Previously, we looked at the many perks of working in the gig economy. Whether you work as a shopper for Instacart or a food delivery driver for Uber and others, you will have more control over your work than you would sitting at a desk 9-5. You can choose the hours you work and the tasks you want to complete. When you don’t feel like working, you don’t. Plus, it’s easy to qualify for the jobs, there is a demand for gig workers, and you can (usually) make decent money with hard work.
So, what’s not to love about all of this? Well, we’ll tell you. Here are the top 3 negatives to choosing gigs as your next career path.
Top 3 Cons of Working in the Gig Economy
1. No benefits
As mentioned last week, right now gig workers are mostly seen as independent workers, otherwise known as freelancers, and as such, are not eligible to receive the same benefits and security as a full-time employee—or any employee, for that matter. This may change in the near future as gig workers throughout Canada are demanding change and there are signs the law is behind them, including the Supreme Court of Canada. You are unlikely to receive paid vacation and you’ll be paying for your own work tools, like cellphones, laptops, insulated bags, and car insurance. Plus, if you don’t feel well, there are no sick days. There are no RRSP plans and little room for advancement. In short, you’re on your own!
2. Taxes and other formalities
If you are used to being an employee or perhaps you’re unfamiliar with independent contractor work, you—and only you—are responsible for paying all your taxes and it can be complicated. We can definitely help you, of course, as you have to set aside a percentage of your income for taxes, register for GST/PST numbers, and you may have to pay installments throughout the year. In addition, some provinces, like Quebec, have very recently introduced mandatory billing for gig drivers and there are numerous steps to complying with this new law. Here, too, we can explain the process to you. You may be able to write off some of the above, but you must be careful with what you choose to deduct.
Knowing how much money you have to set aside, what you can deduct as an expense, and then sorting out how to pay all the required taxes on an ongoing basis is a lot less fun than having an employer do all of the above for you. This can be considered a big negative to working in the gig economy.
3. The truth about fees
Yes, there is money to be made in the gig economy but not for everyone, at least not a livable wage. There are so many variables involved in whether you can be financially successful or not that we can only cover a few here: are you working for one or more gig companies? Are you also working outside the gig economy to supplement your income? Are you in a busy city or an outlying area? How much time are you putting in? Do you expect to stick with this career or move onto something else? And so on…
And then there are the fees. Uber Eats describes its pay policy as: “upfront trip earnings (base fare + trip supplement + promotions) + tips = total fare” but of course, it’s more complicated than that. In the middle of Covid, Uber Eats changed its pay policy and it hasn’t been a hit with everyone. With the new lower base fare, drivers have to rely more on tips and those can be uneven and unreliable over the course of your day – and your year.
In January 2021, the Quebec government asked some companies to lower their commissions but only SkipTheDishes complied. Other provinces, like Ontario and BC, already have commission caps in place in some areas. Instacart shoppers are having trouble sorting out exactly how they are paid, which is not good, as reported by CBC in October. They have seen their take-home pay drop and the company so far has not explained why this is the case. In other words, don’t be fooled by numbers provided by the companies themselves. Fees will be removed. And you have to pay for gas, insurance, and so on, in most cases.
The Takeaway
The biggest negative to working the gig economy is not the isolation or the taxes (probably), it’s the uncertainty. You don’t know exactly how much money you will earn in any given time frame and that can be hard, especially if you are supporting a family. Plus, the regulations change a lot. In response to the cap on their commissions, some companies added a “surcharge.”
Now gig workers are independent workers, but soon they may employees—perhaps in some places, but not others. But, if you have already read our article on the many benefits of working in the gig economy and are not dissuaded from doing so after reading these cons, get in touch with us. We can help you with your taxes, among other things. Join the more than 4,400,000 people already protected by LegalShield and sign up today!
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