Several nights a week, Scott Lipton sits in his 2013 Ford Fusion Hybrid and waits for pings.
When the Sacramento Kings have a home game, he spends the first part of the evening with his wife and 3-year-old son at home in Natomas. Then, usually in the middle of the fourth quarter, he heads over to Sleep Train Arena, where he waits for someone to ping him on Uber for a ride. If he gets the timing right, he doesn’t have to wait long. After he drops off his first riders—midtown, downtown—he heads back and waits for another ping. “Most Kings games I get two or three quick rides,” he says. “That’s a decent night.”
On Friday nights, Lipton stays out of midtown until about 12:30 a.m.—“too many other Uber and Lyft drivers, too many short rides”—and instead researches local events so he can wait nearby. He’s been lucky: He’s never had anyone vomit in his car or felt threatened by any of his passengers. One of his more pleasant rides was also his longest: Just before Thanksgiving this past year, he picked up an older woman at the airport whose son had ordered an Uber ride for her. “She was really nice. I drove her up to the Fairmont Sonoma Mission Inn and Spa to meet her family. That’s been my single biggest fare so far—$120.”
Every time Lipton signs in to drive, he must accept Uber’s terms and conditions. Uber takes 20 percent of his fare receipts, but the amount varies by driver, with Uber taking up to 30 percent of some drivers’ fares.
When his consulting business was slow, before he got a full-time job with the California Department of Fish and Wildlife, Lipton drove 60 hours a week for Uber but said he didn’t make enough money to be tempted to continue driving full time. After basic expenses including gas, he made about $750 a week, but this was before paying taxes—income tax and a 15.3 percent self-employment tax because he’s an independent contractor. Now that he is working full time, he drives a few evenings a week and on weekends to make extra money. “I don’t think Uber’s policies are conducive to full-time employment,” he says.
In Sacramento, driving for Uber and Lyft are just two of the local “gig” opportunities. People also clean houses with Handy, rent out their cars on RelayRides, offer rooms or houses for rent on Airbnb, babysit someone’s kids through UrbanSitter, or deliver food and sundry goods with Postmates. But despite the convenience for people using the services, whether the gig economy will be good in the long run is under debate.
What is the gig economy?
If you’ve never heard the term “gig economy,” you are not alone. Many people who make their living this way have never heard of it, either.
Tina Brown used the phrase nearly seven years ago when she was editor of The Daily Beast to describe the new work reality for people who had been downsized in the Great Recession and were piecing together incomes from a variety of part-time, contract and freelancing “gigs.”
But the phrase languished until this year when media outlets fully embraced it, also calling it the freelance economy, the sharing economy, the peer economy, the platform economy—plus a few more. The names reflect the amorphous and evolving nature of economic activity that involves connecting people who want something—a ride, a room for the night, a babysitter—with independent contractors or vendors who provide those services, usually via a website or smartphone app. Presidential candidates are talking about the gig economy. Economists are speculating about its impact.
Getting to know people from all over the world
Janna Marlies Maron and husband Jeremy Maron’s first Airbnb guest was a quiet young woman from India. They hardly talked, just saying “good morning” in passing.
(Above: Janna Marlies Maron and husband Jeremy Maron enjoy showing their Airbnb guests around town. They rent the spare bedroom in their midtown apartment for $67 to $80 a night.)
“It was almost like having a roommate for a few days,” says Janna, adding that on the last night, “She really opened up and we learned about her history.” For the previous three days, the guest had been taking the California Bar
Examination. A lawyer in India, she was attending law school at Stanford so she could practice in the United States. She even gave the Marons tips about Airbnb: She thought their price of $49 a night was too low.
The Marons are classic gig workers. Janna is an adjunct professor, teaching writing at William Jessup University and Sacramento City College. She also teaches private writing workshops, freelances as an editorial consultant and editor and publishes the literary nonfiction quarterly Under the Gum Tree. Janna also co-hosts the quarterly nonfiction reading series TrueStory. Jeremy works as the marketing and social media manager at Clarksburg Wine Company and also does some sales for Liquid Pixel, a large-format printing company.
