Labor In the On-Demand Economy


Working people are bearing more costs and risks in the 21st century, according to a Sept. 9 report by the National Employment Law Project, “Rights on Demand: Ensuring Workplace Standards and Worker Security in the On-Demand Economy.”

Rebecca Smith, NELP’s deputy director, and Sarah Leberstein, senior staff attorney, co-authors of the report, term the on-demand economy: “Businesses that use internet-based platforms to assign individuals seeking work to businesses and individuals seeking services, controlling relevant aspects of the work and working conditions.”

According to them, the number of workers in the on-demand economy is unclear. Still, a September 2014 report by the Freelancers Union and Elance-oDesk found that 53 million American workers, 34% of the US labor force, have employment as freelance workers.

Significantly, workers are hired as independent contractors and not company employees in the on-demand economy. The basic story here is that such labor gets screwed in more ways than one.

Just ask Takele Gobena of Seattle, Washington, a full-time Uber driver and part-time Lyft driver. He shared his experience with these hi-tech ride-share firms in a Sept. 9 press conference.

Drivers such as Gobena are responsible for buying, fueling and maintaining their cars. At the same time, despite working 15 hours a day and driving customers 37,000 miles in 2014, he earned after his expenses earned $2.64 an hour, according to him, versus the $9.47 an hour wage Gobena received working at Seattle-Tacoma International Airport.

On that note, Uber and Lyft drivers are independent contractors, and have the legal status of a non-employee, e.g., entrepreneur. “In a pending class-action lawsuit in California, Uber drivers claim the company has misclassified them as independent contractors and failed to reimburse them for their business expenses, as employers are required to do for their employees under California law,” according to the ELP report.

Further, Gobena and other drivers who labor for Uber and Lyft as independent contractors must report the income from their 1099 forms to the IRS. That in part requires them to pay a quarterly self-employment tax rate of 15.3%.

Meanwhile, Uber and Lyft, plus home-care firms Honor, crowdsource site Clickworker and crowd work company Amazon Mechanical Turk set pay rates, make hiring decisions and some digitally monitor independent contractors.

The on-demand economy does not provide independent contractors but should with “the protection of baseline labor standards, including the right to the minimum wage for all hours worked and the right to a voice on the job,” write Smith and Leberstein.

The US social safety net created during the 1930s under FDR’s New Deal labor coalition, should be available to all workers, the NELP report asserts. One example is the Fair Labor Standards Act of 1938, which sets minimum wage, overtime pay, recordkeeping, and youth employment standards for employment subject to its provisions.

The NELP report urges the expansion of such labor protections to all the US workforce.

“Businesses in the on-demand economy should not get a free pass on making contributions to existing social insurance programs such as Social Security, Medicare, workers’ compensation, and unemployment insurance, on their workers’ behalf,” write Smith and Leberstein. And the social insurance programs now being developed, such as earned leave and supplemental retirement savings, should extend to on-demand workers.”

On that note, President Obama just signed an executive order that extends paid sick leave to employees of private firms that contract with the federal government.

Meanwhile, retirement security is weakening among the American working class. Accordingly, the NELP co-authors call for all workers in the on-demand economy to be able to pool their money into portable state-managed retirement plans.

No small part of the NELP’s “policy roadmap” for workplace reform is to enable on-demand workers to organize into labor unions. In this way, such workers can bargain collectively versus individually with company owners.

Policies that have weakened bargaining power among typical workers, the bottom 80% of the US labor force, account for worsening income inequality, according to a Sept. 2 report by Josh Bivens and Lawrence Mishel of the Economic Policy Institute in Washington, DC.

Ending the Great Recession did not end the trend of US income inequality. “The top 1% of families captured 58% of total real income growth per family from 2009 to 2014, with the bottom 99% of families reaping only 42%,” writes Emmanuel Saez, a UC Berkeley economist.

Buttressing the NELP report, the EPI’s new initiative “Raising America’s Pay” calls for increasing the bargaining power of typical workers by in part updating overtime rules and strengthening collective bargaining rights. A recent Labor Dept. proposal does that.

Requiring time-and-a-half pay for overtime (excess of 40 hours per week) would affect five million US workers.

Efforts to advance labor-friendly policy options for workers in the on-demand economy are moving from the margins to the center, with the 2016 presidential campaign a case in point. The NELP report is at: <>

Seth Sandronsky is a journalist and member of the Pacific Media Workers Guild. Email

From The Progressive Populist, October 15, 2015

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