We may have reached peak “gig” economy
qz.com
qz.com
Nobody wants to share things, it's all done for economic reasons. People buy on AirBNB and Uber because it's cheaper than an equivalent hotel or taxi. People sell on AirBNB and Uber because they need the extra income.
For a short while, VC investments paid out as bonuses to the participants, and just the novelty of the thing might keep both sides happy. But eventually there has to be a balance found between "I want to pay less" and "I want to earn as much as before" and "government wants as much taxes as before".
So everyone's a winner, what's the problem? Everyone is getting a better deal than they would with an alternative, excellent I say.
I'm not sure whether the ability to do this truly empowered them, whether the life with it is better than the alternative. Clearly they judge it to be.
On the other hand was a chap renting out his spare room who loved being a host, chatting to the people he met etc etc. He was definitely happier with it.
Now suppose we divide old units of accommodation priced £ in two (halve the slope of the supply curve). The price of a new unit will be close to £. But an old unit then costs nearly 2£. So you have a choice between slum housing and coughing up double the rent.
I have nothing against AirBnb itself, I was generally talking about the bigger and bigger disconnect that has formed between the middle classes (who have seen their real wages stagnating for the last 10-15 years in the Western world) and the holders of capital, presumably because the latter have accumulated more and more wealth also because of those stagnating wages for the middle classes.
We both know that without VC money (which in the end comes from holders of big capital) companies like AirBnb and Uber wouldn't be where they are right now.
I had look at places that needed roommates, but the good ones filled up by the time I called back and the others were not places I wanted to live. I ended up paying a premium for having my own place.
http://khanism.org/perspective/minimalism/
Looking back, I didn't want to share after spending much of that time in hostels and shared spaces. But months later, I realize the benefits I've lost. I have too much stuff once again and am desperately trying to cut down. I'm in a city that's filled with cold an unfriendly people, and thanks to having my own place, allows me to be more of a hermit.
I plan on buying a car again at some point and downsizing to less than a car full of stuff. Big salaries are a kind of death trap. It can get people addicted and justify jobs that many of us hate. I'd rather have the small salary and only have enough stuff that I only take up one room; where I could easily pack up and leave.
As well, maybe it takes a while before the true societal risks are understood, AitBNB regulations may be too weak for some reason, but until we discover that, perhaps we've "unfairly" put some marginal hotels out of business that would have survived under the impending new legislation. (Hope that makes sense?)
As I touched on a above, the thing about restricted markets is that price is able to rise artificially due to the unnaturally constrained supply. This ends up being a government subsidy; one that is disproportionally paid for by the poorest people. If you are already comfortable with subsidizing licensed businesses, why not continue to subsidize the marginal ones? Perhaps even in a way that is less impactful to the poorest people?
Congratulations. You just invented "zoning laws".
You have very little evidence that this is true.
And anecdotal data suggests that explicit "social ranking" introduces a whole host of other problems. See: the kerfuffle about AirBnB and renting to minorities.
My issue would be buying a house or condo with the neighbors across the hall or across the street changing daily. It's not an issue of the quality of the hotel. It's an issue of respecting zoning laws.
somebody would like to spend less, be in more welcoming/cozy/more spacious environment, have a kitchen at hand and so on? well there is now an option for those too.
I don't see where the problem lies. just don't take perks from the other 'side' as granted.
People get scammed by shady taxi drivers and landlords all the time. Regulations don't work. Haven't you heard about all the taxi drivers who don't take credit cards because "the card reader is broken"? I've had this happen many times, and I don't even use taxis very much.
Your feelings don't match reality. The licensed taxis I've ridden in were nasty, far worse than the unlicensed Uber cars I've ridden in. Taxi: 20-year-old P-O-S Crown Victoria. Uber: 2-year-old Mercedes
There's also plenty of rat-trap motels out there that are properly licensed. I live a couple of miles from one; people have even put videos on YouTube about how awful it is there. There's plenty of really nice hotels too, but that's because people are willing to pay double the price of the rat-trap, and those hotel chains are nation-wide and want to maintain their reputations, not because of any regulations. The only thing regulations are good for is making sure places don't burn down. And even that's iffy; generally places just burn down anyway and then someone gets punished afterwards.
