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Knowledge@Wharton staff
Presented here for discussion is a summary of a current article published with permission from Knowledge@Wharton, the online research and business analysis journal of the Wharton School of the University of Pennsylvania.
A new study from professors at Wharton and New York University finds that although the flexibility of working multiple jobs fuels their entrepreneurial drive, gig workers are looking for some consistency in their work life and that financial incentives face limits.
The study, titled “The Impact of Behavioral and Economic Drivers on Gig Economy Workers,” followed some 8,000 drivers riding for Uber, Lyft and other ride-sharing firms with some also on call for TaskRabbit, GrubHub and other on-demand services.
The study arrives as numerous reports predict that most of the workforce will be in the gig economy by 2025 due largely to automation.
One behavior, according to an interview on the Knowledge@Wharton radio show on SiriusXM with Gad Allon, a Wharton professor of operations, information and decisions and co-author of the study, is described as an “income-targeting effect” being shown by drivers.
Initially, the more money offered, the more eager drivers are willing to work. But, once they’ve reached a certain income level, more pay leads to work less hours.
“The reality is that many of these drivers are trying to balance leisure, they are trying to balance family life,” said Prof. Allon. “It is true that in the past you paid them a lump sum and they worked and gave their best effort. We know already that there is quite a bit of research showing that for gig economy workers, their family lives deteriorate very quickly.”
A second finding was the “inertia” effect. The longer employees worked with one company, the more likely they’ll continue to work with them. “The way I explain that, at least for now, is [that they are] trying to find more consistent revenue streams,” said Prof. Allon.
For on-demand firms, the quest is balancing labor supply with customer demand. If there’s not enough drivers, customers have to wait for service. With too many, drivers have to wait for assignments and may switch to work for a competing firm. In some cases, subsidies are paid to drivers to maintain attractive wages.
“It is a chicken-and-egg kind of problem, but we know that the main challenge is bringing more drivers or more employees,” said Prof. Allon.