Minimum wage for gig workers won’t solve key problems, experts warn

The advent of the gig economy has raised a dilemma for policymakers over the last decade – how can governments ensure the rights of gig workers while not pushing the financial burden onto consumers?

British Columbia is the latest jurisdiction trying to find a balance, with a law set to take effect this fall that creates a minimum wage for gig workers. Ontario and other regions around the world have been exploring similar measures.

However, some experts and advocates are not convinced that the policy should be mirrored across Canada.

Moshe Lander, an economics professor at Concordia University, said if the law hits the bottom line of companies, they may hit back at workers.

“What’s going to probably happen in response is that now all of a sudden, if the workers are going to have to be paid more, don’t be surprised if these companies come back and redefine what your job is or when you’re classified as being in your job as a way to try and cut those costs,” he said.

Starting Sept. 3, new regulations in B.C. will set a minimum wage of $20.88 an hour for so-called “gig work.” The regulations will also bring app-based workers under the purview of WorkSafeBC.

But Jennifer Scott, president of Gig Workers United, said the new law has one big flaw: it will only apply to periods when a worker has accepted an assignment and not to downtime between jobs.

“The minimum wage is the minimum wage for engaged time,” Scott said.

“Apps like Uber have defined engaged time as the time when the worker has food in a backpack or a passenger in a car or they’ve been assigned a delivery and are on the way to the restaurant. It is not all of the time that we are at work.”

Scott said this does not account for all of the time that gig workers spend time working for these companies.

“When I go to work and I log in, I am waiting for orders. I am at work. But apps don’t include this in the calculation of ‘engaged time.'”

2:10 Pushback on B.C. gig economy minimum wage

Lander said while in the short term, a policy like this would not have an immediate impact on restaurant food prices, it could eventually lead to restaurants being squeezed by tech companies.

“There’s a certain amount of rigidity within these contracts (between companies and restaurants) that they’re not constantly renegotiating with the restaurants that they service, but certainly when they get a chance to renegotiate, they’re going to say – all right, you’re going to absorb some of this,” he said.

This could force restaurants into higher costs.

“(They can say) if you don’t like it, then you find your own way to get your food to your customers, or you try and figure out a way to get them (customers) back into the restaurant,” he said.

Some app-based companies have indicated that this could have an impact on prices for consumers.

A spokesperson for delivery service SkipTheDishes told Global News: “Government overregulation, as in this case, stifles innovation and risks further driving up costs for Canadians who are bearing the brunt of these changes. These measures will only put more pressure on Canadians, exacerbating the cost of living crisis across the country.”

The statement added that they had “serious concerns” that the changes were being brought in on a “rushed timeline” and “without proper study.”

In 2022, the Ontario government brought in Bill 88, which modified minimum employment standards for app-based workers. Gig Workers United and other organizations had opposed the move on the grounds that this would push gig workers into a sub-minimum wage position.

The standard for gig workers is lower than the provincial minimum wage, Scott told Global News.

“Right now, in the GTA, we’re making sometimes as low as $6 an hour,” she said.

4:57 Experts, economists call for more labour rights for gig workers

Lander said a B.C.-like law would be a short cut, where there are no easy ways out.

He said Canada needs to encourage competition in the sector and break what some economists refer to as a “monopsony.”

“A monopsony is where you have one buyer of a good. The classic case occurs in the labour market where… everybody used to work for the local factory. In that case, there was only one buyer of labour. It was the employer. The employer would then say, listen, you work for me or you don’t work. And because those are your only options, I can pay you an extremely low wage,” he said.

Lander said neither gig workers nor consumers have much of a choice outside of a handful of ride-hailing or food delivery apps that have cornered the market.

For the long-term health of the economy, he said it would be beneficial if the Canadian government gave loans and incentives to new players entering the market.

Scott said there are other jurisdictions that Canada can learn from.

Spain, she said, has a law that classifies gig workers as employees of companies rather than independent contractors.

She also said policy makers should apply what some call the “ABC test.”

Under this test, a worker is considered an employee, and not an independent contractor, unless the hiring entity satisfies three following conditions.

According to the California Labor and Workforce Development Agency, the first condition is that the worker is not performing their work under the supervision or control of the company. In this case, they would not be eligible for bonuses or performance-based compensation. If the performance of the employee is controlled by the company, they cannot be considered a contractor under the test.

The second condition is that the gig worker needs to perform work that is outside the core offering of the company. For example, if a worker is delivering food on behalf of a food delivery company, they cannot be considered a contractor.

The third condition for a worker to be considered a contractor is that they are also contracting for other clients. If they perform their duties for only one client, they cannot be considered an independent contractor under the test.

“Right now, gig workers are misclassified,” Scott said. “To change that, the workers have to organize. The burden is on the workers. The ABC test flips that and puts the burden on the employer, which is the way that it should be.”