- An economic slowdown could cause over 1 million Americans to pursue gig work.
- Current gig workers could end up worse off because of the added competition.
Taylor Jay, a delivery driver for several platforms, including DoorDash, Grubhub, Postmates, and Instacart, occasionally works 12-hour days. He says it's been very difficult for him to get ahead financially since he began gig work in 2019.
"It is a struggle, for sure," the 33-year-old told Insider, adding that there's "not a ton of room for really growing savings or anything like that."
He earns between $2,000 and $3,000 a month — equivalent to between $24,000 and $36,000 a year — as a full-time gig worker, according to documents Insider viewed.
Unfortunately for Jay and others like him, making ends meet through gig work may soon get even more challenging if the US enters a recession or unemployment spikes.
That's because an uptick in joblessness could lead over 1 million Americans to flock to gig platforms to help pay their bills.
Bank of America, which has projected the number of unemployed people in the US to rise by 2.6 million by year-end, said in a recent note that 450,000 people could begin driving for Uber and Lyft this year, while as many as 600,000 could start delivering for DoorDash or Uber Eats.
The note cited a 2018 University of Miami study that found for every 1% uptick in unemployment in a given county, there was an average increase of 22% in the number of residents actively working on gig platforms.
"For the ridesharing industry, bookings could see downside with less commute and travel traffic, but a recession should drive better labor supply availability," the note said.
An Upwork survey of 3,000 working adults estimated 60 million Americans, 39% of the workforce, did freelance or gig work over the past year, a record.
If the "economy slows and unemployment increases," the BofA note said, this pool of workers could grow by up to 10% — or roughly 6 million. While a growing workforce would be good news for companies like Uber and DoorDash, it could mean more competition among gig workers — making it even harder for them to get by financially.
'People are going to be getting fewer shifts and fewer gigs'
Even now, when unemployment remains low, Jay said, there are "crazy times" — particularly when various bonuses or incentives are offered and the platforms are flooded with drivers — when it can be challenging to find deliveries and earn a solid income.
In some ways, "it would be nice if it was slightly more difficult to become a driver," he said.
Melissa, a gig worker for Shipt and Instacart, told MarketWatch that more competition would mean "fewer orders and batches available for everybody."
"I don't blame them personally because they're just trying to pay their bills," she said. "But they probably won't make much money, and the people who are already doing it will make less money."
Experts agree.
"With a significant influx of workers, people are going to be getting fewer shifts and fewer gigs," Erin Hatton, a professor at the State University of New York at Buffalo who studies the gig economy, told The Washington Post.
If more competition does come, gig workers will have to decide whether the income justifies the hours they're putting in. It's difficult to assess how much gig workers earn, as it can vary by platform, and most workers do this work only part time, but some surveys help paint the picture.
A 2021 Earnest survey that analyzed data from tens of thousands of loan applicants estimated 84% of gig workers earned less than $500 a month. A 2022 study from a Colorado workers' rights group found the typical gig worker made less than the minimum wage after accounting for expenses and time spent on apps.
Some full-time gig workers, who research has found account for roughly 3% of US adults and between 30 and 60% of overall gig workers, are making over six figures. But in a Legal & General survey of 1,000 gig workers last year who derived at least 60% of their income from gig work, roughly half reported earning under $50,000 a year.
Rising competition isn't the only problem facing gig workers. Millions of Americans embraced food delivery earlier in the pandemic, and while many still use it often, easing COVID-19 restrictions and elevated inflation have contributed to a slowdown in overall demand — which is bad news for those in the food-delivery industry.
Ride-hailing businesses may see an uptick in demand, though, as elevated prices and interest rates lead some Americans to postpone car purchases and turn to Uber and Lyft rides instead.