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independent contractors
Workers Built the Platform Economy, But They’re Not Seeing Its Rewards
By classifying workers as contractors, platform companies avoid paying core employment obligations while retaining tight control over how the work is done.
May 29, 2025
Alejandro G. thought that driving full-time for Uber in Houston offered freedom—flexible hours, quick cash, and time to care for his young son. But that promise faded fast.
“There are hours when I make $20,” he told me. “And there are hours when I make $2.” As his pay dropped, he pawned his computer and camera, began rationing the insulin he takes to manage his diabetes—putting his health at risk—and started driving seven days a week, often late into the night, just to break even.
Alejandro, whose real name is withheld for his privacy, is one of millions of workers powering a billion-dollar labor model built on legal loopholes. Companies like Uber insist they are tech platforms, not employers, and that their workers are independent contractors. This sleight of hand allows them to sidestep minimum wage laws, paid sick leave, and other workplace protections, while shifting the financial risks and responsibilities of employment onto the workers. It also lets them avoid employer taxes, draining funds from public coffers.
If gig workers were properly classified, public companies would have to disclose pay data, showing just how far below the median these workers earn, and how high executive compensation soars above them.
A new Human Rights Watch report looks at seven major platform companies operating in the U.S.—Amazon Flex, DoorDash, Favor, Instacart, Lyft, Shipt, and Uber—and finds that their labor model violates international human rights standards. These companies promise flexibility and opportunity, but the reality for many workers is far more precarious. In a survey of 127 platform workers in Texas, we found that after subtracting expenses and benefits, the median hourly pay was just $5.12, including tips. This is nearly 30% below the federal minimum wage, and about 70% below a living wage in Texas.
Seventy-five percent of workers we surveyed said they had struggled to pay for housing in the past year. Thirty-five percent said they couldn’t cover a $400 emergency expense. Over a third had been in a work-related car accident. Many said they sold possessions, relied on food stamps, or borrowed from family and friends to get by. Their labor keeps the system running—but the system isn’t built to work for them.
By classifying workers as contractors, platform companies avoid paying core employment obligations while retaining tight control over how the work is done. The platforms often use algorithms and automated systems to assign jobs, set pay rates, monitor performance, and deactivate workers without warning. In our survey, 65 workers said they feared being cut off from a platform, and 40 had already experienced it. Nearly half were later cleared of wrongdoing.
Companies use incentives that feel like rewards but function more like traps. Uber, Lyft, and DoorDash dangle “quests,” “challenges,” and “surges” to push workers to stay on a shift for longer or hit quotas. These schemes lure workers into chasing bonuses that rarely reflect the true cost of the work. One Uber driver in Houston said, “They are like puppet masters. They psychologically manipulate you.”
Access to higher-paying gigs is also conditioned on behavior. Platforms use customer ratings and performance scores to shape who gets the best jobs. One Shipt worker in Michigan said her pay plummeted immediately after she received two four-star reviews, down from her usual five. Ratings are hard to challenge, and recovering from a low score can take weeks. Workers feel forced to accept every job and appease every customer, reinforcing a system that rewards compliance over fairness.
These aren’t the conditions of self-employment. They’re the conditions of control.
This labor model also drains public resources. In Texas alone, Human Rights Watch estimates that misclassification of platform workers in ride share, food delivery, and in-home services cost the state over $111 million in unemployment insurance contributions between 2020 and 2022. These are public funds that could have strengthened social protection or public services. Instead, they’re absorbed into corporate profits—a quiet transfer of public wealth into private hands.
In 2024, Uber reported $43.9 billion in revenue and nearly $10 billion in net income, calling the fourth quarter its “strongest ever.” DoorDash pulled in $10.72 billion, up 24% from the previous year. Combined, their market valuation exceeds $250 billion.
But workers are pushing back, and policymakers are starting to listen. From June 2 to 13, the 113th session of the International Labour Conference—the United Nations-backed forum where global labor standards are negotiated—will convene to debate a binding treaty on decent work in the platform economy. The message is clear: Workers are demanding rules that protect their rights.
