per delivery depending on the company. In addition, for every order, restaurants pay fees to the delivery company that cut into their profits and squeeze their workers. 

Plainly, this system is broken and needs to be addressed sooner rather than later.

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