There are terrible motels and good motels; same with hostels. I've stayed in many hostels that were far Superior and better value than hotels. I've been in some that had mold infestations everywhere.
Regulations play a part, and the are an important part of equality. Do people game the system, bend the rules and lobby to pass their own laws that benefit them over the customers and employees. Of course.
But it's all a very complicated system. You need to do a lot of surveys, research and have a good set of controls to say "regulations might correlate with x, y and z," and you'd need people to replicate your work before you can even start addressing causality.
A claim was made that "I feel that regulation makes things clean and safe". I pointed out that that claim is utterly false using actual examples. I don't have to prove that regulation doesn't work anywhere, I only have to prove that it doesn't work somewhere. And in the places I've used taxis (NJ, AZ), they're awful. I have used them in NYC too, and those are OK (though to be fair, I'm not black, which I've read is a big problem there). You're right: it depends on the city, etc. Regulations and regulators are different in different places. But to make the broad claim that "regulation is wonderful!!" is blatantly false, and easily disproven by showing only one example of a place where it doesn't work right. Now, if you want to make the claim that "regulation works really well in location X", that's a defensible claim, and only disproven by showing that things are actually bad in location X (and not other locations).
This seems to be the problem with this whole regulation vs. anti-regulation argument WRT taxis and hotels: the pro-regulation people cherry-pick a few places where things seem to be OK. The anti-regulation point out that their experiences in other places are entirely different. The pro-regulation people them stick their fingers in their ears and refuse to believe that there's places where regulations don't work well. Maybe regulation really does work well in those cherry-picked places, but that doesn't help the places where the regulation is bad and the regulators are corrupt.
To reiterate coldpie's point, "regulations don't come about because some lawmakers got bored, they come about in answer to a problem". Before going full anti-regulatory based on personal experience, one would be good to consider the relative impact on all places.
I merely have the position that regulation is not the panacea that the pro-regulation people seem to think it is. If it works, great. If it doesn't work, then instead of harassing the people who work around broken regulations which just support rent-seeking by cronies, maybe we should look at fixing the political system and eliminating the corruption and bad regulation and bad regulators instead. But that's never proposed as a solution, probably because 1) it's too hard, and 2) the pro-regulation people don't like to admit to the existence of corruption.
Sure, if you consider the desire of incumbent businesses to lock out competition and artificially inflate their profits to be a "problem".
I am wondering how many segments there are in the "accomodations" industry. We have the homely/warm/cozy opinioned root kind of segment CalRobert has exemplified; then we have the dirt-cheap hobo-shelter-minus-stabbing that people on a tight budget seem to value, etc.
Any thoughts.
To be fair, if more hotels were cozy and made it easier to meet local people I'd be more inclined to go with hotels. They're not _bad_, per se, just kind of sterile.
There are exceptions, of course. I've stayed in small, usually family-run, bnb's in rural Ireland, and Germany's romantic road. These tend to be more charming.
Like local hotel taxes.
Also, when you're older and have already spent a decade or more accumulating good friends (one hopes!) the exploration/exploitation equation starts to favour spending more time with old friends than making new ones.
The big difference is that, unlike those "sharing" economy companies, Couchsurfing was not a business, and once it turned its focus to making money an exodus of "users" ensued.
Couchsurfing was not targeted at Airbnb's "get a cheap place to sleep at city X" demographic, and people that couldn't demonstrate they were looking for anything other than a low cost hotel would see their requests turned down. Couchsurfing users were willing to share their house, not for a small amount of money, but for the value of making international acquaintances (and friends for life, sometimes), which is something they also received through the service when going abroad.
That's true for some people. But for others, it's more "want" than "need".
