How the gig economy is making life harder for North American workers
macleans.ca
macleans.ca
If you look at the UK or US during the Industrial Revolution (or China today) you will see poor people doing hard jobs and its all part of a huge economic build-up that makes everyone richer -- even if some people at the top could skim off fortunes.
But if you look at even broader history, such as Medieval Europe, or China and India for most of their history, you will still see industrious poor people. But there's little build-up -- just skimming by the people at the top.
I think modern India is somewhere in between those two modes. And sometimes I fear that western democracies are converging on the same in-between place, but from the other side.
It’s similar to the collapse of the Soviet Union, with the opioid crisis taking the place of people drinking themselves to death.
You also see the same high-levels of corruption, especially in tech, where former Obama officials are given high-level jobs at the big firms or gig unicorns. Hell, even Obama himself just got a Netflix deal.
Indeed it is. What's new is that companies have never been this successful to sell what is basically modern day labour as cool and hip and "good for you!".
I guess it only a matter of time until we see a resurgence of night lodgers as this revolutionary new alternative way of housing.
Overhead for managing repetitive and time intensive labor work is high, so when a program can do it, that overhead drops, efficiency increases, and it becomes profitable.
I'm talking about the gig economy from a workers perspective.
Taxis have always been a gig economy, it's just that you used to have a big sticker on the side of your car. Taxi drivers have never been paid a wage.
Much of the marketing for Uber drivers implies this fantasy.
Maybe BI will make this fantasy a reality.
Another step to enable self reliance would be the popularisation of new technologies such as open source software, 3d printing, solar power, cheap medical sensors, AI and DIY robotics (including agro-bots). Also, replacing banks with lending co-ops.
A small community on the size of a village or town could provide construction, schooling, medical services, servicing tools and machines and of course, agriculture - based on an internal marketplace of gigs or jobs. On the total the community could become more and more independent from the outside. Later on, when automation reaches maturity, the self supporting community could solve most of its needs without much human work and still be independent from the state (UBI) and large-corporation jobs.
Because companies are greedy and the state is corrupt, we need to take power back into our hands to prepare for the future.
Too bad every time one interacts with someone else people with guns and prisons demand about 50% of the transaction. Set income and sales tax to zero and this could easily happen everywhere. It would be cool if some decent sized country would try it and use a land tax to fund the government.
The US before 1913 was a largely agricultural nation with strong equality due to fair capital allocation, free land distributed to homesteaders, manifest destiny and all that. Dispensing current means of income redistribution would mean reverting to a much more feudal, almost primitive state. The vast majority of people would have no agricultural property and no capital, just wages paid by immensely wealthy global capitalists that wouldn't owe any taxes.
Land taxes are one of the only ways to tax non-productive, rentier style wealth that has lots of fixed assets, and merely sits on them extacting money with very little positive economic input. Since it is they who are typically the most responsible for soaring housing and real estate prices (they buy properties and then do nothing with them, often times not even renting them out), to suggest such taxes are "strongly regressive" is pretty much exactly the opposite of reality.
Under a system with strong land taxes, such parties are incentivised strongly to either sell to people who want the land more (can make more money off of it by increasing density, thus pay more taxes) or to do so themselves. In a world without property tax, they are incentivised to just sit on the property forever, and do nothing to it, waiting for a huge payday far into the future.
A large land tax in such an ECON101 postcard-perfect market will immediately increase the costs of inputs to the point where production no longer makes economic sense. Either through decreased production or tariff protectionism the food prices will rise, passing the tax to consumers.
That's not say taxes are always passed down to consumers, that's a pure straw-man you conjure to hurl insults. But in these two cases, they are, to an overwhelming degree.
In effect it would probably be a one off hit to real estate prices. I think the distortions of a land tax are better than others and support it.
I own real estate but it's only 5x my wage, the current system sucks - taxing human effort and creativity is about the worst thing you can tax.
As for income taxes, they don't really tax creativity and human effort, except if you think of the world as a perfect meritocratic utopia where everyone has infinite positive liberties. But in that case, you wouldn't really need to tax anybody.