So adding another gig to their life—Airbnb—didn’t seem that unusual. In February 2013, they listed the guest room in their midtown apartment. The room was small but charming: hardwood floors, picture-rail molding, a double bed and a colorful painting of Elvis Presley. A door connected directly to the unit’s Jack-and-Jill bathroom.
On average, Janna and Jeremy have rented out the room 15 to 20 times a month for $67 to $80 per night. They have met people from all over: a competitive bodybuilder from San Diego who brought his own sheets so his spray tan wouldn’t ruin theirs; a popular blogger from Germany who writes about travel for introverts; a geologist from upstate New York in town for a world summit on climate change; and lots of Europeans and Australians who stop in Sacramento for one or two nights on their way to or from San Francisco, Lake Tahoe and Yosemite.
The couple enjoy making guests feel welcome. When they open a bottle of wine, they offer a glass to guests. When they go out for a meal, they invite their visitors along and have gotten to know people over dinner at Tres Hermanas, Paesanos, The Press Bistro, Zocalo and DeVere’s. Janna particularly loves showing them around Sacramento. “People are often unfamiliar with how cool the city is,” she says. Jeremy took two guests—both professional women’s basketball players from Luxembourg—on a walk around midtown during Second Saturday. They’ve never had unruly guests—no drunkenness, no loud arguments, no thefts. A European couple accidentally broke their garbage disposal, but then paid to have it repaired. (If the guests hadn’t paid, Airbnb says it has “Host Protection Insurance” of up to $1 million.) There was one awkward encounter with a guest who let it be known he was hoping to “get lucky” at one of the clubs and bring back an overnight guest. After telling him that would not be OK, the Marons realized they needed to update their house rules to indicate only guests who are part of the Airbnb reservation may stay overnight.
They see Airbnb continuing to be part of their lives and finances. They recently moved to a larger apartment, also in midtown, and Airbnb was part of the equation. Janna explains, “With our old apartment, we worked with what we had. But when we moved, we asked is it going to be the kind of place people want to come and stay?”
For her, the only negative to putting together a full-time income from gigging is the financial instability. “There can be some dry months,” she says. “But we love our lifestyle and we feel very fortunate.”
Sacramento hotels continue to have high occupancy
The Marons’ guest room is one of 483 Airbnb rentals in the greater Sacramento region, a figure that, according to Airbnb, has increased 80 percent since 2014. The average Airbnb nightly rate in Sacramento is $81, compared to the average hotel price of $114. Between Memorial Day and the end of August, Sacramento hosted 5,800 Airbnb guests.
But despite its growing popularity, Airbnb does not appear to be having a negative effect on Sacramento hotels. According to research by PKF Consulting USA, Sacramento’s larger hotels saw occupancy rates rise to almost 80 percent in June, up from 78 percent last year. In 2014, after years of weak business, Sacramento hotels had their best year since 2007, and 2015 will likely surpass last year.
Cities across the country, including Sacramento, are grappling with how Airbnb should be regulated: Should there be a cap on the number of nights? Should Airbnb guests be required to pay the transient occupancy taxes now collected by hotels?
Steve Hammond, president and CEO of Sacramento Convention & Visitors Bureau, notes that even if the impact of Airbnb is not clear, “The reality is that Airbnb is here to stay, so the industry needs to embrace it and find ways to work together so everyone benefits, including the end user.”
And even if there’s anxiety about Airbnbs turning into de facto hotels, neighbors sometimes don’t even know there’s an Airbnb in their neighborhood.
Ollie Morrish works as a freelance production sound engineer, and when his family came to visit from England, his mother booked an Airbnb room in his Land Park neighborhood. When it came time to check in, it turned out the listing was directly across the street from Morrish’s home. He was surprised. “I knew them; our kids played together sometimes. I’d never noticed that they rented out a room.” He plans to use it again when his father visits.
Companies in the gig economy facing lawsuits
For some gig-based companies, the designation of workers as independent contractors is coming under scrutiny. Many services say they are merely platforms that connect interested parties. For example, Uber says it is a completely neutral platform that merely connects people who want rides with people who are interested in driving them somewhere. But a recent ruling by California’s labor commission found that “The reality, however, is that [Uber is] involved in every aspect of the operation.”