Like one driver I rode with last week: she started driving for Lyft part-time, in addition to her day job, because she wanted to make a little extra money in order to afford the down payment on a house. She didn't need to do that; she could have continued living in her existing place indefinitely, and her day job lets her afford her current living expenses just fine. But she wanted something more, so she took up Lyft. And I got the impression that she'll give up Lyft as soon as the down payment is made.
Or other drivers I've talked to who could work a full-time job in another field and make a decent living doing so, but choose to drive for Uber or Lyft because they like the idea of being their own boss. This actually reminds me of how insurance companies work... I've been approached by a few of them while unemployed in the past, and they came off as pyramid schemes to me, but there are a few people who have the mindset to make it work for them, and they enjoy it.
You have to pay to become an agent, you work solely on commission, and you have to pay for all of your own work expenses (drive around to meet with clients? You pay for the gas!). The agent who recruited you into the biz gets a cut.
It's probably best to browse sites like ripoff report for descriptions of how being a life insurance agent works. A lot of people are unhappy with the system, but if you look through the reports, you'll also see positive reviews by agents who are happy with how the system works who are.
Here's one (this specific company repeatedly contacted me in 2010-2011): http://www.ripoffreport.com/reports/liberty-national-life-in...
Here's how one review compares it to a pyramid scheme:
> So let me get this straight. You are hired informally through a conference type atmosphere where they sell you their business opportunity. They tell you that it is your business and you get what you put in. Claiming that you can make over 100k each each year working solely on commission. After reaching a sales cap they place you ahead of 5 low level sales persons. When those people reach their sales cap they give you five more or 'promote' you again to have 5 managers below you and 5 agents below each of them?
> If this in anyway sounds like the operation that liberty National adheres to then it is a Pyramid Scheme.
Another says:
> This is not a job for anyone without deep pockets. It is an expensive company to go to work for. I have probably spent more money to work for this company than for all other companies I have worked for combined!
And another:
> Also, count on spending several hundreds of dollars (or thousands) to work for this company. You will have to have a (relatively) new laptop computer and a GPS plus appropriate attire and suitable automobile. You'll probably be driving 100 miles a day at your expense. It is unlikely that you'll make enough money in the first few months to off-set these expenses and have anything left over for your family. I've probably spent more than I've made with Liberty National.
But here's one guy who made being an agent work for him and really likes it:
> I have enjoyed the comments from "ex-employees" of the company. I started in August of '06. Prior to this career move, I owned a business for 6 years, worked 16 hours a day consistantly.
> The reason I bring that up is, I believed in what I was doing, these comments have a common thread, LAZY people expecting more than they are willing to put in!
> I have been with Liberty for over a year now, I have worked very hard to get what I have and where I am with the company, with out my "WORK ETHIC" I would not be where I am, with that said, I have not worked a 16 hour day since I sold my business in '06...on average I work 9-11 hours 5 days a week...not bad when you consider my yearly income IS over 6 figures! Oh, and I get to see my family!
> 1. If you work hard, yes you can make over $100k your first year, I did!
This sounds like legitimate MLM not a pyramid scheme. I'd suggest reading the MLM section on https://en.m.wikipedia.org/wiki/Pyramid_scheme
And how the soviet union would only have one manufacturer and one shitty product.
Now we have walmart.
No matter the ideology, powerful people will want to possess power and wealth and will use whatever systems are in place to get there.
Many of the things made during the Soviet era were made to last. I'd recommend the documentary: "The Lightbulb Conspiracy." It talks about planned obsolesce and the throw away economy.
It's not necessarily because the Soviet state, but more simply due to resource scarcity and needing to make things that last a very long time.
It's more than appalling that our cell phones are only intended to last two ~ four years. Of course that gives miners and Chinese manufactures jobs and growth (and the war industry too as they start a few more wars to collect resources).
And no pressure to make shitty things just to ensure you have return customers.
OTOH, if we could get minimum warranties from the EU's standard 2 years to something like 20 years for appliances and 10+ years for digital electronics... maybe then companies would start to care.
