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Minimum Wage Versus On-Demand Economy Jobs

From our friends at SmallBizLabs

Critics of the on-demand economy say the jobs aren’t good. The main reasons given are lack of security, lack of benefits and low pay.

When I hear these complaints, my reaction is compared to what?

If you compare them to manufacturing sector union jobs from 30 years ago, I agree that on-demand economy jobs aren’t great. But jobs like that are quite rare these days.

Also, the majority of people working in the on-demand economy are part-time. This means the alternative to their on-demand economy work is in most cases a part-time or full-time low or minimum wage job – or no job at all.

538’s It’s Getting Harder to Move Beyond a Minimum Wage Job does a nice job of describing minimum wage work. Key quote:

The large number of people getting trapped in entry-level jobs is at least partly the fault of the overall economy. The share of workers staying in low-wage jobs at least a year rose during the 2008-09 recession and has improved only modestly since then. Other research has found that job ladders failed the wake of the recession: Workers were forced into they were overqualified for and then weren’t able to move up into better jobs the way they would during better economic times.

The article also points out minimum wage job holders are older and better educated than in the past. The article chart below illustrates this.

Mimium wage jobs

Most low wage jobs – and especially low part-time jobs – have few, if any, benefits. They also aren’t as secure and stable as in the past and many don’t even provide consistent hours.

So compared to these jobs, on-demand economy jobs start to look pretty good. Pay is certainly competitive and in most cases better than minimum wage jobs.

Yes, they don’t cover social security payments, but on-demand economy jobs do provide work flexibility and autonomy – which are highly valued by many.

Another point to consider is studies (ours and others) consistently show on-demand economy workers are satisfied with their work and prefer it over a traditional job.

These people clearly see on-demand economy work as a better option than their alternatives.

I’m not saying we shouldn’t provide more security and protections for on-demand economy workers. There is definitely a dark side to the gig economy and better worker protections need to be put in place.

I also agree we should be trying to figure out how to create more higher paying, “good jobs” with full benefits and job security.

But today’s reality is on-demand economy jobs are better than the alternatives for many.

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