The revenue of an individual is generally strongly dependent on the social infrastructure they use to generate it. The same person, transplanted into another area of the world with less functional social institutions will generate orders of magnitude less money. For example, an American or British medic moving to the peaceful and English speaking country of Ghana: same creativity and effort, 5-10x less revenue, purchasing parity adjusted. It's only natural then for him to pay for his access to the rich society, thus enabling the public investments that allow such a rich society to exist in the fist place.
The ideea that Americans or the British possess a hereditary, almost magical capacity to self organize in the absence of fiscal revenue, that other lesser civilised people lack, is deliciously naive.
That's not to say the governments of rich countries is the pinnacle of efficiency or forethought and shouldn't be kept strictly in check. But that much worse is possible, and that the failure of government has such drastic consequences to make 50% of your revenue the least of your concerns.
Today's currencies fail to drag along with them all the logistical details market participants are really interested in about an exchange; that's why we have crude hacks like review platforms, credit scoring, insurance claims reports, etc. They're extremely information lossy exchange mechanisms, and these logistical details only hazily emerge after a long time in a fast-moving market, always a rear-view mirror picture of the market.
This would be a form of scabbing: taking jobs away from people that don't have economic security, to give disposable income to people that do.
That world would have more to do with a Star Trek episode than with the current society.
Isn't the point of an imagined scenario not to be like current society in some way?
There are about 1.9 billion acres of land in the continental united states. That works out to 5.8 acres per person. If people could afford to purchase 100 acres of land per year, and even a tiny percent of people utilized this - land prices would skyrocket. And a similar story would end up being true of other resources and labor costs.
In describing fantasy scenarios you have to consider the implications on the allocation of limited resources such that everything isn't just completely overwritten by inflation.
While land is limited, wealth and capital are not. It's perfectly possible to posit a society where people own, say, shares of robotic mining companies that roam the solar system for resources. Or that values genuine human sexual intercourse to the tune of one million dollars per act, inflation adjusted. It's much harder to substantiate how such a society would actually look like.
The first would be where janitors would go and retail is another poorly paid job today.
The average house cost in 1960 [2] was $11,900.
So with a house price of around two times yearly income, we get to about $100k wage for a janitor or retail clerk in 1960. US post WWII was a pretty unique situation, but one would hope that you should be able to more than imagine such a situation. You can study the existence of such a culture in the recent past and still talk to people who actually lived it.
[1](https://babel.hathitrust.org/cgi/pt?id=mdp.39015021301612;vi...)
[2]https://www.census.gov/hhes/www/housing/census/historic/valu...
An inflation adjusted wage of $5000 in 1960 represents $42.500 in 2018, which is in line with the often repeated tidbit that real wages of blue collar workers have stagnated for decades.
Therefore, what you are describing is a world with similar real wages to those of today, and with real estate cheaper by a factor 2-3x, inflation and quality adjusted. That is indeed easy to imagine.
What I am describing is a world where real wages are 4-5 times larger. Yes, those wealth increases could be trapped by a ballooning real estate market, where a single bedroom semi is worth $2 million at current purchasing parity, making it very similar to your world. Or something else could happen entirely, that is almost impossible to predict.
These aren't gig jobs. They offer steady employment with predictable hours and wages. If everyone has a basic job contract (which is a right in some countries already), it is even more predictable. If the job itself isn't good enough for your basic economic needs, the safety net kicks in. If they lose their job, the safety net kicks in so they aren't struggling to get by with gigs. (Obviously idealized situation).
The point is that worker never is forced to piece together gigs to be able to pay for food, clothing, shelter, and other things society sees necessary to be a full citizen. The same employee might decide to save for a house, vacation, buy a newer vehicle, or something similar and then work gigs on top of his normal employment. It isn't that everyone will be paid well or that no one will clean toilets, but it may mean that companies like Uber would have to hire regular employees so they have the same sort of economic security as the janitor would.
Everyone’s experiences are different!
