“These Days, Everyone Needs a Side Hustle”

On By Dan GreeneIn Uncategorized

Uber has TV ads now. The one I see most often is called “Get Your Side Hustle On”. It opens with a thirty-something black male Uber driver telling us, somewhat wearily, “These days, everyone needs a side hustle.” Then the upbeat horns pick up, he and his passenger start dancing, and he tells us how Uber helps drivers move “from earning, to working, to chilling at the push of a button.” He’s earning in his car, working when he’s teaching middle-school chemistry, and chilling when he’s passed out on the couch in the middle of the day, his daughter reading beside him. The side hustle is what helps you make ends meet. Uber, now valued at around $62.5 billion, helps you get your side hustle on whenever you have spare time to slip between your full-time job, your childcare responsibilities, your social life, and your sleep schedule.

There’s some romance to this story, of course; Americans love a hustler. But all credit to Uber, because this ad seems to be an accurate representation of their business model and the reason why they, founded in 2009 and officially launched in 2011, and the rest of the gig economy have grown so rapidly in the wake of the 2008 financial crisis.  New data from Pew show that folks on the fringes of the formal labor market, those without secure jobs or the sort of wealth that provides a cushion in tough times, are seeking out gig economy work to make ends meet.

This a sizable group: 8% of Americans earned money from technology-enabled gig work last year. Pew calls these tools for soliciting drivers, handymen, shoppers, and data-enterers ‘labor platforms’, distinct from the ‘capital platforms’ used to rent your home or sell your bespoke wares. Another 18% of Americans made money from the latter in the last year. It is no coincidence that the growth and success of gig platforms has taken place during a period of stagnant wages and labor market bifurcation (i.e., the jobs generated in the wake of the crisis have been concentrated in high-wage knowledge sectors and low-wage service sectors, with the middle increasingly disappearing). It is precisely because so many Americans have needed to find a little work on the side that these gig platforms are thriving. These days, everyone needs a side hustle.

This is not an altogether new phenomenon. The so-called ‘informal economy’ often grows during recessions. When good jobs are hard to find, people seek out other, less-regulated means to put food on the table: selling food out of a cooler at the bus stop, taking in neighbors’ laundry, offering handyman services to other members of your church, or driving an unlicensed taxi for a few spare bucks. In previous eras, these would have been largely off-the-books, cash-only exchanges, because individual hustlers don’t want to get the health department, the taxicab commission, or the taxman involved. But the genius of Uber, TaskRabbit, and the like is that they formalize these previously informal exchanges by making them accessible to any consumer with a credit card and a smartphone, while simultaneously retaining the informality that frees the company from the obligations employers typically owe employees or regulators. And of course, gig platforms create many new opportunities for this work just by providing extensive logistical support for it, support that justifies their extraction of rent from this newly formalized work conducted on their platforms.

What was the macroeconomic soil in which these business models took root? According to the Economic Policy Institute, while US workers’ productivity has grown by leaps and bounds since 1979, their real wages have barely budged—and low-wage workers’ pay has actually fallen. The exception is the top 5% of earners, whose wages have grown 41% since 1979. So most of our wages haven’t grown in a few decades, while the cost of expensive, essential outlays like housing, healthcare, and college have soared.

More recently, the 2008 financial crash destroyed many Americans’ financial safety nets by wiping out their main sources of wealth—their investment in their homes and their retirement accounts, typically 401Ks—and put serious strain on other savings and investments, if they had them. There has always been a massive wealth gap between white Americans and people of color, which severely restricts the social mobility of the latter, since inherited wealth is a crucial ingredient in affording big things like housing and college and smaller things like unpaid internships This gap widened a great deal in the wake of the housing crash, with black and Latino households losing three and four times more wealth respectively than white households between 2007 and 2010. And while the unemployment rate has finally fallen back to pre-recession levels, the jobs that we have regained since the recession have not been good ones. The National Employment Law Project found that while employment losses during the recession were concentrated in mid-wage and higher-wage industries, the employment gains during the recovery have been concentrated in low-wage industries.  We’ve had an uneven recovery, especially for people of color.

How does Pew’s new data on gig economy workers fit into these trends? Well, the data only provide a snapshot. To confirm my speculation that gig platforms capture precarious Americans’ informal work and extend the opportunity for a side hustle to others, we’d need to know more about trends in gig economy work across time and geography (e.g., whether tighter local labor markets discouraged gig work or not), and what sort of other work gig workers are doing. But this snapshot seems to support my suspicions:

  • 56% of labor platform users say the money they earn through those platforms is either ‘essential’ or ‘important’ to meeting their basic needs, as opposed to being ‘nice to have’ (42%). They’re more likely to have a household income below $30,000 (57%), be nonwhite (64%), and lack a college degree (52%).
  • Recalling our black male middle-school teacher going from chilling to working at the push of a button, labor platform users for whom those earnings are essential or important are more likely to say they use the platform because it gives them control over their own schedule (45%) and because there are few jobs in their area (25%). Those who say the money is nice to have are more often (62%) motivated by the work being fun, or just something to do.
  • 14% of black Americans and 11% of Latinos earned money from online gig work in the past year, compared to 5% of whites. Black Americans are more likely to have done physical gigs like driving or taking in laundry (5%) than white Americans (1%)
  • Fewer than half (44%) of technology-enabled gig workers are employed full-time. 32% are unemployed.
  • Americans making less than $30,000 per year are more than twice as likely (10%) to do gig work than Americans making more than $75,000 per year (4%).
  • Compared to Americans overall, technology-enabled gig workers are less likely to have health insurance (10% lower than the national average), a credit card (15% lower), or a retirement account (13% lower).

Importantly, Pew finds large differences between labor and capital platforms; users of the latter are older, whiter, wealthier, more highly educated, and less reliant on these earnings than gig workers. Who, then, is most likely to be a gig worker who needs that side hustle? A working-class person of color without a college degree who is fitting that hustle in between other life tasks because they’re making less than $30,000 a year, lack a financial safety net, and struggle to afford healthcare. So, that Uber ad wasn’t 100% correct: Some people need a side hustle more than others these days.

The language of the ‘sharing economy’ positions all of us equally in the same community of app users. Indeed, the main advocacy group for the industry, now packaging portable benefits for gig workers, is simply called Peers. But if we read the latest data alongside earlier data on consumers of gig platform labor, it becomes clear that we are not all on the same page. An earlier Pew report found that super-users who purchase services from six or more of these platforms are generally digitally literate, college-educated urbanites making $75,000 or more. The gulf between frequent suppliers of labor to these platforms and frequent purchasers of that labor mirrors the gulf in the labor market that has been growing for decades but which ballooned after the recession: Low-wage service jobs with unpredictable schedules and no benefits on one side, and high-wage knowledge economy jobs concentrated in urban areas on the other.

That so many are desperate to supply their labor for these platforms must surely be a major factor in their growth. They were the right model for the right moment. With good jobs drying up and people looking for extra, flexible, informal work, these digital platforms were ready to welcome them. In precarious times, the side hustle is a growth industry.

Dan is a postdoctoral researcher with the Social Media Collective at Microsoft Research New England.  He studies the institutions and technologies that teach us how, where, and why to work in the information economy. You can learn more about him and his research at dmgreene.net.