Rising gas prices eroding some gig workers’ profits, expert says

Alexandrea Ravenelle, ‘Hustle and Gig’ Author and UNC Assistant Professor, joins Yahoo Finance Live to discuss the battle over how to classify gig workers and how rising gas prices are hitting delivery and ride-sharing workers.

Video Transcript

- Let's say I want to work a few hours outside of my regular job to save for my kids' college. I can do that.

- Whenever my mom needs a ride to the doctor, no matter the day, I can do that.

- If I want to work 20 minutes a week or 30 hours, I can do that.

- When I need a day off to study for a big exam, I can do that.

AKIKO FUJITA: You were just taking a look at an ad there that was spearheaded by Flex. It's a lobbying group representing gig economy companies like Uber, Lyft, and DoorDash. The newly formed group is spending more than $1 million on a campaign pushing back against lawmakers looking to reclassify those workers as employees. That's seen as a critical step to unionization, with the gig economy also under pressure from rising gas prices and post-pandemic demand.

Let's bring in our next guest. We've got Alexandrea Ravenelle. She's UNC assistant professor and author of "Hustle and Gig, Struggling and Surviving in the Sharing Economy." Alexandrea, it's good to talk to you today. We have seen these efforts from workers to get reclassified before. They haven't necessarily moved in the right direction, but what does this latest effort and a $1 million investment tell you about how much traction this movement may be getting?

ALEXANDREA RAVENELLE: Well, a $1 million investment is pretty considerable. You can't help but think that if you've got a million dollars to put towards this, maybe you've got a million dollars to put towards paying your workers a little bit more, you know? We, especially right now, are seeing a lot of pain at the pump for a lot of these gig workers who are doing food deliveries or who are doing grocery shopping or who are doing driving. And so I'm not surprised that we're seeing increased interest in trying to make sure those workers are being treated fairly and paid adequately.

JARED BLIKRE: And Alexandrea, this is a very complicated issue, of course, governed by not only federal but also local state regulations. But I remember the initial battle over in the California legislature. That was kind of one of the first big ones that we were looking at. And it seems to me there doesn't seem to be a really happy middle ground here. Is it possible to let some of these gig workers simply be gig workers and have others have the benefits that they might be looking for?

ALEXANDREA RAVENELLE: Well, you know, we actually saw that a little bit with Instacart at one point. So they had a portion of their workforce that was working as gig workers and another portion that was being paid as W-2 employees. Companies really could classify these workers as W-2 employees and simply say, you can have shifts up to a certain amount.

You know, the classification as a W-2 worker does not actually prevent any type of flexibility. It just means that you receive additional protections so that you qualify for workers' comp and you qualify for unemployment and you qualify for things like minimum wage. You know, the leadership of these companies, they're not being paid as independent contractors. They're being paid as employees.

AKIKO FUJITA: Alexandrea, you brought up another point that I think a lot of people are watching, which is the impact from those high gas prices. We're talking about $4.17 a gallon for regular gas. We haven't seen the higher prices reflected in the rates for Uber and Lyft as well, but no question drivers are feeling that. Number one, what kind of impact is that likely to have on drivers on the platform? Do you see people maybe saying that cut that I'm getting is just not worth it when I'm paying this much for gas?

ALEXANDREA RAVENELLE: Oh, yes, definitely. I mean, drivers were already being left with a tiny fraction of the fares. It's not unusual for 30%, 40%, even 50% of the cost of a ride to go to the company. So rising gas prices is really just hitting their profits even more. You know, most of us feel pain at the pump maybe once or twice a week when we fill up our tanks. But for rideshare drivers and for delivery workers, that pain pump might happen daily or even several times a day. I've spoken to drivers that have actually found it's cheaper, even before this big increase, to rent a Tesla for rideshare, rather than pay for gas.

JARED BLIKRE: I once got a Tesla when I was booking a rideshare, and it was very nice. I was quite happy and surprised there. Well, you're the author of "Hustle and Gig," and I know that extends beyond mobility and ride sharing and delivery. I'm just wondering if you're seeing any of these themes play out across the entire gig industry.

ALEXANDREA RAVENELLE: Oh, yes, absolutely. I mean, during the pandemic, we saw that certain gig work was much more vulnerable to the pandemic. So for instance, individuals who were doing TaskRabbit, who were doing home cleaning, chefs who were cooking in people's private homes, those individuals very much found themselves without work. And although there was unemployment, in many cases, unemployment wasn't originally set up for them. And so even with the CARES Act and PUA, it took them months in order to start getting unemployment funds.

We did see more of an increase in demand for food delivery workers during the pandemic, but then individuals who were sort of flocking to this in order to make money ended up sort of digging into the employment opportunities for other workers who had already been doing this type of work. So it's a constantly moving challenge, I would say.

AKIKO FUJITA: Alexandrea Ravenell, "Hustle and Gig" author and UNC assistant professor, it's good to talk to you today. Appreciate the time.

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