The broken promise of the gig-economy

Gig-economy sounds like an effective way to achieve the American Dream. In reality, close to half of them are living in poverty.
30 August 2018

No American dream: nearly half of California’s gig workers are living in poverty. Source: Shutterstock

Working in the gig-economy sounds like the dream — earning money while on flexible hours, you are your own boss, working at your own pace, you choose the work you want to do.

However, as many gig-workers find out, behind the glamour is a lot of shattered expectations. In fact, in California where one in 10 adults work in the gig economy, nearly half of them are battling with poverty.

The results came from a study conducted by the Public Religion Research Institute (PRRI), which painted a stark contrast to the image of the state being a tech innovator and economic driver for the nation.

Gig economy is defined to include jobs on ride-hailing platforms such as Uber and Lyft, as well as providing services such as shopping, delivering household items or assisting in childcare.

“It is striking that nearly one-third of Californians are finding that the promise of the American Dream—that if you work hard, you’ll get ahead—is not coming true for them,” said PRRI CEO Robert P. Jones.

Globally, California ranked as the fifth largest economy in the world. At the same time, PRRI noted that in general, almost one-third of the state population are suffering in poverty.

More specifically, over half of California workers find it difficult to pay for a US$400 emergency expense. 42 percent of the same workers have put off medical treatment.

When results are broken down into regions within the state, the differences between regions become even more prominent.

In the San Joaquin Valley region, where it is famous for agriculture, the percentage of workers in poverty is close to 70 percent.

In comparison, only 27 percent of workers in the Bay Area (famous for housing tech giants the likes of Google, Facebook, and Twitter) were considered to be living in poverty.

“Grasping the magnitude of this problem and understanding the real-life struggles and hardships that impact these more vulnerable workers, is critical for California policymakers, businesses, and non-profits who want to work to create a healthier, more robust employment environment in the state,” added Jones.

At first glance, the gig-economy seem like a perfect fit for the American Dream; today, less than half of them believe that in that motto where hard work equates to economic opportunity.

If estimates by Upwork are anything to go by, America is preparing for the number of freelance workers to make up the majority of the labor force in a decade’s time. When that time comes, the darker issues revolving the gig-economy will also be compounded.

The PRRI report already showed that the majority of Californians would advise young people in the area to relocate and find opportunities in different communities. It is thus important for governments and industry players to recognize and take action on these issues now before it snowballs out of hand.