The bad, if done wrong, you get poor recycling of input materials. If done right, you get iteratively better more environmentally friendly products.
We would not want to be using inefficient air conditioners, washers, dryers, refrigerators, water heaters, etc. from yen years ago. They are simply inefficient compared to a new model. The problem is in recycling the displaced products.
They were made to last because they were costly and difficult to obtain, but they were of shockingly poor quality. Consumer goods in the soviet union were uniformly terrible. These dreadful products were the natural result of material shortages, obsolete design, inept management, a total indifference to quality and consumers who had no other choice.
Look at soviet cars. Trabants, Yugos and Ladas were shoddily built from the cheapest materials. Soviet citizens kept these cars running because they had no other choice - either you figured out some way to fix up your pile of junk, or you walked. When Ladas and Yugos were exported to the west, they required major upgrades to meet safety and emissions standards and were still the worst cars on the market.
That maps across the entire soviet economy. The very best goods available to soviet citizens were usually worse than the shoddiest goods on the western market.
There's plenty of wrong with the current state of facts, but suggesting it's roughly similar, let alone equivalent, to what the situation was in the USSR is quite ridiculous.
Actual sharing like couch surfing hasn't been nearly as popular.
If it were a real sharing economy, the developers and system engineers on the platform would make the same hourly rates as the drivers. In such a way everyone would contribute to the co-op and everyone would benefit.
It'd be interesting to see a price breakdown internally at Uber or Lyft and see how much people would actually get paid if every driver/contractor and every dev/admin/janitor/board member were to make the same hourly rate.
If it were a real sharing economy, the developers and system
engineers on the platform would make the same hourly rates as
the drivers. In such a way everyone would contribute to the
co-op and everyone would benefit.
Different services are worth different amounts depending on the value they yield and, sometimes, who they're targeted at. If a relatively small team of programmers can enable a massive business, then they may be deserving of apparently outsized compensation for their time and work.
Eventually, a "business" has to actually create value and earn a profit somehow. If VCs actually intend to support neat stuff on charity, they can just write checks to the National Science Foundation.
I don't use airbnb because my travel needs can't tolerate any random last minute host cancellation. I continue to use hotels. I'm rarely happy with hotel prices but I am willing to pay for reliability of service.
I'm not through the whole thing, yet, but we're off to a bad start
Another way of looking at these numbers is that the unsustainable explosive growth the "gig economy" saw early on was just that, unsustainable and explosive initial growth. The "mere" ~100% YoY growth for labor platforms is still incredible, and time will tell if that continues to drop.
The article avoids talking about what the "gig economy" would need to sustain itself, but it's entirely possible it doesn't need to grow nearly this fast to still be completely viable.
Hopefully that spreads wider.
It seems like all of these "match x worker to x task" services are a countdown until the customer finds a worker they particularly like (or just one they can tolerate, I wouldn't be wild about strangers having access to my home) at which point they drop the service, and the servicer's time to handle clients for said service has now been reduced, since they have a direct relationship with a client.
I mean they can put this in the ToS that you "can't do that" but in reality they absolutely can, there's nothing to stop them and no real way to follow up in a meaningful, actionable way for the service.
What if your favorite worker is busy? Either you have to find a replacement yourself (a failure), or the worker knows someone else who's available (and then the worker is basically running their own small time service).
Not to mention, it would be a trifle for even a lackluster reporter to paint this up like the company being the creepy big brother bad guy. The PR cost could be very high too, considering the levels of loyalty (read: none) most customers have to these services.
But, even before that offer the customer a free service time with new contractor for canceling. if in a competitive situation offer to match prices just need a quote. if it starts to look kind "fishy" flag the contractor.
Also, try to filter out dishonest contractors. In the cleaning situation do you want someone coming to your place that's willing to steal from the place they work?
The basic result is, while these services are good for helping customers -find- contractors, it's much harder to maintain that value gain once the contractor has been -found-. Most customers aren't going to perceive it as stealing from their employer, because they aren't employees, they are contractors, and because of the low value gain by using the service. The service is in effect getting paid to continuously provide contractors, and if the customer likes the contractor they have, they have no reason to continue using the service.
