Just as Walmart and fast food companies have been criticized for how they treat employees in the past, Uber and other on-demand companies are constantly being slammed for how they treat their drivers.
Recently Uber has been defending their position as a company that is helping the economy and allowing people to earn extra money with a flexible schedule. The idea that on-demand jobs are transition jobs has also been used to defend retail and fast food companies that pay their workers low wages. The theory behind this idea is that many people will go through times in life when they aren’t fully employed, such as when they are in school, in the process of looking for a full-time job, or semi-retired. Transition jobs are ideal for these situations because they are easy to attain and don’t require the same level of commitment as full-time, “real” jobs.
While the classification of their employment arrangements as transition jobs may be a strategy to justify how they treat their workers, there are some comparisons to be made between on-demand jobs and minimum wage position traditionally found in retail establishments and fast food restaurants. If on-demand jobs are better for workers than minimum wage jobs, this could still be a sign of progress for some people, even if neither of these can stack up to full-time jobs with benefits.
To simplify this comparison, think of it as Uber vs. Walmart.
Uber definitely offers some benefits that Walmart employees don’t have. They’re schedule really is flexible. Many jobs that claim they offer flexible schedules end up requiring the employee to provide all the flexibility. Uber’s peak demand times will cause most drivers to need work late nights and weekends, but it’s been noted that it’s better to give workers the information they need to decide when is the best time for them to work than to require them to be on-call so that the employer can accommodate potential increases in demand.
This flexibility can also allow workers to vary their work schedule from week-to-week. If an Uber driver needs to miss a shift, they don’t have to worry about finding someone to cover for them or getting fired.
Uber drivers can also work as many hours as they want. Because workers that work 30 or more hours in a week are considered full-time employees and must be offered health insurance coverage, many employers will not allow workers to work more than 29 hours in a given week. Not only does this mean the employees have to find their own health insurance, they also can’t get more hours unless they find a second job.
Uber drivers can work as many hours as they want, which can be a gift or a curse depending on your perspective. It’s great that people have the opportunity to work as much as they want, but the independent contractor status of drivers means that they can potentially earn nothing (and actually lose money from wasting gas) during some of these hours.
This brings up another issue, perhaps the most important one for those working in transition jobs: how much money are they making? While Wal-mart has recently increased wages for many employees, a lot of workers are still making under $10 an hour there. If you take Uber’s word for how much their drivers make, then on average they’re earning almost $20 hour. However, there are a few reasons why that number might be a little misleading.
First, the data is over two years old, and the market has become more competitive since then. This number also doesn’t take into account that their drivers have to pay for gas and other expenses, along with self-employment taxes. Finally, the rates vary by city and demand fluctuations, so drivers have the potential to make $15-$20 hour sometimes and much less other times.
The fact that on-demand workers aren’t protected by minimum wage laws is one of the big reasons people want to form a new classification for these workers, but they are some downsides to consider if these workers become employees. Instacart provides one example of this change: when they reclassified some of their workers as employees, they started limiting them to 29 hours per week in order to avoid triggering health insurance requirements. So while Walmart employees are guaranteed a minimum wage, unemployment compensation, and coverage under worker’s compensation laws, they also lose certain benefits as well.
Walmart does offer the potential for advancement, which is not a feature that most on-demand jobs can offer. On-demand workers can earn more by learning the ropes and finding the best locations to get fares or other gigs, but there aren’t yet a lot of opportunities to earn promotions. Fast food restaurants and retailers offer the potential to become managers or at least full-time employees with benefits.
Finally, Uber drivers have the advantage of being able to work for multiple on-demand companies without any worries about scheduling conflicts or taking on too many hours. Walmart employees have more rigid schedules to manage, so getting a second job involves getting approval from two different managers and sometimes having a late night shift followed by an early morning shift. Diversifying is hard for many part-time employees; it’s fairly simple for on-demand workers.
In fact, on-demand workers have a lot of incentives to work for several companies at once: reducing downtime, taking advantage of bonuses, and being prepared if something unexpected happens.
Overall, neither Walmart nor Uber is offering health insurance or a full-time salary to these “transition” workers. If a person really is in a life transition, on-demand work provides some flexibility that retail and fast food jobs don’t allow for. If you’re an artist or self-employed freelancer, driving for Uber is a nice complement to your main gig that will keep your bills paid. Walmart is an option for people that want a little more stability or the chance to advance to jobs with more responsibility and pay.
Personality type may end up being the deciding factor for a lot of people. Some people just don’t want to put on a blue vest and stand at a cash register. On-demand work gives you freedom to wear what you want and work when you want. If you’re in transition, that’s not a bad deal.
Also published on Medium.