The problem - in America, at least - is that contractors are denied benefits like health insurance and pensions/401k plans. But the issue of an inadequate social safety net is separate and much deeper than a mere employee/contractor distinction. Otherwise it remains a game of IRS musical chairs.
The problem is much larger, and the "sharing" economy companies (and YC) are way ahead of you. It's more accurate to call it the "loophole" economy. A hotel chain that doesn't have to obey health and safety rules? It's called AirBnB! A taxi company that pays its under-insured drivers less than minimum wage? It's Uber! Exploiting a legal loophole and calling it "tech" is currently a lucrative enterprise.
As their own employers, independent contractors can (and probably should) set up one-participant 401k plans for themselves. This can have significant advantages, since the "employer" gets to select the terms for the 401k, and employer-sponsored plans often drop terms that cost less than the value it'd provide you (eg, in-service Roth conversion + after-tax contributions).
The lives of a high-flying contractor doing skilled work are very, very different than someone who faces a the "gig" contracts.
There are plenty of employees who work on piecework or an ad hoc basis. Setting ones own hours isn't really a cornerstone test for contractor status. Certainly much less so than the ability to set prices or subcontract.
You can, sure. Doesn't mean anyone will hire you.
The fact that someone offered a particular rate, and you agreed, doesn't really change anything material.
To me a contractor can decide to work that day, or not work (doesn't matter why - could be timing, or doesn't agree with the pay), and it's fine - if he works he gets paid, if not, he doesn't.
In contrast an employee has to work every day (other than agreed breaks), or he'll be fired, and no further work will come.
But you're not forced to set prices. It's just you won't be hired if your price is too high.
Is a grocery forced to set a particular price, if people won't buy the product at a lower price because a competitor has it?
If I say "I'll buy rice from you for $10", am I forcing the other guy to sell at $10? He can set whatever price he likes. I just won't buy it. Maybe someone else will.
GrubHub drivers can do... neither?
Your example is nonsensical. We're talking about the distinction between an employee and a contractor. Not a store selling products. And again, to my knowledge drivers cannot set prices no GrubHub to begin with, so what you're saying is just irrelevant.
Grubhub is only one client. If you want different pay, get a different client.