See what I mean?
And the "down and to the right" graph depicting 500% growth falling to 100% is, well... judge for yourself.
Former GrubHub employee here.
When you tip with your credit card when ordering through grubhub, 99% of the time it goes to grubhub and it never reaches the driver. Grubhub guarantees a hourly wage, but to keep your tips that you have to earn more then your hourly rate. This means the driver won't receive any tips until he/she makes themselves free for grubhub. Pretty ingenious IMO, make the driver a contractor so you don't pay payroll tax, and the drivers basically work to make themselves free for you to hire.
It's not that I want the tips, I really do think tipping is a horrendous system and it is "my fault" for signing up to work for them (I was incredibly desperate for money). I just feel it is disingenuous to call it a tip when it should be called a "please pay my driver's hourly wage for me" fund. I know that is basically what a tip is, but when someone tips me very well I have this sick feeling in my stomach because they wanted it to go to me not grubhub. That is why I'm leaving grubhub.
I'll break it down for you guys how it works because I was confused for a long while about how it works (which is probably by design).
You work 8 hours for grubhub. For brevity, lets assume in your area grubhub pays $10 a hour, the mileage they pay you is 25 cents a mile (from restaurant to customer only, you don't get anything driving to restaurant) and the delivery fee is $2. You deliver 10 deliveries during that time, your (payable) mileage is 40 miles:
You worked 8 hours, so your hourly wage is $80. Now lets see how much in tips you need to make before you can start keeping your tips!
Delivery fees - $20 Mileage - $10
You would need to make $50 in tips to start actually getting your tips.
Now I'm getting a new pizza delivery job where the hourly rate is a couple bucks an hour lower, so my hourly rate in this example would be $8, so while I would only make $64 dollars from my hourly rate, I get to keep my delivery fees, mileage, and tips on top of that.
The Grubhub I worked for spreads the work around so that people earn the minimum hourly rate. Why wouldn't they? it lowers their labor costs to near zero.
If you have to use grubhub tip in cash, or better yet just don't tip. I don't care I am making the minimum hourly rate 99% of the time. If grubhub can't survive without the credit card tips customers intended to go to the driver it shouldn't be around.
P.S.: I'll say again I understood that I signed a contract so grubhub can do whatever it wants. I understand I got a few dollars more over the minimum wage (as if it was worth giving up all that tip money). This entire post was about informing people the deception involved around the credit card tips. If grubhub stands by their practices, then spreading this information around won't hurt their business.
And this post[2], from GrubHub, uses some language that would be concerning if they were doing what you're saying.
[1]http://money.cnn.com/2016/03/15/pf/tips-seamless-grubhub-del...
[2]https://www.grubhub.com/thecrave/essential-guide-to-tipping-...
Not saying I don't believe you...just that it's pretty brazen to hold tips while outwardly encouraging customers to tip, based on some appeal to be nice to drivers.
Edit: Thanks for the update. Sounds like fraud to me, since they are outwardly saying the tips go to the driver. If that is spelled out in the contract you have with them, you might have some easy recourse.
I read both your links.
1.) The restaurant had nothing to do with the tip at all. The customer pays grubhub the money for the food and (most of the time) my tip. Grubhub paid the restaurant directly, any time I made more then my hourly rate in tips the tips showed up on my check from grubhub.
I am sure grubhub works differently in different cities. I am merely relaying my experience working for them for over a year.
2) They can claim the tips go directly to the driver, the tips indeed go directly towards the driver's hourly rate so grubhub doesn't have to pay them themselves. That is how it is in their minds. This can be open to interpretation, just merely giving people the information they should have had from the get go.
Yes, your new pizza gig, is supposed to make up the difference between $2.35 and $7.25 if you make no tips.