The U.S. can start by updating employment classification standards and adopting clear criteria to determine whether a platform worker is truly independent. We also need greater transparency. If gig workers were properly classified, public companies would have to disclose pay data, showing just how far below the median these workers earn, and how high executive compensation soars above them.
This isn’t about rejecting technology. It’s about making sure new forms of work don’t replicate old forms of exploitation or create new ones, by hiding them behind an app.
Alejandro doesn’t need an algorithm to tell him when to work harder. He has a right to a wage he can live on, protections he can count on, and a system that doesn’t punish him for getting sick, injured, or speaking up.
He and millions like him built the platform economy. It’s time they shared more than the burden.
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The Gig Economy Is a Working-Class Nightmare
As the “gig” model has taken hold, many traditional, stable jobs have been put in jeopardy, and many of the hard-fought rights associated with them are being dismantled or watered down.
Aug 05, 2024
In his 1930 essay “ Economic Possibilities for Our Grandchildren”, the economist John Maynard Keynes predicted that future generations would someday work 15 hours a week. The theory was based on anticipated advances in technology and productivity. Keynes’ theory has a strange kind of prescience today (though not quite in the way he expected). What’s called the “gig economy”—a labor market that relies heavily on part-time, temporary, or freelance work—resembles his prediction in a backward sort of way, as numerous industries and occupations have moved away from fixed, stable employment toward short-term flexibility.
Conclusive data on the current size of the independent contractor workforce in the U.S. is difficult to find. Different sources disagree on the scale. In 2017, according to data from the Bureau of Labor Statistics, about 6.9% of workers in America were classified as independent contractors (lower than in 2005). However, the Covid-19 pandemic increased demand for delivery services and rideshare apps (Uber, Doordash, Instacart). A study published last year by the National Bureau of Economic Research found that independent contractors may be around 15% of all workers.
Gig workers are not a particularly large slice of our labor force, but they represent a microcosm of a larger trend—the effects of post-Fordism (post-industrialism). In the 1970s, America transitioned away from the Fordist model of labor, where people worked on assembly lines in the mass production of goods. As this was happening, wages began to stagnate, union membership declined, and the U.S. lost its domestic manufacturing base. The New Deal coalition was dissolved, and the working class became less and less associated with the Democratic Party.
Keeping people stuck in low-wage, part-time jobs in the service sector without security or benefits is a poor substitute for fair compensation, and companies cannot rely on it forever.
A major change has taken place in the economic organization of our society. As social safety nets and union membership have been eroded, job precarity has become a permanent state for many Americans. In the gig economy, your position and status are constantly in flux. Maybe you do your job online in a hybrid or work-from-home format. Maybe you move around between periods of unemployment and temporary or part-time employment. Under the Fordist model, a person could expect to work at the same place for their entire lives with rising standards of living. The gig economy, by contrast, is a fractured labor market where work is increasingly isolated, casualized, and digitized, and limited compensation and benefits are the norm. Gig work is particularly common among younger generations. Nearly 45% of millennial professionals do freelance work (many in addition to other jobs).
In 1997, Alan Greenspan, the then-Chairman of the Federal Reserve, testified before Congress, and he attributed the success of the economy to growing “worker insecurity.” Essentially, workers were too worried about keeping their jobs to ask for higher wages or benefits. They no longer had the same kind of job security, which meant they were in a weaker bargaining position. If you’re an employer, this kind of relationship is ideal. You keep labor costs low, and profits high.
Nowhere is this basic lack of fairness more evident than in gig positions. If you’re classified as an independent contractor, there are a whole host of legal rights that don’t apply to you. It varies by state, but in Massachusetts, for example, you don’t have a right to a minimum wage, overtime, or sick pay. You’re not eligible for unemployment benefits. You’ll almost certainly have a harder time finding health, dental, or vision insurance. Benefits such as retirement, worker’s compensation, and family leave are also generally not offered. You most likely won’t get paid time off for public holidays. Anti-discrimination laws don’t protect you, and you can’t legally sue your employer for wrongful termination (although there are exceptions if the employer has violated a written contract). Independent contractor status also severely limits the possibilities of labor organizing.
There are some benefits to independent contract work (it’s easier to set your own hours, work remotely), but in an ideal labor market, people would have a choice between flexibility and stability. They wouldn’t be forced into either category. For many people, this doesn’t seem to be the case.