I'd say roughly 5% of my drivers have appeared under retirement age. I wonder what the age statistics look like nationwide.
I'm not saying this is ok, but I think there are also more intangible things that come into play here. Working for Uber gives you the freedom to work when you want. You don't have to call in sick or find someone to take your shift. You just don't get in the car that day.
Which really, I think, is the allure of a lot of gig jobs: the ability to be your own boss (kinda).
When you’re earning so little you don’t have the freedom to take a day off because you feel unwell.
http://www.latimes.com/business/la-fi-retail-scheduling-2018...
“The Kmart in Los Angeles where Noemi Castro works often doesn't post her schedule until a few days before the week begins, she said. Days off frequently change, as do her hours. Last week, she got 26 hours; this week only eight. Sometimes, Castro said, a last-minute change is made to an online scheduling document without her knowledge. "The manager calls and says, 'Why aren't you here?' " she said.”
Fuck retail, and food service. Seriously.
I wouldn't be surprised if a lot of drivers failed to adequately budget for the maintenance costs of their car being used that more heavily too, which could abruptly land them in the red when a garage bill comes in.
Nearly every car owner fails to adequately budget for (or even understand) the full cost of ownership of their car :)
Edit: I forgot my audience for a second. Guys, college-educated engineers and 1% developers aren't typical. People routinely fail to properly account for the TCO. The entire auto-sales model is centered around tricking people into accepting terms worse than the perceived TCO. Don't worry. I wasn't talking about you.
how? you mean long auto loan periods?
Or every time you go somewhere, the cost of a roundtrip is the number of miles to reach your destination, in dollars (since each mile costs around 50 cents, or more). Plus some for tolls and the rising gas costs, but a 20% buffer should take care of that.
If you have a luxury car, add another 20% or 30%.
Even a lot of college-educated engineers seem to not account for it. I was on vacation with a few guys (most of them engineers). This was for a very long road trip (~3000km). They wanted to give the drivers the gas costs. I said the gas costs only cover a minimal part of expenses. I even gave them a back of the envelope calculation (insurance costs + average maintenance costs per km, etc.). They all just said that's not what the car costs.
I said ok, I'm not willing to drive at that price. But I'll pay another person whatever the group agrees on, even if it's total cost in the end. They still went with gas costs.
Gas is like 10 Euro cents per km in Germany (depending on car). The government assesses 30 cents per km. For a newer car the costs are much higher.
I'm guessing the guy that drove incurred costs of roughly 50 cents per km (looking as his car was only 3 years old), and got back 10. That's 3000 * 0,4 = 1200€ he gifted the rest of us.
I find this "gas costs" approach only works if all of your friends drive roughly the same. But living in a European city only a third of us even owns a car.
If you optimize purely for money, expect to pay up in convenience, and happiness frankly.
I know some people who landed in hard situations where their usual day job would not be enough to cover rent + food + bills. But working the day job and spending 5-6 nights a week driving Uber would be enough. Granted: that's at the expense of not sleeping, not resting, running up their car's mileage, and possibly ruining their health. But the availability of the app has literally saved people from homelessness.
Yes, it's probably less than ideal that tired drivers do this.
But, mostly, it's a very good thing that this person was able to survive and prevent another homeless family.
Let me guess, "the government should just provide for them ?" (without, of course, raising your taxes).
Which is that country that supposedly prevents these situations ? I'm sure finding a picture won't be a problem.
But I know, it makes you feel real good about your own worst-case future to think that doesn't happen. Now go out and talk to some older people that have had a bad run, and I guarantee, even in the Netherlands, you'll feel a whole lot worse about it. None of the other countries come even close to what the Netherlands supposedly does (If you don't mind living in a building where you get attacked daily for being old that is. Or the social worker doesn't like you. Or ... And let's just not discuss the waiting lines to get to talk to someone if something goes wrong)
I just don't know where people get the idea that the government has their back. Incomprehensible. I mean, sure they have rules and regulations that may help in specific situations (especially for rich guys to pay less tax I mean), but help people who are powerless ? Good luck with that.
