In the past few years, on-demand transportation modes have become increasingly more popular. And Millennials rideshare driving have been powering these technologies, acting both as consumers and workers. According to the Young Invincibles, an estimated 23 million young adults fall between the ages 18 – 34. These young people make up the bulk of the on-demand economy workforce¹ ( check out the .pdf attached here); however, we Millennials are making less than the generation before us on average.
I came across a group of young guys, that were self-proclaimed Millennials, during work last night. They seemed to be on their way to a house party somewhere in lower Manhattan, between Battery Park City and the Financial District. And were constantly talking in abbreviations:
I can’t believe she KPI’d the ADFs. Did you guys catch that?
Really nerdy stuff. From what I gathered, they were co-workers heading out for a night of fun. You know, to blow off some steam? Some experts believe that Millennials are roughly categorized as anyone falling into the age group of 25 – 34 years old. Similarly, a huge portion of rideshare drivers also fall into that category.
The report released by the Young Invincibles highlights why so many individuals are likely doing rideshare driving. Because median salaries between the two generations suggests an inter-generational decline of $10k, or 20% in young adult workers. And that’s not because Millennials are at an earlier stage in their career (like my whimsically greenhorn passengers likely are); but instead because of entering the job-market during economic downturns¹.
Which means a major percentage of on-demand workers are Millennials rideshare driving.
These data provide insight that the Millennial generation is coping with economic pressures by engaging in the on-demand economy (e.g., doing rideshare driving). A few other interesting takeaways from the report include:
- Young adults with debt and a degree today, earn same as workers with no degree in 1989.
- Among those with a college degree, those with no student loan debt experienced the least amount of decline.
- Racial disparities are strife among Whites, Latinos, and African Americans. Income gaps between the three classes are persistent into the current generation.
- Young workers without a college degree have suffered the greatest wage declines. This reinforces the importance of obtaining higher education in our society.
Along these lines, Millennials are saving more for retirement than the Baby Boomers were. Even as median net worth has declined by 56% across generations¹. It’s truly a dense report, and I suggest reading it in full if you have the time. Towards the end, in the Recommendations section, the authors suggest several ways to improve Millennials’ capacities for asset and wealth accumulation, including:
- Financial literacy and capability
- Tax time savings
- Support on-demand workers with portable benefit plans and protections
Specifically, since on-demand workers are currently categorized as 1099 contract workers, it’s possible that Millennials rideshare driving are falling into these generational income gaps inadvertently. For example, it’s commonly known that most individuals join up to work with transportation network companies (TNCs) before fully understanding all the costs involved.
The Risks Involved With Participating in the On-Demand Economy
Because of this generational income gap, young workers seem to be turning to the on-demand economy to boost their earnings. This could be something of a knee-jerk reaction to economical pressures. Millennials that do rideshare driving might need the extra cash to cover living and/or other necessary expenses.
What Millennials rideshare driving often don’t realize initially is that companies like Uber and Airbnb don’t pay into the unemployment pool. Additionally, the workers are considered independent contractors which means taxes aren’t taken out of our pay.
Furthermore, the current classification system as it is means nothing is taken out of workers income for Social Security, Medicare, etc., etc. Nothing is being taken out for the long-term well-fare of the worker, and every dollar we’re being paid is taxable. On top of all this, some rideshare drivers take out loans for new cars because of inflated perceived earnings with Uber and Lyft. Further burdening the poor Millennial, whose already subjected to a host of uncontrollable variables associated with the rideshare gig (e.g., fare cuts, murky tax responsibilities, classification of independent contractor, etc.).
How to find the light at the end of the tunnel
Fewer than half of young adults have started saving for retirement, according to the Young Invincibles. The authors call for a reformation of state and federal policy to provide government sponsored retirement accounts. Ease of access to financial information outside of employer-facilitated accounts is likely limited to Millennials rideshare driving. Similarly, fewer than half of young adults have started saving for retirement already; however, the percentage of individuals with retirement account ownership has increased significantly (16 in 1989, compared to 40 percent today)¹.
While portable benefits plans and protections like workers compensation, paid sick or leave time, and health benefits don’t exist for on-demand workers. It’s important to equip yourself with some financial knowledge, which empirically leads to a better financial outcome in the long-term. This is accomplished through asset and wealth accumulation, choosing low-fee options, portfolio diversification, managing budgets, and paying bills on time. And if you’re interested in getting to know more about finances in general, I suggest taking out a few books from the library or getting acquainted with popular personal finance blogs online.
Do you even plan for retirement bro?
Additionally. lack of funds to make investment decisions in the first place can be a difficult stumbling block for Millennials rideshare driving. For many low-income Americans, their tax-refund could be the largest lump sum they receive all year. Deciding to invest this chunk of money into a low-fee, high interest rate savings account would be an excellent place to start their retirement funding.
Finally, Getting back to our sample of Millennials taking a Via late the other night, there’s a good chance that they haven’t already set up a retirement account. Either through their employer or with an outside agency, as I’ve done personally. Perhaps they’re even moonlighting as rideshare drivers, to boost their monthly contributions into said account(s). That’s what I would be doing if this weren’t my full-time gig already.
¹Allison, T., 2017. Financial health of young America: Measuring generational declines between
baby boomers and millennials, Young Invincibles, 1 of 3 part series, retrieved from: http://www.investopedia.com/articles/insights/012617/millennials-theyre-doing-worse-boomers-did.asp?ad=dirN&qo=investopediaSiteSearch&qsrc=0&o=40186