California is once again robbing its residents of opportunity. Sobbing hearts have decided gig workers aren’t earning enough money or receiving the benefits they deserve.
California is once again robbing its residents of opportunity. Sobbing hearts have decided gig workers aren’t earning enough money or receiving the benefits they deserve.
In January, California changed labor law to make it more difficult for companies to hire workers as independent contractors. Now a judge has ruled that Uber and Lyft are breaking that law and must classify their drivers as “employees.”
When I was in college, I heavily relied on my job as a dog walker. I was doing my best to pay my way through school, working through an app, Wag!, that liked to call itself the “Uber of dog-walking.” I would receive a notification and would then go walk a dog for 30 minutes to an hour.
Before I started walking dogs, I depended on the pastries my local cafe threw out at the end of the day. Dog walking allowed me to pay for groceries, rent, and tuition. Those apps gave me the same two things that Uber drivers desperately need: flexibility and instant money.
At the peak of my dog-walking enterprise, I walked 20 to 25 dogs a day — no matter if it was raining, snowing, or 95 degrees and humid. What policymakers in California likely don’t understand is that I would never have traded that job for secure air-conditioned minimum-wage employment.
I was my own boss. I chose my own wages, working more when I needed the money. Uber drivers didn’t ask to receive the minimum wage, sick leave, vacation time, or any other benefits. If drivers feel like ubering isn’t worth their time, or the wear and tear on their car, they can simply stop. They don’t have to give two weeks notice or worry about receiving an embarrassing recommendation for their next job.
Uber, Lyft, and the other companies that make up the gig economy have helped thousands. Students, a demographic almost always strapped for cash, often struggle to find work as a result of their class schedule. With Uber, they can work when they choose without needing to explain to their boss why they need time off to finish an assignment.
Commuters often use ride-sharing apps like Uber and Lyft to make a couple of bucks and break up the monotony of a long, lonely trip. Anyone struggling financially can jump in their car and use the instant cash they receive from Uber to tide themselves over. People use Uber to pay off their cars, pay down their mortgages, bolster their savings, and otherwise improve their financial stability.
According to the Economic Policy Institute, the average Uber driver only works three months out of the year and 17 hours per week. For most drivers, Uber only supplements their income. Uber never claimed to provide a living wage, it’s pretty openly marketed as a side hustle.
Uber drivers may only make between $8.55 and $10 an hour, but people continue to hop in the driver’s seat, proving they would rather work for those numbers than take the extra leisure time.
The fact that these workers earn less than the minimum wage should lead us to question the minimum wage, not the gig economy. After all, almost a million adults have decided to work for less than the minimum wage. We should stop telling those people they are wrong or that they aren’t savvy enough to know what they want.
Uber has proven that the minimum wage distorts the market — that it sits above the equilibrium wage, where job supply meets job demand. If there is high demand for jobs, businesses can lower the wage they are offering and afford more workers. By mandating wages, the government takes away this flexibility. A portion of people make nothing instead of the small-but-respectable salary they’d earn if allowed to negotiate their pay for themselves.
Uber data has allowed economists to accurately plot supply and demand curves. If there is a high demand but not enough supply, Uber increases rates and pays drivers more. The drivers who won’t work for $10 an hour will happily work for $12. These rational Americans are fully capable of making these decisions without legislation telling them how much they should earn.
Instead of making Uber conform to the governments arbitrarily chosen “fair” salary, the government should allow more companies to operate like Uber. And if more companies offer flexible low-wage work, Uber may have to pay their drivers more to keep them on the roads. We don’t need arbitrary price floors to create a fair system. People benefit when they are allowed to work hard for the wage they find acceptable.
This article first appeared in print in the Orange County Register on 17 August 2020.