In 2020, rideshare drivers in California fought a bitter fight to avoid being classified as independent contractors. The state had previously passed Assembly Bill 5, which required rideshare drivers to be classified as employees. Uber, Lyft, and other companies drafted and campaigned for Prop. 22 to exclude drivers from being classified as employees and spent more than $200 million supporting the measure, according to OpenSecrets. The U.S. Department of Labor and the National Labor Relations Board also supported the bill. In 2020, the measure passed.
As gig positions become more and more common, we can expect to see similar fights in other industries, with similar results. Companies can essentially rewrite labor laws in their favor, and poor and working people bear the brunt of this.
Alternatives to Uber have also suffered. A significant share of the market has been taken away from traditional cab companies. New York City’s taxi medallion system, for instance, has faced a collapse. The medallions (which are required to operate a yellow cab) once sold for up to $1 million, but have plummeted in value, now going for as little as $90,000. Many cab drivers have worked for years to earn these medallions, planning to lease them to new drivers to finance their retirement. These people have essentially had their savings wiped out.
In 2018, New York drivers experienced a string of suicides related to the increased difficulties of earning a living in these positions. In February, 2018, a livery driver named Doug Schifter committed suicide in front of City Hall. He had previously been the writer of a column in a trade publication about how app-based services were flooding his market. Later that year, a cab driver named Nicanor Ochisor hanged himself in his garage. His family publicly stated that ridesharing companies like Uber and Lyft had made it impossible for him to earn a living.
In other industries, such as academia, gig workers are being similarly squeezed. Adjunct or contract-renewable professors may make less than half what tenured professors make, and often have to string together work across multiple universities, sometimes supported with tutoring, test proctoring, and other side jobs. According to survey data released in 2022 by the American Federation of Teachers, “a quarter of adjunct faculty have an annual salary below the federal poverty line.” These professors often have limited or no benefits, and no guarantee of work past the current semester.
These are just a few examples. As the “gig” model has taken hold, many traditional, stable jobs have been put in jeopardy, and many of the hard-fought rights associated with them are being dismantled or watered down. We’ve entered the age of casualized work, but for the opposite reason Keynes predicted—not because we’re basking in leisure, but because we’re trapped in a state of precarity. Productivity has increased, but these gains have not been evenly distributed.
Aside from being unfair, this model is also unsustainable. Keeping people stuck in low-wage, part-time jobs in the service sector without security or benefits is a poor substitute for fair compensation, and companies cannot rely on it forever. The essential hollowness of this model is in plain view, and the subordination of workers to these demands will, sooner or later, collapse. It’s impossible to predict when exactly this will happen, or on what scale, but it can be predicted that it will happen eventually.
How can this be overcome? A sharp reversal of course is needed. Working conditions are unlikely to improve unless we can rebuild the popular institutions which guarantee our rights. Labor unions in particular can establish paths to long-term job security and multi-year contracts as industry standards. Additionally, peer countries have addressed the shortcomings of gig work by offering things like paid family leave, sick leave and universal healthcare to the population. The U.S. needs to encourage broad, expansive change to address these growing concerns, and re-write the terms of our social contract to create routes to economic security. If there is to be any kind of positive development in this area of the labor market, it will depend on these efforts.
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Biden DOL Finalizes Independent Contractor Rule to 'Help Protect Workers'
Praising the policy, one economist said that employer misclassification "robs workers of labor rights and threatens their economic security."
Jan 09, 2024
Democrats in Congress and unions were among those applauding on Tuesday as the U.S. Department of Labor announced its final rule to provide guidance on when employers can treat workers as independent contractors under the Fair Labor Standards Act.
"Misclassifying employees as independent contractors is a serious issue that deprives workers of basic rights and protections," acting Labor Secretary Julie Su said in a statement. "This rule will help protect workers, especially those facing the greatest risk of exploitation, by making sure they are classified properly and that they receive the wages they've earned."
Welcoming the rule—set to take effect in March—the Teamsters said on social media that "it's long past time for American employers to recognize and respect their employees, to stop exploiting loopholes to pay workers less and deprive them of benefits, and to honor every worker's right to organize and collectively bargain a union contract."
