A Middle Ground Between Contract Worker and Employee | Hacker News Reader

A Middle Ground Between Contract Worker and Employee

nytimes.com

40 pointshvo49 comments

Here's the original paper by Kreuger and Harris that this article is built around:

http://www.brookings.edu/research/papers/2015/12/09-moderniz...

The authors propose a new employment category: Independent Worker. The authors calculate that there are currently ~600,000 independent workers in the US (0.4% of total employment).

In our proposal, independent workers — regardless of whether they work through an online or offline intermediary — would qualify for many, although not all, of the benefits and protections that employees receive, including the freedom to organize and collectively bargain, civil rights protections, tax withholding, and employer contributions for payroll taxes. Because it is conceptually impossible to attribute their work hours to any single intermediary, however, independent workers would not qualify for hours-based benefits, including overtime or minimum wage requirements.

The elephant in the room is "minimum wage requirements." here ie finding away around paying minimum wage.

Ask Sports Direct in the UK how fiddling the minimum wage is working out for them.

Sports Direct are a vile, abusive organisation. I'm not sure how the owner can sleep at night knowing that his riches are the direct result of exploiting desperate people.

This is the story that the parent comment is referring to: http://www.theguardian.com/business/2015/dec/09/how-sports-d...

Their shares rose 4% after the Conservatives won the general election, because the market didn't expect them to reform zero-hours contracts. (It seems the market was correct). http://www.independent.co.uk/news/business/news/election-201...

What happens if 1099s try to collectively bargain? Aren't they allowed to. What specific freedom do they need?

>Alan B. Krueger, a former chief economist to President Obama, and Seth D. Harris, a former deputy labor secretary, argued in a paper released this week that many workers in the so-called online gig economy should have more rights and protections than most do now. At the same time, they wrote, “forcing these new forms of work into a traditional employment relationship could be an existential threat to the emergence of online-intermediated work.”

It would be brutal to Uber's profitability, titanic valuation and possibly even their existence, but online-intermediated work is here to stay.

Since their profitability is largely predicated on maintaining the current upward transfer of wealth (from drivers who create the wealth to shareholders who don't), they would, of course, prefer to keep treating their drivers as independent contractors who can be kept precariously employed.

Regarding your comment on the upward transfer of wealth: that's the "gig economy" for you. In reality, the gig economy is a feature of late capitalism's final race to the bottom wherein information technology has enabled businesses to access previously untapped small private capital (cars or whatever else) to be utilized by the owners as an adjunct/prerequisite to selling their labor.

Thus, the small private capital is requisitioned at large scale for the purposes of the large capital business owner, allowing them to avoid paying the cost of actually onboarding and maintaining the small capital purchases. The labor bought by the business owner is expendable and limitless, thanks to information technology; the entire venture is only possible by trading a pittance of labor costs and getting both steady labor and the use of small capital items in return.

The gig economy allows the rich to take value from the small amounts of capital that are readily and equally distributed among the working class in the form of their cars or whatever else. Paying for the labor and getting both labor and capital is brilliant, but people don't realize that they're consenting to an economic situation that looks a lot like robbery.

The gig economy is caused by a surplus of labor from very high birthrates 20-40 years ago. It will disappear in the future because of falling birthrates around the world.

Side question: at least in the US tax code, can you not write wear and tear on your Uber vehicle off as depreciation?

https://ttlc.intuit.com/questions/2722277-what-can-an-uber-d...

Even from the point of view of Uber differentiating in terms of customer experience. Any driver at the moment who gets too many 1-star or 2-star ratings will be cut off. That's a great thing for customers; it means you can expect a usual experience that's really good. From an employment perspective, it would seem less certain. For example, are customers being fair & balanced, free of any racism, sexism, and so on in their ratings?

Being able to fire drivers due to low ratings seems essential to keep high standards, but there's also the possibility that it allows for customers who are not fair to cause drivers to be cut off through no fault of their own.

If it was transferring wealth from drivers to shareholders, they wouldn't do the job.

They chose to do the job, so it is at least better than the alternative options they could do.

>If it was transferring wealth from drivers to shareholders, they wouldn't do the job. > >They chose to do the job, so it is at least better than the alternative options they could do.