But rest assured (and this not some "feel good feeling", but first hand knowledge of social workers in the field), there's not a single case of "a family that wouldn't have been homeless if the earner just had the opportunity of a second "gig economy" job".
And the systems in place here do work rather well (as long as you stay realistic - and I do know quite some harsh cases). People that really manage to fall through all the cracks have almost all the status of being unemployable/unfit for work (and I don't mean "sorry, but you're too old"-unemployable, but usually because of severe mental health issues and/or substance abuse).
I have to admit though: Looking at what our current government does at the moment, chances are I'll chime in with you in a few years...
And in countries that have sick leave, it means that you don't get paid for your day off sick.
You also don't have a minimum wage as a contractor, because when you're not driving a passenger, you're not "working". For countries with strong labour laws like Australia, it's a massive erosion of workers rights. Most Uber Eats drivers and riders are also making less than minimum wage for the hours they are working. Plus there are no penalty rates for working nights, weekends, or public holidays.
That said, I think it'd be cheaper to provide preventative care for free than it would be to cover ER visits for the same number of uninsured people. Tends to be cheaper and a bit more humane.
It makes people stick in bad situations and disadvantages small businesses both financially and in wasted time.
https://www.bloomberg.com/view/articles/2016-09-28/health-ca...
They haven't provided any improvements in service or products, they've just learned how to wring more money out of everyone
But the thing is, eliminating labor from healthcare seems to just be impossible to do in a responsible manner. So their prices go up with specialist labor prices. And yes, those have not exactly gone down. As for actual prices for basic things, I do get the impression they've gone down. Not by a lot, but 20-30% over a decade or two ? Certainly.
Your assertions about price movements sound rather curious as they appear nearly the opposite of what is obtained by people whose job it is to measure these things. https://fee.org/media/17509/prices2-1.png
https://fee.org/articles/why-large-screen-tvs-are-affordable...
I'm saying the biggest TVs (the ones that everybody seems to buy, like 100" and up) are far more expensive than the biggest TVs used to be 20 years back.
Also that article argues for competitive private healthcare. We've tried that. We know where that leads. Trust me, you don't want that.
It also comes with such insightful statements as this one: "Consider each product or service shown. College is heavily subsidized, regulated, and exclusionary, and the costs are soaring."
Yes this whole student loan thing we keep hearing about ... nothing to do with anything, right ?
Take for example Lantus insulin. My gf needs about a box a month and in the US is at least $289.46. Here in Ireland without insurance you pay 40€ and we pay only 5 euro when properly insured. Actually you can apply for chronic disease card and it is free to you, those 5 euro cover all. Checking strips, insulin meter, needles, all covered. So it is not healthcare what is expensive, it is making money out of you.
A usage which sadly underlines the fate of most gig workers.
Maybe there's an argument to be made that these people are better off than they would be otherwise. But I'm not so sure it's that simple. You have this zero sum game where the health and well being of humanity is being arbitraged for VC profits and increased efficiency for the restaurant owner.
At this point I was expecting an explanation of how an similar number of low-skilled people would have jobs if these services didn't exist.
Instead you give the unexplained assertion
> You have this zero sum game ...
Which game is it? Who are the players? What is zero-sum about it?
It's the same game they're playing with AirBnB, Uber, etc. Just openly break the law and subvert centuries of built up labor laws and protections we've created to make America into a livable society, just to profit a small minority of shareholders. The players are the American people, with no choice left but live with this system because more equitable uses of this capital aren't perceived to give investors "10x returns". There used to be an agreement in the US between Capital and Labor that struck a fair deal, and this agreement has fundamentally eroded. What benefits and rights that did still exist in jobs up to this point are gone for most people. The result is a zero sum game, where human suffering is converted to shareholder profits.
Driving a taxi was horrible. Anyone that laments Uber has never driven a taxi.
But hey, I got that hamburger faster and $1 off the delivery.
