Having a “side hustle” sounds really enticing, but it can be competitive. Entrepreneur Zina Kumok shares tips on how to evolve with the gig economy.
The shine of the gig economy has started to lose its luster.
In the early 2010s, it seemed like we were entering a golden age of convenience and affordability -—all thanks to a handful of revolutionary apps. Instead of waiting on an unreliable and pricey cab, you could find an affordable Uber in minutes. Hungry for McDonald’s but don’t want to get off the couch? Postmates would deliver it to your door for a few extra bucks.
But in the last few years, the dream has started to sour. Uber has taken increasing condemnation for poor treatment of employees and a lack of corporate responsibility, recently leading to a loss of their license to operate in London. Airbnb, once championed as the savior of cheap and convenient travel accommodations, is now receiving heavy pushback from housing authorities and proponents of affordable housing.
The sharing economy is still going strong, but it’s no longer a land of boundless optimism and opportunity.
So what does this mean for workers who rely on these apps and services? Is working in the sharing economy still a viable way to make a living? What can these workers do to assess and improve their situation?
The Reality of the Gig Economy
While many people still sign up to work for companies like Uber, Postmates, and Fiverr, dreaming of livable wages and flexible hours, the reality is much more dismal. Few people are making a full-time living through these apps. According to data from the lender Earnest, 85% of side hustle employees make $500 or less each month.
Workers on Airbnb earned the most, at $942 a month, with TaskRabbit users coming in second at $380 a month. Lyft and Uber workers earned $377 and $364, respectively. Other data from the JPMorgan Chase Institute found that earnings on both Uber and Airbnb peaked in 2014 and have been declining since.
It’s understandable why workers assume they’d earn more through the gig economy. In January 2017, Uber paid out $20 million to the Federal Trade Commission to settle claims that it misled drivers about how much they would earn.
The company told potential applicants that drivers in New York had a median income of more than $90,000, and those in San Francisco had a median income of $74,000. In reality, the FTC calculated the figures were closer to $61,000 and $53,000, respectively.
Those discrepancies might seem small, but they matter to people who sign up to work for these companies. More than half of those surveyed by the Pew Research Center said the income they earned from side gigs was essential or important to their finances, compared to 42% who said the money was simply “nice to have.”
Many in the former camp say they rely on the sharing economy because there are “not many other jobs available to them where they live.” Employees who heavily depend on these jobs are also more likely to be less educated and low-income.
As working in the gig economy has become more common, it’s also become less lucrative. Phoenix resident Anthony Kirlew worked as a Lyft and Uber driver in 2016, back when Lyft guaranteed their drivers hourly rates of $25-$40. The work was hard, he said, because you had to drive during the weekend between 10 p.m. and 3 a.m. to earn those guaranteed rates.
“It was really good money for a side gig, easily $250-$300 per weekend,” he said. “Shortly after, the market was flooded with drivers, the guarantees went away, and it was no longer worth it for me to do for side money.”
Kirlew hasn’t worked a sharing economy gig since.
What Sharing Economy Employees Can Do
Examine their hourly rates. While driving for Uber can seem like a great gig, some people have found out that the numbers don’t often make sense. If you currently work in the sharing economy, add up how much you earn and then deduct any related expenses, including maintenance, gas and extra insurance. Then, divide the total figure earned by how many hours you spend to find your hourly rate. If that rate is too low, you’ll know it’s time to quit and find something else.
You can also be more strategic about the jobs you take. For example, some Uber drivers will only pick up rides during surge pricing so they can keep their hourly rate high.
“But overall, driver pay has decreased and the bonuses Uber/Lyft used to offer new drivers have mostly gone away,” said Harry Campbell of The Rideshare Guy. “There are opportunities to make money, but it’s not as easy as it was a few years ago. You definitely have to drive smarter, not harder, nowadays.”
Diversify your income. Relying on the gig economy can be difficult if rates start to change or the market becomes oversaturated with workers. That’s why diversifying your income streams should be a top priority.
Don’t solely depend on Lyft or TaskRabbit to make rent. Look at other sources, such as tutoring high school students, refereeing middle school soccer games or even mowing lawns around your neighborhood. By having more than one way to make money, you won’t feel the sting too badly if one side hustle starts to dip.
Focus on your regular job. No matter how well you do delivering food for Postmates or creating designs on Fiverr, there’s usually an upper limit to how much you can earn. Instead of worrying about Uber changing their policies, focus on being a better employee at your day job.
Come to work with a good attitude, a desire to learn and a willingness to improve. Those qualities will help you shine and earn you more in raises and promotions. The JPMorgan Chase report found that people were more likely to quit their side gig if they were succeeding at their 9-5 job.
If you don’t like your current job, work on your resume and apply for other positions. Traditional employment isn’t going away anytime soon, so don’t be distracted by your side hustle.
Zina Kumok is a writer, speaker, and coach.
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