You've hit upon the reason why austerity is so 'popular': it artificially constrains aggregate demand for labor, reducing available options, which allows businesses to suppress wages for workers, despite them creating the same amount of wealth they were before.

There simply don't exist jobs in which workers get to keep the vast majority of the wealth they create. You can't choose to do them. They aren't an option. There just exist jobs where you get to keep relatively more or less. Uber is in the latter category, and people take it because they have fewer options.

Cooperatives / employee-owned collectives?

Say what you want about efficiencies, but there are absolutely alternatives, especially in non-capital intensive industries.

Cooperatives still need to pay rent, purchase raw materials and have access to the capital.

All of those factors are ways in which the wealth created by the cooperative's labor can be diverted to the 1%.

That said, ride sharing cooperatives would be vastly superior alternative to Uber. If cities mandated that ride sharing organizations had to be cooperatives, that would be one way in which they could stem the outflow of wealth and provide a decent middle class job to their citizens.

Granted. But just because we can't realize the final solution to the capitalist bourgeoise swine isn't a reason against an ownership structure that promotes more employee equity. ;)

The honest argument is probably access to capital. When you boil it down, why would a capital owner trust a structure that was fairly antithetical to him or her and their pals? It's starting off with a fairly big black mark.

And then of course there's the "too many leaders, not enough followers" issue. I'd love any links that pointed to whether anyone has come up with a good solution to the tension between the efficiencies of centralized control and the equality of diffuse control in a general manner.

I thought Kim Stanley Robinson's Red Mars idea of a truly randomly elected legislative body was interesting. Jury duty for legislature, in essence. Albeit you'd probably need a separate body to develop professionalism.

I'm not against it, I'm just pointing out that even with an equitable ownership of a business the value of your labor is still being leeched upon via your factors of production.

The "wealth" that is getting transferred is a bit more abstract than money going directly from the worker's pocket into the shareholder's. Instead, it looks more like the worker's personal vehicle being worn down over time by work done for the purposes of the company rather than personal purposes. The worker's capital is depreciating more rapidly than during personal use, and the profits generated by this erosion of asset are going to the shareholders, not the worker. The worker receives pay for his labor, but receives nothing for the gradual depreciation of his capital that results from the terms of the gig labor.

I'm fairly sure money received from doing business with uber is meant to account for both depreciation and salary. If you pay money to a company you don't pay separately for labour and deprecation of assets. You pay a single price, it's up the company how to split it.

If the company doesn't set aside the money for depreciation and renewal of assets , they will soon realise and stop doing that activity if its unprofitable.

Stop treating uber drivers like children.

Depreciation not deprecation.

As far as we the public know right now, the only wealth transfer Uber has produced is from investors to drivers and other parties.

From investors to customers, perhaps. Definitely not investors to drivers though.

Uber are subsidizing rides in the hopes that they can squeeze out the competition, at which point they will jack up prices and milk their monopoly as hard as they can.

Whether there is an actual wealth transfer going on depends on whether Uber's bet will be successful.

That in turn depends upon whether they can keep classifying drivers as contractors.

For this reason, as consumers, it's in our long-term interest to use Uber competitors instead of Uber.

Indeed. A couple of my distant in-laws are now full-time Uber drivers in a medium sized city. They're making comfortable middle clas incomes--far more than they've been able to earn to date anywhere else.

> but online-intermediated work is here to stay

Here to stay but may be soon regulated.

There are a couple great bits in that article, but this is one I've seen as a trend:

"Under an employment model, by contrast, the company has a much more reliable and knowledgeable workforce, one that can be held to a specific standard of quality and a more consistent schedule."

Home Depot learned a similar lesson in the 2000's - http://archive.fortune.com/2008/09/18/magazines/fortune/fort...

Employee morale is critical in service-oriented jobs.

Companies often learn the same lesion over and over. Reliable workers are more in demand so they can more easily find higher paying work for someone else.

If you cut pay or increase workload things can look ok for just long enough that all your good people leave.

Middle ground as in: you (the contract worker) have none of the benefits of an employee and all of the downsides of an independent contractor and the company has all the benefits of having employees but none of the downsides.

That's nicely spread, 50/50.

They also have the benefits of being a contractor. No worry about working for multiple companies at the same time. You own your creative work that you get paid to build unless you sign it away with a contract.

