The Silicon Valley Economy Is Here. and It’s a Nightmare
newrepublic.com
newrepublic.com
Does the contemporary New York Economy connect people around the world and put all the worlds knowledge at your fingertips? Oh no, they just wreck the economy as a whole and feed us garbage like how they create value through “liquidity.”
How about the Washington DC economy? You know, the old joyful military-industrial complex that sucks in taxpayer money and converts it into dead civilians in the Middle East.
Or maybe the other geographically centralized titan of the US, The Texas Economy? You know, the one responsible for many of the major geopolitical conflicts in recent history that is also a huge part of what is turning the only planet we have into an unlivable hellscape.
And as far as I can tell the whole SoftBank funded fake tech masquerade thing is starting to melt down, so?
Does that money exist in a vacuum? No, it's invested in American companies, for the most part. SoftBank has set absurd valuations, which other VCs have benefited from.
Would it be any more acceptable to lure people into the "dependent contractor" trap if it did?
The dead civilians in the Middle East is terrible but all in all this is the most peaceful period of world history since civilization started. In most eras there’d be dead civilians in the vast majority of places instead of the minority.
Doesn’t make it right or good, but it’s not as bad as things past.
And lets not pretend companies not funded by SoftBank are paying their warehouse workers, janitors, caterer or content curators good money. Seems like SV in general is pretty good at cutting costs at the expense of workers.
But if your point is sweeping generalizations are generally pretty inept at painting a nuanced and detailed picture, I’d say I agree with that.
> put all the worlds knowledge at your fingertips?
I think this is a dream that has passed by. There's a lot of simplified knowledge now on the web, littered with ads, but we are far from having the worlds knowledge at our fingertips.
Instead we get a slow, controlled leak, of very noisy data, accompanied by as many ads as possible.
If you truly want access to the world's knowledge, you have to work for one of a handful of elite companies, pay an exorbitant amount for premium databases, or get it illegally via tools like scihub.
If you think this starts and ends with SoftBank, you're crazy. SoftBank may be the biggest and worst offender, but this stuff is rampant in SV and the VC world. It goes well beyond the last few months.
You can pretend this is exaggeration, but public sentiment is starting to turn.
>What about the New York Economy. What about the DC Economy. What about the Texas Economy.
What about them?
This article is about the Silicon Valley Economy. Are you asserting that the NYT doesn't write articles covering wars or Wall Street scandals or political controversy? Their pages are filled with them. Go read those if that's what you're looking for.
For example, compare what was described in the linked article to how brutally companies like Facebook and Google resist treating their campus staff like "real employees": https://gizmodo.com/google-and-facebooks-security-guards-are...
At least they pay their workers as opposed to the entertainment and fashion industries which are notorious for abusing unpaid "interns".
“You can offer to work for 16 hours a day,” said Annabelle, a security officer who asked to be identified only by her middle name because she feared retaliation from her employer. “And they always have places where they need officers, so if you can stay awake and you can work the hours, you can earn some overtime, and that will help pay for a desperately needed car repair, or it will put food on the table—whatever the latest catastrophe is.”
And makes me wonder if there is any correlation between the need to work more hours at unsteady jobs and the rise in methamphetamine use in the last decade:
https://www.drugabuse.gov/publications/research-reports/meth...
"NIDA’s National Drug Early Warning System (NDEWS), which tracks drug trends in sentinel sites across the country, found that treatment admissions for methamphetamine as the primary substance of use were less than one percent in sites east of the Mississippi River, but ranged from 12-29 percent in the sites west of the Mississippi. Nationwide, overdose deaths from the category of drugs that includes methamphetamine increased by 7.5 times between 2007 and 2017."
https://d14rmgtrwzf5a.cloudfront.net/sites/default/files/met...
Nobody values liquidity until they absolutely need it. Transfer of liquidity risk IS value creation, and absolutely necessary for a well functioning economy.
So now he has this other job. No brightness or creativity involved -- but no cooperation either. Just a single principle: The Deliverator stands tall, your pie in thirty minutes or you can have it free, shoot the driver, take his car,file a class-action suit. The Deliverator has been working this job for six months, a rich and lengthy tenure by his standards, and has never delivered a pizza in more than twenty-one minutes.
