How Much is Freedom Worth? For Gig Workers, a Lot.

For some gig workers, losing the flexibility to set their own schedules is equivalent to taking a 17 percent pay cut, according to new research that explores the wages and work habits of DoorDash drivers.

App-based platforms that allow workers to start and stop work at a moment’s notice and change their schedules from week to week provide significant value to America’s estimated 1.6 million gig workers, many of whom don’t work enough hours to qualify for the benefits and protections typically associated with full-time employment.

“Flexibility is extremely important to gig workers. Forcing the average driver out of their preferred shift is as bad as cutting their weekly earnings by more than 5 percent. For the California drivers that we study, the ability to start or stop working at any moment and the flexibility to change hours from week to week are particularly valuable,” says Harvard Business School Professor Felix Oberholzer-Gee, who outlined the research findings in a recent working paper, Being the Boss: Gig Workers’ Value of Flexible Work, co-authored with HBS doctoral candidate Laura Katsnelson.

The gig economy boomed amid the COVID-19 pandemic, with many workers for app-based ride-hailing, shopping, and food-delivery platforms working more hours to compensate for pandemic-related job losses within their households. As this trend accelerated, Oberholzer-Gee and Katsnelson looked for an opportunity to better understand how workers balance wage and quality-of-life considerations in choosing gig work, despite the lack of benefits and legal protections that other employees enjoy.

Armed with data on 426,385 meal-delivery drivers working for DoorDash in California, Oberholzer-Gee, the Andreas Andresen Professor in the Strategy Unit at HBS, and Katsnelson used statistical simulations to analyze drivers’ work patterns and pay.

Their findings suggest that the ability to set one’s own work schedule has a significant impact on quality of life—not just for gig workers, but for everyone—and that that impact can be expressed in dollars and cents.

“There are substantial differences between drivers,” explains Oberholzer-Gee. “For the top 10 percent of DoorDash drivers Laura and I studied, losing flexibility is equivalent to a 17 percent pay cut. For the average driver, it is about a third of that value.”

If assigned to deliver meals during specific time blocks, many drivers would likely quit dashing; the researchers estimate that a strict assignment to the most frequently worked delivery shifts would result in more than 30 percent of drivers leaving DoorDash entirely.

Understanding dashers and their choices

The California DoorDash drivers included in the study worked 27 million delivery shifts between Feb. 1, 2019 and Aug. 1, 2020. The typical driver worked 3.4 days per week, for a total of 9.1 hours spent actively making deliveries. Drivers made an average of $187.51 during these weeks, or $20.33 per hour. Thirty-nine percent of drivers had a full-time job, 20 percent were students, and 11 percent were stay-at-home parents. For all of them, 40 percent variations in the times they worked from week to week were typical.

By comparing the drivers’ pay and worktime trends to various scenarios with employer-set schedules, the researchers were able to calculate dollar-value equivalents for the freedom to work on demand. “We find that assigning them to the shift they drive the least often is equivalent to a 24 percent pay cut for the median driver and a 36.9 percent pay cut for the average driver,” they write.

Oberholzer-Gee and Katsnelson found that drivers attach different value amounts to different kinds of flexibility. “Some can work the same days and the same shift from week to week, but others like to be able to change [their schedules] at the last minute,” they explain.

The date range for the driver data also enabled the researchers to compare work habits before and after the COVID-19 pandemic began. Starting in March 2020, when meal-delivery services became a fixture of lockdown life, drivers worked an extra 2.4 hours per shift, and earned an additional $39.50 per week, a 26 percent increase over the pre-pandemic period. (Oberholzer-Gee says food-delivery drivers tend to work shorter shifts, and so are less likely than other gig economy workers to use the work as a primary income source.)

“This suggests that the ability to scale working hours up or down in response to some macro-economic shocks is an important benefit for gig workers,” the researchers write.

The politics of gig work

Aside from studying whether gig workers would be willing to sacrifice pay in exchange for having the freedom to set their own hours, the researchers also wanted to know: How did people’s work preferences influence their political choices when it came time to vote on reclassification of gig workers under California’s Proposition 22 initiative?

Benefits and other protections were at the heart of Proposition 22, the first large-scale look at how voters view gig work.

In 2019, the state assembly passed a law requiring companies such as Uber and Lyft to classify their drivers as employees, rather than independent contractors, since driving is central to their work. Drivers would get minimum wage, overtime, paid sick leave, and unemployment insurance. The companies said the law would upend the way they operate, so they struck back with a $200 million campaign. And they won.

In November 2020, 58 percent of voters approved the Prop 22 exemption for ride-share and other gig drivers, with a minimum-earning guarantee. Based on that guarantee, the researchers determined that the average driver’s earnings would increase 19 percent, to $24.20 per hour, under Prop 22. Drivers who spend the least time on deliveries saw the biggest boost.

“Under Prop 22 rules, the earnings of the bottom 10 percent would have increased by 70 percent to $20.07 per hour,” Oberholzer-Gee and Katsnelson write.

To put their findings about the value of worktime flexibility into context, the researchers also analyzed voting patterns for the ballot initiative. Liberals tended to support the state law, and conservatives were more likely to support Proposition 22, according to the study. Higher-earning gig workers were also more likely to support the measure.

Flexibility attracts talent

For Oberholzer-Gee, the Prop 22 results showed that voters, like DoorDash drivers, saw flexibility as the most important element of gig work. As regulations are debated from state to state, he says, “it’s hard to know how large the [gig] market will be in the end.”

But, he says, the technology-driven gig economy and the global pandemic have already reshaped the future of work—driving many workers to seek flexibility at all costs—and companies competing for talent should take notice.

“The pandemic forces everyone else to think about flexible work,” he says. “Can people change their work hours? Can they work from home? Can they take micro-vacations, taking off just a few hours from work? Flexibility is now a real parameter for [attracting] talent.”

Many companies are using technology in new ways to assist with scheduling workers, Oberholzer-Gee says, pointing to the mobile shift-swapping app used by employees of clothing retailer The Gap. The company piloted the app in its Old Navy stores and expanded it to all brands in 2018. The app “creates value,” says Oberholzer-Gee, by helping workers avoid being scheduled for too many shifts, or too few.

“You make work more comfortable and more predictable,” he says. “There are innumerable ways to use technology to create better jobs.”

About the Author

Lane Lambert is a writer based in the Boston area.

This article originally appeared in Working Knowledge.