Uber and Handy are facing class-action lawsuits filed in California, with workers claiming the companies have deliberately miscategorized them as independent contractors and that they are really employees. This distinction matters because benefits and legal protections for employees—everything from health insurance, pensions and unemployment insurance to guaranteed minimum wage and reimbursement of expenses—are tied to a formal employee status.
Martin Kenney, a professor in the Department of Human Ecology at UC Davis who studies the platform economy, is concerned that in this new economic model, workers are losing out. “Gig workers essentially become less powerful, almost powerless” compared to employees. He says companies have been pushing the “independent contractor” envelope further and further, and notes that, “with digital platforms, we now have a whole other level.”
(Below: During the fourth quarter of Sacramento Kings home games, Uber driver Scott Lipton waits by Sleep Train Arena in his Ford Fusion Hybrid to get pinged for a ride.)
Do you Uber?
Although Uber and Lyft ride-sharing services are both available in Sacramento, Uber now dominates local car-service rides to such an extent that it’s often used as a verb, as in “We’re going to Uber to the show.”
Uber’s impact in Sacramento has been significant: The company claims more than 1 million rides in the Sacramento area since launching in January 2013, and there are some 3,000 Uber drivers here.
Precisely how much Uber has affected Sacramento’s taxi industry is difficult to quantify, but a recent study by Certify that looked at millions of business expenses nationally found Uber is now more popular than taxis for business travelers, making up 55 percent of ground transportation receipts compared to 43 percent for taxis. Locally, Uber’s domination over taxis is only likely to increase: As of September, riders can officially request an Uber ride from Sacramento International Airport.
Uber and Lyft are popular because they are easy for riders—you can summon a driver and pay for the ride with your smartphone. The popularity of ride-sharing services is also having some unexpected consequences: In August, the promoter for the City of Trees music festival massively underestimated the number of attendees who would use Lyft and Uber, which led to a major traffic tie-up for people leaving the concert at Gibson Ranch.
Because the timeliness of the service depends on the number of available drivers, Uber actively recruits partner-drivers and makes it easy to sign up: “Got a car? Turn it into a money machine.”
There is no training and no face-to-face interview if you want to drive for Uber. The sign-up process is free and mostly remote. It involves uploading various documents (driver’s license, car registration, proof of insurance, photos of your car), getting your car inspected of your car), getting your car inspected by an Uber-contracted mechanic and passing a background check. After that, you are ready to drive.
Catherine Enfield, co-founder of the SactoMoFo food truck events, drives for Uber, but not in Sacramento as she used to. She first got involved in the gig economy with Airbnb, renting out the extra bedroom in her downtown home a few times per month. She has a full-time job, but last year she realized she was bored on the weekends. “I thought I can either sit at home watching TV or I can get out and socialize and drive for Lyft,” she says.
Enfield signed up with Lyft in August 2014. “What I liked about Lyft was that they required that I meet a mentor in person,” she says. But when Lyft lowered its rates, she signed up for Uber.
Then Uber lowered its rates as well, and she says what had been a $33 fare to the airport dropped to $22 and then $17. “If I feel like driving for Uber,” Enfield says, “I go to San Francisco, where the rates haven’t been lowered.”
She would rather not have to leave town to drive, but she enjoys the work. “A lot of my motivation is social, getting out,” says Enfield. “I really do like it. My problem is that, even though I’m not in it for the money, I still need enough money to make it worthwhile.”
Clean, but don’t call
Lauri Taylor often starts in the bathroom when she cleans houses because she can see right away she’s made a difference. She has been gigging as a housekeeper for Handy for a little longer than a year. Previously, she worked as a housekeeper at a hotel and was cleaning private houses with her sister-in-law when she saw an ad for Handy on Craigslist and put in an application. “I thought it was too good to be true at first,” Taylor says. It sounded like easy money. She wouldn’t have to look for clients. And, she adds, “they paid you right away for every job and it went directly into your bank account.”
After she passed the background check, she attended an orientation with about 15 other people at a home in Rancho Cordova. There, she was given a vacuum cleaner and a bag with cleaning supplies. (Cleaners now must pay for their own supplies.) She said they also gave her a work phone—a T-Mobile One Touch to be used solely for her Handy work.
