On-demand apps creating gigs, but not exactly jobs

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It was just after noon on a recent Wednesday, and my phone chimed with a notification: Someone in Brookline Village had a hankering for a corned beef sandwich from Michael’s Deli.

I called the restaurant, ordered the sandwich, and punched the delivery address into Google Maps. Then I hopped on my bike to pick up the food.

In just 35 minutes, I had delivered the sandwich and was back in my home office (scarfing down a second sandwich I’d bought for myself.) I’d joined the on-demand economy, earning $3 for my time through an app called Pinch. If I could pick up my pace to two deliveries an hour, I’d be earning … two-thirds of the minimum wage.

A parade of new app-based services are making urban life more convenient, from lunch delivery to laundry pick-up to chauffeured vehicles that materialize outside the bar just when you’re ready to leave. These apps are powered by billions of dollars in venture capital — transportation startup Uber alone has raised $5 billion — and an army of workers who are generally treated as independent contractors.

When you talk with those workers, as I’ve been doing this past week, you find that while the companies promoting the apps often advertise earnings of $1,000 a week or more, it can be tough to earn a real living.

“I think these are gigs. People who look at them as jobs are looking at them the wrong way,” says J., a Boston resident who currently works as a shopper for Instacart, a grocery-delivery service, and Postmates, a courier app. (He requested anonymity since the companies typically require workers to sign a nondisclosure agreement, and prefer to supervise any media interviews.) “I don’t think there is a way to make a living,” says J., who is relying on income from the apps while also working to launch his own business.

The upside of the new apps, J. and others say, is the freedom to work when and where you want.

Uber drivers, for instance, can choose to work only at times of high passenger demand, when they may earn two or three times more than normal.

“I would only drive during surge pricing hours,” says Jackie Ouellet, a graduate student at Boston College who was seeking to earn extra money with a job that fit her class schedule. “I had time in the early mornings and the evenings.” With the surge prices, Ouellet says she sometimes made $70 or more an hour. She chose to stop driving before 10 p.m. because of safety concerns.

Matthew O’Hara of South Boston says that during this winter’s epic snowstorms, he was already going out in his pickup truck to plow driveways and parking lots at buildings that his firm manages. Using an app called PlowMe, made by a Boston startup, he could pick up extra work.

“This winter was an anomaly, but I was making a few thousand a week when we had snow,” O’Hara says. “It was perfect as a supplement” to his normal income, he says, and he is considering adding a Bobcat vehicle to his fleet before next winter.

But relying on the apps as one’s sole source on income can be challenging.

Daniel Burn says he quit his job working for a Boston insurance company to drive for Uber full-time in 2013. He had two cars in the company’s low-end UberX category — typically midsize sedans — and had another driver working for him. “I was looking to start a business, but then they reduced the fares,” Burn says. Uber can change its prices at its whim, and drivers don’t have any negotiating leverage.

Uber spokesman Taylor Bennett says the company has found that when it cuts fares, drivers’ earnings “increase over time, since with greater demand, drivers are taking more trips more often.” Uber’s own recent survey of its drivers says 61 percent use driving as a supplement to other full- or part-time jobs.

Burn got rid of his second car after it was in an accident. He returned to work at the insurance company early last year, and his second driver is back behind the wheel of a cab. Burn still drives occasionally.

“If surge is on, I’ll go out,” he says.

Uber Filer
Larry Curtis of Brockton driving for Uber in July 2014. Wendy Maeda/Globe Staff File

Holly Rowley says that she had her own business cleaning houses in Ohio, and when she moved to Roslindale last summer, she quickly began to bring in money and “learn the city” by taking cleaning jobs through an app called Handy. It paid her between $15 to $22 an hour based on how many jobs she did with the service, and how highly customers rated her work.

“If you dropped below 4.5 stars, your pay would go down to $15,” she says. Mostly, she made $20 an hour, she says, but sometimes customers canceled jobs and she’d find herself without work for the day. On a day when she was sick, she had to cancel two jobs — and the company docked her pay $25 for each one, for giving less than 48 hours notice.