That's a really good point.
Housing costs and choked infrastructure were unleashed by policies designed to deter population growth.
What wasn't anticipated is that the incumbent residents would have less economic power than the new arrivals almost overnight, putting them on the "deterred" side of the bargain unless they'd already locked in their housing costs by buying.
The unfortunate thing is that the incumbent residents least likely to benefit from anti-growth policies, i.e. long-time renters and paycheck-to-paycheck workers, are the first to bear the brunt of the shortages.
I'm assuming GP is referring to policy that affects population growth specifically - such as antiquated zoning restrictions that were made under postwar suburban growth mindset and a lack of expansion of high quality public transit. Superstar regions tend to be quite pro-growth with regards to jobs, almost by definition.
Can you imagine if starting a new business in the bay area was as onerous as starting a development on a new apartment building? Your entire seed round would go to hiring lawyers to appeal the zoning board for an exception, and your series A to fight off subsequent legal challenges by the community.
The problem is employers would not match what servers and other tip earning jobs currently make. When I was in high-school I made significantly more than would have been possible at any other part time job with tips.
As a buyer, I assume the cost of whatever is on the menu is 15% plus tax more than the price on the menu when deciding whether or not it's worth purchasing something, but it would be nice to not have to do that calculation.
ps, 15% is a pretty bad tip. unless someone was wrong with the service, 18-20% is really the minimum.
This 18% to 20% nonsense only started after the iPads from Clover or whatever came out, who obviously have an incentive to increase tipping percentages as they make more since they take a percentage of every transaction too.
I also love how some restaurants nowadays conveniently calculate tip on the post tax total of your meal for your "convenience".
the post-tax thing is bullshit, I agree on that. tips should always be calculated from the pre-tax total.
> unless someone was wrong with the service, 18-20% is really the minimum.
This. My default tip is 20%. If the staff did more than an average job, I'll go to 25% or more.
However, servers who ask for this compensation probably get sacked, and/or they would rather not report how much cash tips they are making.
Interesting. My knowledge of minimum wage law is out of date. I couldn't confirm what you say here (not that I don't believe you), but in searching for this I did notice that my state did two things -- it eliminated the lower minimum wage for food service employees, and it made it illegal for employers to include tip income as income for the purposes of satisfying the minimum wage.
I like both of those things.
IOW, tips in CA are now in addition to the minimum wage the server makes, not in lieu of it.
That's... amazingly sad. Where I live, 10% is a generous tip; but then again, our servers get the same minimum wage as everyone else.
All so you aren’t perceived as being “cheap”. And the people cooking don’t even get any of it.
15% is not a bad tip for a server. 15% is a great tip for someone who does the least amount of work in the restaurant.
EDIT: Followup. CA [1], and especially SF and LA, now mandate that tipped workers get the same pre-tip minimum wage as non-tipped workers. In LA that means $12-$13/hour before tips, so anything more than a 10% tip really demands absolutely amazing service.
[1] https://www.dol.gov/agencies/whd/state/minimum-wage/tipped#C...
And if they have a problem with my tipping, I can always stop eating at the restaurant, and then they won't get any tips at all from me.
I'm not a particular fan of tipping but it's difficult for an individual business to eliminate the practice.
Actually, I'm thinking everyone paying for meals electronically and tipping electronically would go a long way as that would remove the extra incentive from evading income taxes. Once that is gone, then the below average waiters may be incentivized to demand a steady wage rather than be subject to volatile tips.
Of course, in the US, even in places where all people have the same minimum wage, people still tip lest you be seen as a cheapskate.
Isn't that pretty commonly the case today? I don't know percentages but I would assume the majority pay in restaurants by credit card including tips in the US.
Not really - it may be hard for an individual restaurant, but plenty of countries don't have customers tipping in restaurants. In many (most?) cases, this is via a mandated tip included in prices (e.g., in France, this was required from 1984).
That said, there's no pressure whatsoever on tipping, and while it's common enough that the service workers aren't 'surprised', I regularly have friends making a comment about how they never tip.