Despite initially giving her cleaning supplies, Taylor says, “They make it clear that I don’t work for them.” She says that idea is reiterated in all the emails and in the agreement she has to sign in order to claim a job.
Contractors working for Handy can make between $15 and $22 an hour, but Taylor says after working for a while, she realized the variables that would allow her to go up to the top tier—there are four tiers: $15, $17, $20 and $22—are almost impossible. For example, customer ratings of her work must be between 4.5 and 5 for a total of 14 jobs in a row to go up one tier. If her ratings drop, she has to start all over and keep a 4.5 or above for the next 14 jobs before going back up.
Taylor explains the workers also have to clean a certain number of houses within a given time frame to qualify for the increase, but those opportunities to clean aren’t always available. “I was only able to claim one job in the last four days,” she says. “They aren’t supplying jobs.” Her hourly rate had gone up to $20, but lately she averages $17, which she finds frustrating. “You are all psyched—I got a raise! But then you lose it. Why not just say what you want to pay?”
But what frustrates her most about Handy is communication. “We used to able to call a dispatcher if there was a problem, but now that’s totally gone,” she says. “There’s no way to call them.” The only way independent contractors—and clients—can contact Handy is through the app or website, which offer a limited set of options. And some of the problems need a quick response. She once showed up to a house to find another cleaner already there for the job. Taylor says whenever she complains to the company via the app on her phone, she doesn’t hear back.
The future of the gig economy
As for the future of the gig economy, Professor Kenney believes the complexity of the changes makes predictions difficult. But he does say the workforce is already changing. “Many sectors of the labor force are at risk of being reorganized—rewired, in a sense—through a platform where the platform owner has enormous power,” he says.
In addition to concerns about workers losing rights, he also worries about the unintended consequences of the gig economy on existing business models. For example, Uber is not governed by the same regulations as taxis. “A taxi is a ‘public’ conveyance,” Kenney says. “That means the driver has certain public responsibilities. If a dispatcher sends the driver to what’s considered a bad neighborhood, the driver has to go by law. An Uber driver can just not accept the request.”
With Uber depressing the taxi industry’s ability to make money, Kenney says there could be a time when there are no more public taxi drivers. “In some sense, it will be replaced with a better service,” he says. “But in another sense, the public good goes away. Underserved, underprivileged people may be further underserved if taxis all disappear. Those are the kinds of issues we’re facing with the gig economy. It’s hard to say if there will be a way to address all those discrepancies.”
(Above: Brandy Smith at Zen Threads production facility in Curtis Park.)
ETSY AND BEYOND
Not all gig workers are simply making a little extra on the side. One local artist turned her Etsy gig into a bricks-and-mortar business.
Brandy Smith received a bachelor’s degree in studio art from Sacramento State, and when she had trouble selling her paintings, she began making custom T-shirts, reasoning she might have more success selling $20 T-shirts with original art than selling a single painting for $300.
She began selling her custom-made T-shirts on eBay, with little success. Then a friend told her about Etsy. She created her Etsy store, Zen Threads, at the end of 2008 and shipped her first orders for “wearable art” in 2009.
At that time, she was printing the T-shirts in the garage of her Tahoe Park home. Because she hated the chemicals used in a lot of silk screening, she used eco-friendly dyes and inks and emphasized the earth-friendly aspect on the Etsy store.
By the end of 2012, sales on Etsy outstripped what she and the two people she hired could do in her garage, and in 2013, Zen Threads moved to a production space in Curtis Park, right next to The Coffee Garden. Smith is now the head of her own company and employs six people.
Etsy was key to Zen Threads’ success, but Smith feels it is unlikely the online platform will continue to help her business grow. “Last year may have been a peak,” she says. “I felt like it was bound to happen. But now our local business has grown, and I’d also like to expand our custom screen-printing work.”
Although acknowledging she “worked my butt off,” particularly in the beginning, she seems surprised and grateful at Zen Threads’ success. “Who knew you could make a living off a website? I never would have thought that was possible, especially for an artist. I wouldn’t have expected that this is where I would have ended up, not what my business has become today.”