Money

Success of Uber and GoFundMe points to larger failures, says award-winning author

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How your side hustles could actually be hurting you

Entrepreneurs like Mark Cuban and Daymond John may extol the virtues of having a side hustle, but for many Americans, these side gigs are more than just a passion project, they're necessary second or third jobs. And that speaks to a wider problem.

About 40 percent of Americans have some sort of side hustle and earn roughly $690 a month, according to a recent Bankrate survey. At the same time, the crowdfunding site GoFundMe has raised more than $5 billion since its launch in 2010.

Americans need to examine the underlying reasons why so many people need to rely so heavily on these new money-making ventures, says Alissa Quart, executive director of the Economic Hardship Reporting Project and author of the recently released book, "Squeezed: Why Our Families Can't Afford America. "

Many of these companies have almost a benevolent reputation, but they're actually taking advantage of "social problems that are being advertised as pluses," Quart tells CNBC Make It.

Middle class life is now 30 percent more expensive than it was 20 years ago, Quart writes, and families are dealing with the soaring costs of housing and college, all while the average paycheck has the same purchasing power it did 40 years ago.

PayScale recently reported that real wages — your take-home pay, adjusted for inflation — have not bounced back to the pre-recession levels of 2007. Even in cities where the job market is hot and wages are on the rise, like San Francisco and San Jose, California, residents' purchasing power is down.

Side hustles are 'really problematic'

"We hear about side hustles glowingly — it's awesome you can be an Uber driver and also a pharmacist," Quart says. In actuality, gig economy jobs like Uber are "really problematic."

"They prevent people from doing the work of their first profession," Quart says, adding that these jobs are often also poorly paid when all the variables are taken into account. For example, working a second job can cost side hustlers if they have to keep their kid in daycare longer. Similarly, drivers for Uber and Lyft or other ridesharing platforms will generally shell out more for maintenance on their cars.

"At the end of the day, people are stressed, their trajectory is muddy. They're still not earning enough," Quart says. School teachers who moonlight as drivers told her they are grading papers at stop signs and thinking about their curriculum when the light changes. "It shouldn't be this way," they told Quart.

Quart says Uber, in particular, advertises itself as an opportunity to nurses and teachers with campaigns and slogans such as "Teachers, driving our future."

"Uber has promoted its teacher-driver initiative as an act of apple-pie altruism, a perfect private sector remedy for the failures of the public sphere," Quart writes. But why don't these teachers already have school supplies or an adequate salary? We need to start thinking about that, she says.

"We need to think about what we're accomplishing — what do we think of a career or the meaning of our existence if we're just accruing dozens of side hustles?"

Crowdfunding is 'kind of frightening'

While a lot of the stories about crowdfunding didn't make it into the book, Quart tells CNBC Make it that she spoke to a lot of people who were using these sites to cover basic necessities.

For example, one millennial couple Quart spoke with was using GoFundMe to raise money for IVF because same-sex insemination wasn't covered by their insurance. Others were using it for maternity leave or even lawsuits.

In fact, there's a whole school lunch section on GoFundMe, where people can donate to fund lunches for public school kids in places including Durham, North Carolina and Seattle, a trend Quart calls "kind of frightening."

As a social safety net, it's "dystopian," she says. "That whole world of GoFundMe, crowdfunding sites and the bizarre things that nonprofits have to step in and do that our local and federal government should be doing."

It really shows it's a threadbare system, she adds. "It's the view from steerage as the hull's going down — that's what the GoFundMe raising money for school lunches and daycare is showing."

Uber and GoFundMe did not immediately respond to requests for comment.

Don't miss: Why a 33-year-old turned to a risky loan when his baby's premature birth left him broke

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