“If you’re trying to maintain any full-time pay, it was just pretty unachievable,” Rowley says. She was hoping to work 25 hours a week through the app, but hitting that target was difficult because of the cancellations.

A Handy spokesman explains via e-mail that the company’s current cancellation fee for workers is $15, not $25. The spokesman says that workers get paid when customers cancel a job with less than 12 hours of notice, but the company’s policies have changed over time. He says workers average $17 per hour.

Joseph MacDonald of East Boston spent about a year working for the courier service Postmates, hoping to use it to pay the rent when he left a job as manager of a café and pursued a career as a freelance photographer. But while the company said that it “guaranteed” a $15-an-hour rate, the conditions of earning that rate would change often, sometimes in the middle of the week, MacDonald says.

“It was like Lucy with the football,” he says. “They’d keep moving it around.” The company also changed the way that customers were asked to tip couriers, in a way that MacDonald says radically reduced the amount they tipped.

His stint with the company ended in July, when he was hit by a car — driven by an Uber driver — near the Boston Common, just after making a delivery. As an independent contractor, he was not covered by worker’s compensation insurance, and the company wouldn’t cover the cost of his wrecked bicycle. “It was all on me,” MacDonald says.

Postmates spokeswoman April Conyers acknowledged that the company has made changes to the way it asks customers for tips. But she said that the company does provide medical and liability coverage to couriers when they are on duty, and that MacDonald “never filed his claim. We followed protocol the way we were supposed to.” (MacDonald says he is still awaiting all his medical bills, and notes that he is responsible for a $500 deductible.)

A Postmates courier.

All of these service-oriented startups are experiments, trying to determine how to attract employees; what the law will allow in terms of how they classify and compensate those employees; how to foster loyalty among customers that try them once; and how to eventually become profitable.

Going to court is part of the experiment, as many of the companies that treat workers as independent contractors, including Uber and Postmates, both based in San Francisco, have been sued over that decision. MacDonald is part of one such lawsuit, filed by Boston attorney Shannon Liss-Riordan.

Some of the companies are battling lawsuits over worker classification, but others, like valet parking service Luxe and Instacart, have begun to transition some or all of their independent contractors to employees.

In these experiments, customers, workers, and elected officials are along for the ride. At the heart of the issue: while these apps are producing income for many of their workers, and providing lifestyle flexibility, are they also creating societal costs and individual hardships when people get injured, sick, pregnant, or want to retire?

Are we witnessing the birth of a new subclass of employees with no safety net, struggling to piece together a living wage? And if we don’t want these businesses to supply income for people who are under- or unemployed, which businesses will do it instead?

Some of the businesses have already hit a ditch, but I don’t expect them all to go that way. Homejoy, a cleaning service that at one point offered a two-and-a-half-hour introductory visit for $19, went out of business in July. This month, Zirtual, which offered remote personal assistants for $399 a month, abruptly shut down; it had employed about 400 people as full-time “Zirtual Assistants,” rather than independent contractors.

Marcela Sapone, co-founder and CEO of a concierge service called Hello Alfred, expects that today’s prices for many of these services are artificially low.

“The reasons these apps are able to offer such low prices is that they’re funded by venture capital,” she says. “The mission is to get as much of a user base as possible, then go back and make the economics work. Either the economics work, or you have to change your pricing.”

At higher prices, consumers may be less likely to use the apps regularly. (Hello Alfred’s pricing for its home services starts at $15 per week; it treats workers as employees rather than contractors, Sapone says.)

The app I used to become a courier, Pinch, is an experiment of a slightly different kind, asking people to do errands for their neighbors, and earn a little money in the process. It doesn’t seem to be going so well. Aside from jobs posted by the company’s employees, I haven’t seen much real action. (CEO Christian Na says an improved version of the app is on the way soon.)

But if you’re in dire need of a sandwich, you know who to click.

Scott Kirsner writes the Innovation Economy column every Sunday in the Boston Globe, in which he tracks entrepreneurship, investment, and big company activities around New England.
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