I do vaguely remember quite a few places having tip jars though, but my memory is fuzzy on that.
I also tend to tip in cash, specifically so that the company isn't involved. A tip is between me and the people who served me.
1) What job would the subject have been working say, 4 years ago, before instacart expanded to the entire US? Would that job have been better?
2) Did Instacart destroy that other potential job, leaving Instacart as the only option?
I guess these are variations on the theme of "No one forced you to take this job". I'm all for these news articles being written, and for workers banding together to demand better treatment. But at some point we have to realize that if the company is not destroying other industries and creating monopolies, then one can just choose to work somewhere else. Even better, one could try to gain the skills necessary for obtaining less contingent work.
First, the problem is described in the article but not specifically called out
It is Bait-and-Switch.
The initial wages are rather generous, enough to get workers to move to their platform from other potential employers.
The initial rate of $22 to deliver a basket of groceries looks pretty doable, and if you can do a couple per hour, likely reasonably profitable.
Now it's down to $3. Not even close to any minimum or sustainable wage.
They committed to one sort of condition, and then are screwed, sunk costs, missed opportunities, etc.
This has happened even worse under Uber, where drivers took out car loans assuming one pay structure, then Uber changes the deal...
Second, the trope that if someone accepts a low payment, it must be OK.
At a theoretical level, that might be true, but the theory makes the bad assumption that all actors in the economy have equal power in the transaction. This assumption is massively false.
The vast difference in power between these workers vs the SV corps is exactly what allows the exploitation. The choice to be exploited is only marginally less horrible than the other choices.
For a clearer and more extreme example, you are lost in a desert dying of dehydration, I drive by with a 5gal jug of water and a map to guide you to safety. I say: "hand over the title to your house and I'll give you both" - will you do it? Of course you will, losing your house is less bad than losing your life. Does that mean that it is a free and fair transaction? Not even close.
What forces them to take the job is the paucity of other options.
There's plenty of research on how poverty is extremely expensive, and these companies are exploiting that.
My unease with this focus completely on gig economy jobs is that they are all new. There was no Uber, Instacart, Lime, etc. a mere 10 years ago. What would Uber drivers be complaining about if Uber did not exist? Perhaps about how inflexible and low-paid some fast food or grocery store jobs are. But the fact that they don't switch to those jobs now, is proof that they consider their gig job better, whether due to flexibility or higher pay.
Is there a structural problem with the economy as a whole? Sure -- what I'm saying is that people will complain about whichever employer employs lower-skilled workers, whether it's Walmart back then or Uber right now. But I don't think there is anything uniquely evil about Uber.
The logic above is simply restating the same fallacy that allows for the exploitation -- just because there's nothing better, it means that they are good.
The fact is, that in a modern society, any job that does not allow it's workers to make a living wage is not only exploitative, but it also constitutes welfare for the employer -- the taxpayers subsidize the companies to the extent that they subsidize their workers. WalMart has actual classes on how to get govt benefits.
If the business isn't viable providing a living wage, it is not viable in a modern society.
Whether a business deserves to survive based on how it treats its lowest rung of workers requires a lot of value judgments I'm not prepared to make. Off the top of my head, Walmart provides access to low prices (saving money) to orders of magnitudes more customers, than workers it exploits. Their current starting salary is $11/hr. Whose job is it to make sure someone has enough money to live on? The term "living wage" ignores those who for some reason or other don't work. Who gave Walmart the responsibility to provide their employees a "living amount" of money, and whose responsibility is it for the unemployed?
Perhaps in some idealized distopia, but not in any kind of modern society that is sustainable.
>>who gave Walmart the responsibility to provide their employees a "living amount" of money, and whose responsibility is it for the unemployed?
The same govt that sets the minimum wage, pay 7 overtime requirements, work safety requirements, etc.
The entire structure of worker protection was developed precisely because previous generations finally figured out that the arguments you make are empty - Allowing unfetterd exploitation of workers results in a few rich capitalists, horrific Dickensian living conditions for most, and ends in revolution with even worse conditions.