Let's assume, for argument's sake, that this is true - labor laws and protections increase wages in aggregate enough to account for all the jobs that are abandoned because they are not profitable enough to pay the required wages. There's one more thing to consider in Uber's case - the regional availability for jobs. Can we assume that the low-skilled adequate-income jobs you create through labor laws would be concentrated in richer towns, richer neighbourhoods, where the industry and market can afford the higher wages? What about the poorer neighbourhoods/towns? Uber(well, taxi service) allows people there to take a job which might not be available to them otherwise, without moving to a different town/neighbourhood.
https://www.dol.gov/whd/regs/compliance/posters/minwage.pdf
I don't believe the California minimum wage law has tip credit.
Some people wonder whether the VCs will even make out their invested money in Uber/Doordash cases. I've heard that in many cities Uber/Doordash/friends are subsidizing the marginal order in order to grow.
Make no mistake, currently the marginal gains are flowing through to customers. We like to blame faceless large corporations, the "others" for the fall of liveable, stable, wages. But the fault in some sense is in our selves. We, the individual customer, are driving this dynamic by being huge sticklers for the lowest price possible.
We individuals talk a good game about a fair livable society, until it comes around to saving $1 on your next Uber / Doordash fare.
Waitstaff in restaurants are typically younger here too. In visiting the US, it's seemed that there are a lot more "career" waitstaff whereas in Australia that happens more in small owner-operator establishments, or very premium restaurants.
I expect that's true everywhere, really, in various ways.
I work in property development and also see this happening more and more frequently for contractor and appliance delivery people... instead of showing up to deliver your appliance, they mark you as "not home" or "unavailable" and skip attempting delivery or install altogether- that way they get to bring the stuff back to the warehouse, don't have to bother wasting time attempting to delivery it and the guy on the next shift has to deal with it.
Perhaps I should stop being surprised when hearing about people going into the emergency room because they have a scratch on their leg, then yelling and even attacking medical personnel to the point they get arrested when prompt treatment is not provided.
And then apply that attitude to actual people. Needless to say, they complain about that too, yet do nothing.
How do you mean?
"Employer beware" would be cave dico. Provider beware, provisor cave.
Though it's not clear what dynamic you're pointing to.
Provisor comes from the verb vidi, and means "one who sees ahead," but I suppose you can use "patronus" instead to mean provider. So provider beware should be "cave patrone".
But for the most people, being full time is nothing but a form of psychological exploitation. People were generationally taught to value the (false) sense of stability it provides in return for being paid much less, and many social institutions such as mortgages, were built on top of that to reinforce, and take advantage of, that odd thing.
If it dies for about 80% of population i'll see it as a benefit, and i feel totally comfortable with it. I fully realise that i am totally unemployable as i am: hiring me full time and paying me what i make will be simply unprofitable for almost every potential boss. And many better qualified people than me 'happily' work for the fraction of what i make because they are addicted to these guaranteed twice a month paychecks, unable to imagine their life without these 'guarantees', which are nothing but guaranteed misery.
And yes i am 38 and have a family.
What's false about it?
A recession in which unemployment rates increase would probably lead to an increase in drivers (supply) from the displaced employees and a decrease in people with disposable income to take Ubers (demand) leading to a reduction in cost per ride and the associated driver wages (unit price). Given the sheer number of countries Uber operates in, the company has probably already seen this happen more than once. What happens to driver wages and Uber as a company in the event of a global recession is harder to predict since that would be unprecedented for the company.
Maybe having Uber available as a source of income during a recession would be a good thing for the recently unemployed?
> Here is the thing about Uber and Lyft (and much of the “sharing economy”).
> They don’t pay the cost of their capital.
> The wages they pay to their drivers are less than the depreciation of the cars and the expense of keeping the drivers fed, housed, and healthy. They pay less than minimum wage in most markets, and, in most markets, that is not enough to pay the costs of a car plus a human.
http://www.ianwelsh.net/the-market-fairy-will-not-solve-the-...?
Like with the electric scooter companies. You're not paying for the scooter, you can buy one of those. You're paying for the service of being able to leave your scooter in public somewhere and have someone else collect and recharge it.
