- More pay increases. Raising the minimum wage for gig workers is becoming more common in the U.S. at the state and local level, as well as internationally.
- Technology might act as a disruptor. In the long run, the combination of higher wages for gig workers and new technology, such as autonomous electric vehicles, could lessen the need for such workers.
- The return of more traditional work. Another long-term outcome of increasing hourly wages for independent workers could be that companies begin to offer more traditional employment arrangements.
App-based workers are getting some support on the legislative front when it comes to earning higher wages in some states and localities.
New York City’s law, which went into effect Dec. 4 and was recently upheld on appeal, requires companies such as Uber, GrubHub and DoorDash to pay app-based delivery workers $17.96 an hour (rising to $20 per hour in April 2025).
Seattle’s new law will go into effect Jan. 13. It applies to certain app-based workers and provides for several rights and protections for covered workers. One of those rights includes minimum pay “based on the time worked and miles travelled for each offer.”
Also, British Columbia is proposing raising its minimum wage for app-based delivery drivers in 2024. The law would establish a standard of $20.10 an hour (120% of the province’s general current minimum wage of $16.75) and apply it to “engaged time,” which begins when a worker accepts an assignment and ends upon completion of that assignment.
Some experts say this emerging trend of raising wages for gig workers casts a shadow on the long-term outlook for that segment of the workforce.
Examining the Current Gig Economy
The convergence of pay transparency laws and the desire to regulate the gig labor force will continue to drive the trend toward increasing minimum wages — especially in locations that are pro-labor or pro-union, said Atul Mitra, department head and professor of management at the University of Northern Iowa. Mitra addressed similar themes in “Working from My Car: An Examination of Food-Delivery and Ridesharing Services in the U.S. and India,” a Journal of Total Rewards article he co-authored in 2022.
“I expect this trend to significantly impact workers in EU nations due to a strong presence of unions and robust worker rights,” Mitra said.
In the U.S., independent contractors make up roughly 36% of the workforce and account for 59 million workers, according to McKinsey’s 2022 American Opportunity Survey. Not all independent workers are gig workers, however, and other surveys put the number of gig workers at less than half that (about 16%, or 26 million).
Regardless of the exact numbers, it’s clear that at least some employers are relying on gig workers rather than hiring employees and having to provide them with benefits. “Financial need will continue to drive the relationship between employers and gig workers,” Mitra said. “Thus, I don’t expect employers to seek an employer-employee relationship that nurtures loyalty in the short run.”
In other words, employers that use gig workers will likely continue to focus on ways to minimize the costs of that workforce as a way to increase profitability.
“In the long run, though, I hope to see a shift in focus on benefits that enhance gig workers’ well-being,” Mitra said.
What’s Next for Gig Workers
As minimum wages increase for gig workers, Mitra said, independent contractors in other industries might be inclined to move to gig work, particularly if they have loftier financial goals and want to have only one job.
At the same time, the gig economy is facing some headwinds as a result of wage increases.
Kathleen Anderson, a partner with Barnes & Thornburg, said companies that use app-based delivery drivers are already challenging emerging minimum pay laws for such workers.
In addition, not all states have jumped on the bandwagon. “A similar law was presented in Minneapolis last year but was vetoed,” Anderson said.
Mitra added that increasing minimum wages for gig workers may simply remove the incentive for companies to use these workers, potentially sucking the air out of the gig economy.
“It could become more economically [sensible] for companies to go back to a more traditional way of receiving and providing services,” he said.
According to Mitra, two technological advancements could potentially disrupt the gig economy in the near future. The first is autonomous electric vehicles (EVs) becoming a reality within the next five to 10 years, in which case driverless cars could replace gig workers.
“This is more likely to happen sooner if the costs of EVs go down quickly,” he said.
Mitra also expects artificial intelligence (AI) to play a critical role in assisting gig workers and independent contractors to become more efficient and effective. For example, AI might help enhance customer service by supporting better communication between gig workers and customers with different and diverse backgrounds.
“I believe that the first trend — autonomous EVs substituting gig workers — will help reduce costs and enhance employer profitability,” Mitra said. “I also expect the use of AI to help increase the satisfaction and well-being of gig workers and independent contractors.”
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