Going with your server example, if it worked like grubhub the waitress would have to earn over $2.35 an hour before s/he could start keeping her/his tips. At that point, s/he is essentially free for the business to hire. Now imagine if that place had maybe a hundred waitresses and spread the tables out between them so none made more then the $2.35 an hour. The business then keeps all the tips in this scenario. That is how grubhub works (where I live at least)
When I got a big tip early in my shift, I would never receive any more orders the rest of my night. Why would they send me more orders? then they'd have to give me some of the credit card tip money. They could have one of the other drivers do all that work until they maxed out their hourly.
Is it right to call it a tip when the business intends to do everything in it's power to not give any of the money written in the tip line to the driver? I guess thats a personal opinion you will have to make on your own.
The new place I start working at in a few weeks "guarantees" only $2 less an hour. that is one delivery an hour at the new place with no tip and I am making the same hourly rate. Then I will keep my tips and mileage and delivery fees.
A company I can be proud to work for hopefully. I won't feel bad seeing a good tip ever again. peace of mind is the best tip I can think of.
For server's wage, the business is required that a server make at least $7.25 an hour. So,
- if nobody comes, the restaurant can't pay you server's wage, they pay you minimum wage ($7.25)
- If a server receives $4 in an hour of tips, the restaurant has to add in $1 to the $2.35
====
And for long term employees with weekly/monthly paychecks, hopefully this all equals out or benefits the server. If the server takes cash tips and doesn't report them, or works under that expectation, then that server has somewhat unlawfully opted out of the system.
This is actually how it works for credit card or cash tips to waiters in restaurants as well. This is not unique to GrubHub.
The "minimum wage" is not a base income with all tips being just gravy on top. "Minimum wage" is a concept introduced by the government that puts a lower floor on how much you make. If the tips by themselves aren't enough to put you over "minimum wage" the restaurant must legally cover the shortfall.
2017: Not anymore.
2022: We are in the "minimalist economy".
Are there any sharing economy unicorns currently listed on the stock exchange? They are just asking for people to short it.
It follows that turnover must be quite huge in the profession.
Sadly, the employees have no choice, they cannot get unemployment benefit if they leave an uber/deliveroo job. Or they work a zero hours contract job, again with no security.
Similarly, in this case, if I have a job with an assured income every 2-4 weeks, you'll have to convince me with a huge uptick over this income to sacrifice this assurance for a chance to become a contractor. Add to this the other benefits such as retirals and health-insurance and the trade-off looks even less attractive.
Rephrased as a question: "Did these companies succeed primarily because of the job / capital market they grew up in, or was it just a contributor to the scale / growth?"
Actually if the true reason for this trend is that the economy is improving and wages will improve then these investors should be fine.
1. The article seemed fuzzy on data supporting the claim that people who have dropped out of the gig economy have changed to non-gig employment.
2. What are the types of jobs the former gig-sters moved to?
3. Are more employers trying to move to a gig-based employment model?
4. Aren't there already companies who sort of operate on a gig-based model in how they hire contractors for a limited duration and then drop them when the contract ends? It's just that these don't get counted as the trendy "gig" model?
5. We may have reached peak "peak" articles.
(I like the term "gig economy" - also used in linked article - because it reflects the reality of the style and conditions of the work.)
Ok I made that meaning up - but still, think about it.
They do not share out of the goodness of their hearts, they are merely positioning themselves to extract even biger surpluses in the future.
Uber seems to arrive at new locations with offering price savings that pretty much amount to dumping, and would be strongly opposed by consumers and antidumping regulators (the usual pushback doesn't come from them) if established cab services weren't such an annoying, low-level-of-service monopoly.
But hey, yellow cabs here have improved a lot (better cars, better service) and prices are approaching parity.
The same way a gig musician is supposed to have his own gear that has already been paid off and not supposed to run out and buy the most expensive stuff at guitar center after a few guitar lessons. Then they're pissed that studio gigs pay only $100 a day which isn't a lot to offset that guitar center credit card balance.
Then why does Uber offer financing?
When your contractors lose money working with you they eventually have no choice but to do something else because they run out of money.