And set your own schedule right?

At the heart of the divide between contractor and employee is America's idiotic healthcare bargain between Democrats and Republicans: employers provide private healthcare and the public system is only for the destitute and old. Obamacare is an attempt to solve this by adding more work for individuals transitioning between jobs. A rational healthcare system would not be so dependent on your employment status.

Health insurance being tied to employment is a result of government wage and price controls during World War II. A simple improvement would be to provide the same tax breaks associated with paying for health insurance to individuals rather than companies.

There's no market need for these absurd legal employment classifications. Let people contract with other, and stop creating elaborate arbitrary categorizations as a means of applying complex taxes and regulations.

That's a lovely, idealistic premise. But one half of this negotiation has considerably more power than the other, and many would argue the less powerful side needs to have certain rights protected.

No, that's the beauty of dissolving these long term employment relationships. You don't need protections from your abusive employer because you can very easily find a better employer.

> You don't need protections from your abusive employer because you can very easily find a better employer.

You are assuming that employment in a given industry is not a monopsony (or an oligopsony of similarly-abusive employers.) But every company wants to be a monopsony just as much as it wants to be a monopoly, for largely the same reasons, and the same forces that are behind the changed employment relations are also driving the formation of large, single market players that are forcing out large networks of smaller employers.

So these changed employment relationships guarantee employment for every citizen in the US? Interesting concept.

Nope. A fluid labor market means just means that contracts and labor have a much easier time finding each other.

I'm not particularly interested in guaranteeing employment for anyone, let alone everyone.

A fluid labor market means just means that contracts and labor have a much easier time finding each other.

But why is that preferable for labor, compared to having a reliable job? People have bills, mortgages, etc - a "fluid labor market" is not in their favor.

Yes, but only if we can tax corporations heavily and use that to provide a floor on living standards for workers. If we don't do that, we will have to provide a floor some other way, which for a lot of people is regulation.

In all of these situations, one of the "people" is an abstract legal entity already operating under the protection of a set of legal codes that provide advantages to the actual (human) people who set it up. It seems reasonable that as part of those codes, they work with/employ actual "people" (humans :-) in specific ways.

Here's the thing. If there is a marketplace where you set your own rates, you can still be a contractor. That's one of the tests that marketplaces like Uber failed.

"Middle ground" here is going to be devastating to technology employees, especially IT.

Welcome to the Service Request, piecework economy.

What's the disadvantage of w2? Wouldn't the costs be about the same?

If you are an independent contractor, you need to pay the "employer" share of taxes, which is 7.6% (social + medicare). This is hidden if you are on W2, as W2 employees pay the "employee" share of 7.6%.

The other benefit of being on W2: disability & unemployment. Often times, many service workers get injured. If one is on W2, the employer's disability insurer covers the treatment and recovery of employees. I have seen many cases where many service workers are gravely injured.

Unemployment: if you are on 1099, you won't get unemployment benefits, when your contract ends after 12 months.

Health Insurance: W2 does not guarantee that. I worked as a security guard for two companies in 2002. One provided decent health insurance; the other provided super crappy health insurance (like max benefits of $20K per year, if you paid $50 per month)

If you pay someone 10$/h as a w2 for even 5 hours a week, the government wants you to contribute an extra 6.2% for social security and 1.45% for Medicare. Plus a range of other benefits which don't show up on there paystub, but still cost you money.

The costs, though, are actually about the same, because you're likely paying that contract worker more than an actual employee would be making.

It depends on how you slice it. You can sometimes get away with paying contract workers less than a w2 worker at minimum wage. Don't include expenses, lot's of wait time is 'off the clock' even if they can't leave etc.

Many employees also don't realize just how many benefits they are giving up. New Uber drivers for example often drastically overstate what there earning are.

PS: I fell into this trap even as a w2. 52$/hour and zero benefits is significantly worse than I initially thought.

That was my point. I guess I wasn't clear.

ie "cost of doing business"

Shlep yourself to Somalia if you don't want to pay taxes.

They are stupidly corrupt, and require bribes to get anything done in goverment. So the actual tax rate is a lot higher.

Probably country like Hong Kong, which has low corruption and a incredibly low tax rate.

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