If you don't want to "make value judgements", you need only to look at whether practices will sustainably improve society.
However, by avoiding those value judgements and the answer above, you are also basically saying that it is perfectly OK with you that I took the title to your house for that 5gal of water and map. I wonder if you are comfortable with that kind of value judgement.
> “We are controlled. We are treated like employees but without the perks,” Jennifer Cotten, a Los Angeles area–based shopper, told me.
Ain't a whole lot of perks being a part-time, entry-level employee at McDonalds. Being an employee is no guarantee of financial safety or stability. I think at least some of these gig workers are very confused about what's going to happen if their "employers" are forced to classify them as employees. Namely, I think everyone believes that they'll be kept on, and that doesn't seem especially likely to me.
McDonald's provides cheap food for everyone. Uber means no one will go back to phoning a taxi/waiting 45 minutes for one due to the artificial scarcity of medallions. They are here to stay. Things (unemployment as you mention) would be even worse without them.
Concessions are pay to play, and the host grants you a meager allowance for the privilege of making them rich.
Say you run a hotdog stand in a stadium. You provide the capital. You pay rent. Aramark sells you the supplies (cups, buns, etc). Aramark provides the labor, that you pay for. You pay for any spoilage. You eat any losses to theft, returns, bad bookkeeping. There is no appeal. The host is the law, their word is final.
Not franchisees, not contracting, not share cropping, not debt bonded, not MLM, not small business owner. No, it's worse. None of these other arrangements fully capture the entirety of the power imbalance.
(I'm embarrassed it took me this long to correctly identify this pathology.)
As a driver for Uber, the gig economy exemplar, you provide the capital. With debt bondage, the land lord (lender) provides the capital. On very unfavorable terms, sure. But Uber is stealing your savings. Transferring wealth from your past vs future self.
I didn't say anything about shoppers (consumers). But since you mentioned it, in the concessionaire model, the host controls the choices. Sure, you can opt out or smuggle your own stuff in. But sometimes you want a cold beer and a hot dog.
Sure, you can always go solo. Try to keep more of the surplus (profit) for yourself. Try to succeed in your own marketplace of one. Many jurisdictions make that hard. But some manage it.
1) Silicon Valley isn't to blame for the fact that in the 90s landowners tightly constrained the construction of new housing in an effort to maintain the housing stock as an investment vehicle for existing homeowners. And while supply/demand doesn't perfectly explain the housing market, the fact is the United States no longer has the political will to build housing units where demand is, because of entrenched landowner interests. You can't build "dense" housing because it will "ruin" the character of a neighborhood. You can't build subsidized affordable housing because it will "attract crime". So you get nothing... well, that's not true: You're priced out, but maybe you can buy a 2800sqft home in an exurb that's a 90 minute drive from your job. Too big, too expensive, or too far for you? Too bad!
2) Scooters are good, actually: When we had them in Chicago were shown to connect people between public transit access points. Unlike Uber/Lyft, which cut into public transit utilization, e-scooters seem to actually encourage public transit use.
3) The gig economy is a symptom, not the cause, of a larger economic shift away from general prosperity. The social contract used to at least hint at the idea that if you worked hard and did an honest days labor you would at least be entitled to a roof over your head, food in your belly, and the ability to support a family. There was a marked shift away from this in the 1970s, in the name of "meritocracy" to allow higher earnings for those who "deserve" it in exchange for lower wages for those don't. The late Paul Volcker is said to have carried around a card containing auto worker wages in his pocket as a reminder of this so-called injustice. Basically: the college-educated workforce should be entitled to higher wages at the expense of workers who don't. A somewhat tragic view now in an age where your barista may hold a graduate degree. I think this thinking was more widespread among elite babyboomers and (thankfully) hasn't been adopted by millennials or zoomers, but the social stigma around the trades still exists.
Scooters aren't new nor are the many niches filled - community bike shares cover many but not all of the niches (the sweat factor). Even if they are being judged unduly harsh they bring lesser benefits to the table.
California is different on this topic, and the Bay Area is positively pathological. It’s completely reasonable to call out SV specifically for that mindset.