Uber is an Old Scam: https://www.youtube.com/watch?v=JGwZcR0q6VE
Seriously, watch the video. Professor Richard D Wolff.
Long story short, when taxis first came out, we saw the following: unsafe everything, assaults, kidnappings (pay more or you get dropped in $bad_location), wrecks and injuries and no insurance. The result of that was regulation, which improved conditions for riders and drivers both, but raising the bottom line.
It's only time until the regulation hammer hits Uber and similar businesses.
+ "Unsafe everything, assaults [and] kidnappings" are in fact already illegal. More regulation will not make them more illegal. Claiming we need a taxicab commission to enforce basic laws is a non-sequitur of breathtaking scope.
+ There was a vibe that Uber will compromise the customer experience to make more money. This is nonsense, uber is operating in a cut-throat environment where any cost savings will be passed directly to consumers who are getting what they pay for. As one questioner pointed out at the end, Uber isn't actually making a profit. Any cuts in quality are being passed on to the customer in reduced fares.
+ Insufficient insurance. This one is one that is up for debate; but the message of 'insurance good, profit bad' is probably oversimplifying the issue and likely pushing an outcome where everyone has to pay more for transport without a proportional improvement in outcomes. The speaker might feel better about that, but I doubt the Uber passengers would.
Indeed they are already illegal, however adequate checks are not done on those who want to be people driver. That effect of not actually doing due diligence does allow much higher incidence of bad actors in positions of power.
+ There was a vibe that Uber will compromise the customer experience to make more money. This is nonsense, uber is operating in a cut-throat environment where any cost savings will be passed directly to consumers who are getting what they pay for.
Bullshit. They have one of the hottest stock request IPOs out there. A year ago their estimated market cap was $50B. Now its estimated at $70B. Sure doesn't sound like a no-profit company.
+As one questioner pointed out at the end, Uber isn't actually making a profit. Any cuts in quality are being passed on to the customer in reduced fares.
Hollywood accounting. And foregoing profit to starve the market is also a perfectly valid strategy. In other words, the lack of profit is intentional and easily reversed at will.
You're going to need actual statistics for that. Claiming that we can detect a class of people who are acceptable citizens except under the specific circumstance that they are acting as a chauffeur isn't a reasonable position. Either they are dangerous and should be locked up or they aren't. Their status as a taxicab driver isn't going to be relevant. They would be just as dangerous if they were unemployed, if not more so.
> Bullshit. They have one of the hottest stock request IPOs out there. A year ago their estimated market cap was $50B. Now its estimated at $70B. Sure doesn't sound like a no-profit company.
Pretty sure the profit line is in the red for 2017. You might find yourself on the wrong side of the facts here, even if they don't conform to your worldview.
> Hollywood accounting.
Always willing to be corrected, but Hollywood accounting is a fairly specific practice where they claim specific projects made a loss so they don't have to pay the actors, but the profits still appear in a different part of a controlled conglomerate.
What you are alleging is tax fraud, which is also illegal as it happens. And, again, nothing to do with regulation of the taxi industry, in America I believe it is an issue for the the IRS. Companies in competitive markets have a lousy track record of unilaterally deciding their profits need to be higher. Its investors believe Uber can make a profit, but there isn't any evidence of that yet. They are taking a pretty substantial risk.
> And foregoing profit to starve the market is also a perfectly valid strategy. In other words, the lack of profit is intentional and easily reversed at will.
If they start raising rates what stops their customer base from migrating? I see how companies capture their community and there is friction to move, such as Facebook or even Twitter or Reddit.
I don't see the same loyalty to Uber. My speculation is the real decider will be self driving vehicles and I have no inside knowledge of how far these companies are but I also think there is an issue of superficial good enough vs true self sufficient (and safe) driving vehicles.
I would bet on Waymo over Uber, I just don't see how the business model of subsidized fares is sustainable or easily reversible without creating space in the market for competitors (and self driving is on the horizon).
So, Uber has outperformed Bernard L. Madoff Investment Securities LLC's one-time market cap of $64B.