Why can’t we have normal businesses where you employ your workers and charge your customers the real cost of the transaction ? If that is not viable, don’t start the business to begin with. Let’s just go back to first principles, can we ?
Why would you ever consider running a legitimate, profitable, down-to-earth business when you can do the above instead?
This is also why I quit the startup scene and despise most of them (including some that I used to work at). I try my best to focus on local, real businesses. They might be legacy, you might find "uncool" technologies but most of them at least have a real product they sell at a profit without screwing anybody and the work-life balance is often better.
Tips should be about rewarding going BEYOND the normal... not as a basis of someone's wage.
Tips are not expected, and are meant only for extraordinary service. The base pay is decent and so are the benefits like vacation, pension etc.
Although if I were doing that if just have a vape of deems rather trying to find some weird nasal spray thing.
The distinction is that a different law exists for that category of workers, not that they aren't paid legal wages.
Other countries do make exceptions to their pay rules. For instance, younger people that are likely to be working temporarily may be excluded from benefits rules.
Wage theft by employers is over $20 billion a year (more than all other kinds of theft combined) and wage theft happens predominantly to those being paid minimum wage.
17% of low wage earners are subject to wage theft -- 2.4 million people just in the 10 most populous states -- and the average amount of theft is $64 a week. Which doesn't sound like a lot but is 25% of their weekly wages.
At least they acknowledge the problem.
It's not like the US situation where the 'minimum' of $2 or whatever it is would be absolutely unliveable.
What's with the American obsession with outlawing poor people's jobs?
(My adopted home country, one of the richest places in the world and one of the best places to live, doesn't have a minimum wage either.)
Scandinavian countries have massive powerful trade unions that work to negotiate standards and wages for everyone. Even if you're not actively part of a union, your employer will almost certainly use Collective Labor Agreement negotiated by the trade union. This CLA guarantees certain things like vacation time, minimum wages, break times, etc.
Now you could not use a CLA drafted by a union and instead try to fuck people over with your own contracts. That's not very likely to work though since these countries tend to have strong social welfare systems coupled with free healthcare. So if people quite due to shitty pay and/or hours, they can still make do with social benefits. Also people here in Finland at least, know that for most jobs you absolutely want a CLA drafted by one of the unions because that CLA protects you.
Most companies use the CLA's as a base and allow employees to negotiate better contracts if they want to. E.g you can ask for less hours and more pay, the CLA generally only guarantees minimums. Now an employer can always try to renegotiate the agreement with the union for their workers, but you better be damn sure you treat your workers right since if the unions decide that you're not, they will fuck you up.
These unions are massive and hold a ton of power. In Finland over 70% belong to a union and it is not uncommon for them to strike if the employers are trying to fuck them up. The best example of this is the recent chaos with the Finnish Postal Service.
To give you an idea on what happened, the postal service tried to renegotiate the CLA they used, which would have resulted in worse pay and hours for the workers. Union was taking none of it and went to strike. The postal service tried to get around this using questionable means which broke International Labour Organizations rules. This led to a ton of sympathy strikes which eventually ground the nation to a standstill.
Public transportation froze, flights were cancelled, trains didn't run, all goods transported by postal cars were boycotted by unions this led to stores not being stocked up as they should have for example, ferries and cruise ships under Finnish flag froze. Among numerous other things. The unions eventually won after inconveniencing thousands of people and costing corporations tens of millions of euros.
The workers didn't get shafted and their rights were protected even without a government mandated minimum wage.
But the point I wanted to make was that I think even if we had stronger unions, Americans like myself have become lazy and afraid of being inconvenienced. We had Occupy Wall-Street, but I'm just not sure. I just don't envision my fellow Americans striking, together, for things. We're barely united on anything as it is right now.
Just some general thoughts/comments. I'd love to hear other perspectives on this.
That would be illegal in Switzerland (not really a business hating commie hell hole). When a collective agreement exists for specific areas it applies to all companies in that area.
That's not to say that dodgy firms don't try to get around it, but if they're caught it it gets expensive and troublesome. And checks (alas, I don't know if sufficiently) are conducted.
The national mail in Finland is tasked to do letter service, which no other postal company is doing. Letter service is also the most human intensive job there is.
Their unions regulate wages, and in practice this means the same thing as a government-mandated minimum wage. It just so happens that their structure is a little different.
Because other countries haven't institutionalised the idea of poverty-line wages.
We don't really have a minimum wage in Austria either, but wages are regulated per industry. So employers are still required to pay certain wages, even though we don't have a general minimum wage.
And there's no such thing as including tips in the wage, tips are always extra.
(There is one major loophole, of course, which is hiring people as contractors, but that requires convincing the authorities that your employees are not really employees)
The countries you mention don't need minimum wages set because they have other mechanisms or even just social norms that ensure nobody is having to work 8 jobs to try to feed their kids.