\xe2\x80\x9cMisclassifying employees as independent contractors is a serious issue that deprives workers of basic rights and protections.\xe2\x80\x9d\n\xc2\xa0\nActing U.S. Labor Secretary Julie Su didn\xe2\x80\x99t sugarcoat it on Tuesday as the Department of Labor issued a new ruling on worker misclassification and the\xe2\x80\xa6— (@)
Economic Policy Institute (EPI) president Heidi Shierholz highlighted that the rule rescinds a Trump-era
policy and, like Su, stressed how "employer misclassification of workers as independent contractors robs workers of labor rights and threatens their economic security."
"Many workers are harmed by employer misclassification—particularly those in the lowest-wage and most difficult jobs, such as nail salon workers, truck drivers, and construction workers," Shierholz said. "A previous EPI analysis found that in 11 commonly misclassified occupations, workers misclassified as independent contractors lose out on thousands of dollars in earnings and benefits per year, compared with workers doing the same job with employee status."
"Since this rule was proposed, opponents of this rule have waged an all-out misinformation war, claiming that independent entrepreneurs and business owners will now be forced into employee status against their will," the economist noted. "The reality is that if the Trump administration's rule was allowed to stand, workers with far less power to actually set the terms and conditions of their employment—not bonafide contractors—would have continued to lose out on basic worker protections, earnings, and benefits to which they should be entitled."
The Washington Postreported Tuesday that "the rule is expected to face an onslaught of legal challenges from companies. It has faced extensive criticism from businesses and industry groups, including those representing Uber, Lyft, DoorDash, and other ride-share and delivery platforms. But labor officials say they have carefully considered possible litigation and are confident that the rule would withstand a court challenge."
Some Republicans in Congress are already taking aim at the policy, with U.S. Senate Committee on Health, Education, Labor and Pensions (HELP) Ranking Member Bill Cassidy (R-La.) threatening to challenge it under the Congressional Review Act.
Meanwhile, Senate HELP Committee Chair Bernie Sanders (I-Vt.), a longtime labor rights advocate, praised the administration's new move to "stop unscrupulous employers from deliberately misclassifying their workers and cheating them out of hard-earned wages," adding that "when 60% of Americans live paycheck-to-paycheck, workers need labor laws that protect them, not allow them to be ripped off."
Congressional Progressive Caucus (CPC) Chair Pramila Jayapal (D-Wash.) also offered praise, saying that "I am thrilled to see the Biden administration continuing to put its pro-worker commitment into action with this new final rule."
"With gig work playing a larger role in our economy, it's more important than ever that workers are protected under federal law and have access to all the rights to which they're entitled," she said. "This new policy will
ensure that the workers who have fallen through the cracks—from rideshare and delivery drivers to janitors and home care workers—will finally be able to access Social Security benefits and unemployment insurance and be guaranteed overtime and minimum wage pay."
"The rule is also an essential check on large, wealthy corporations who have skirted their obligations to these workers even as their labor makes the companies" profits possible," she continued, adding that the CPC looks forward to working with President Joe Biden and Su to ensure it "is implemented fairly and equitably across the country and industries."
The department's announcement came a day after Biden renominated Su as labor secretary—a decision also celebrated by progressives, including Jayapal and Sanders, who called on the Senate to stop stalling.
"Julie Su has spent her career as a dedicated public servant, fighting tirelessly for working people, especially the lowest-wage workers, domestic workers, immigrant workers, and workers of color," Jayapal pointed out. "She deeply understands how the Department of Labor should work and the needs of our modern economy."
"There is so much work still to do to raise wages, lower costs, and fight for the working people of this country, and we need Labor Secretary Su to achieve it," the CPC leader added. "We urge the Senate to move swiftly and finally confirm this extremely qualified nominee."
Sanders said that "I strongly support Julie Su's renomination to serve as Secretary of Labor. Her strong pro-worker track record as acting Secretary shows beyond a shadow of a doubt that she is the right person for the job. Her tireless and consistent work for working families across the country should continue as secretary of labor and I urge my colleagues to support her nomination."
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