It's a neoliberal fantasy-land, yes. Lee Kuan Yew's autobiography was called "From Third World to First" for good reason.
Also living on any sort of low wage is massivly uncomfortable. Just affording air conditioning is difficult.
Even people with great jobs end up living with multiple generations of family in tiny apartments.
What do we know about Singapore? It has masses and masses of public housing, so people are looked after in a way that doesn't happen in the US. The US is very keen to push this sort of thing on employers - see also health insurance.
It's a different model and I would agree probably a worse one, but either way it's the state ensuring people have their basic needs met.
The US healthcare-through-employer tax rebates are crazy. But politically untouchable, alas.
That didn't mean that people were working several jobs to get by, not that they were paying to work. Maybe it was the easily accessible public welfare that forced employers to pay a living wage, or the large proportion of union membership.
Although, a quick web search shows that at least in Quebec, minimum wage for tipped workers is 1.9$ lower vs. not applying at all in many US states - better, but still sad.
The service sector is actually considered to be a low-cost offshoring center for American businesses, due to lower median salaries, and a weak Canadian dollar.
Australia is one of the best countries imo. Minimum wage with penalty can be up to as high as $100 per hour ( yes $100) and starts around $25+
If everyone suddenly stopped tipping then service workers would default to minimum wage. For anyone with a different experience your employer was breaking the law.
But what I think you’ll find is that it is the service workers themselves who prefer working for tips.
I'm sure they'd prefer a sensible wage + tips, over a sub-minimum wage supplemented by tips.
Minimum wage in NYC is $15/hour and $10/hour for food service workers. Some restaurants have started paying their servers more and not allowing tips. But are the employees actually earning more? I doubt it.
> Some restaurants have started paying their servers more and not allowing tips.
Service bad? -> complain to employer, employer punishes employee
Service OK? -> employer pays employee for work done
Service good? -> employer pays employee for work done and customer pays employee for good work (and employee shares it with all the other employees who are in the chain of service).
Where people seem to disagree here is with the idea that service workers are better off with low wages + tipping than higher wages + no tipping.
That's how it typically works where i live. servers share the tips and split the haul.
I don't know what social dynamics caused this, if it is a fluke or expected behaviour. So no way for me to predict how Americans would react.
Tipping is generally based on the quality of the establishment, you tip at a higher class restaurant but you don't at restaurants that are franchised or common brands.
In Sweden in particular, it seems that the waves of refugees in recent years have only fueled this.
It's nice to say removing tips and adding vacation is what workers want, but how will United States workers afford premium phones and buy larger houses?
Expectations are different. It's an entirely different set of cultures. More space, more premium goods, more modern conveniences seem to be common goals more Americans share than not. We like new cars and big televisions. So it's not surprising that employment compensation is oriented toward that, and less toward things Europeans tend to value like healthcare, social services, etc.
This all breaks down, of course, when wages are low _and_ you don't have a social safety net.
If you're in the US and your problems are vacation time, "buy[ing] larger houses", etc., you're not in a position to even get tips. You would be in a privileged class of educated workers with a perfectly fine quality of living.
We're talking about the average US worker. This person has never taken a vacation in their life because they've never been in a position to. They take what they can get, which in the case of the gig economy is often well below minimum wage. If they have a roof over their head it's likely only by the grace of a wealthier family member. This person works their ass off performing the unskilled labor that makes our world go round and they get treated like a criminal for it.
For game theoretic reasons / general equilibrium, you can't restrict tips like that. Even if you try.
Your shop can ban tips, though.
In my area, restaurants are allowed to pay waiters less because tipping is expected, and a restaurant is required to pay workers more if they don't make minimum wage after tips. It's really odd, and we should just remove the exclusion for restaurants. I think simply removing the exception will end up fixing the culture around tipping.
When customers tip, and total wages in the tipped jobs are thus higher than in the non-tipped alternatives, workers will change jobs until expected total wages are about equal.
What works in other countries, eg Japan or Australia, is that different social norms lead to much less total tipping. But you can't transform eg American into Japan or Australia at a whim.
It's up to customers to make tipping the exception and not the norm. But that's hard: because the individual tip goes directly to that starving poor devil who served you and has a relatively big impact on their life, but only a very small impact on workers' expectations when changing jobs, there's a 'tragedy of the commons' going on: each individual tip you give provides you with a nice warm fuzzy feeling of altruism, but it damages your total goal of having decent base pay.
So, it's very hard for individual customers to change that. But: individual employers can drive change. They can forbid tips and prominently display that they do so, so that both prospective workers and customers now what they are in for.
Prospective workers will demand higher base pay. Customers will take the lack of tip into account when comparing prices.
A Google search for 'restaurant bans tips' shows a lot of write-ups about experiments. It's not a panacea, of course.
What society should do is require a decent base pay (regardless of tip). That way I know that my server can make ends meet if I tip them or not, and tipping them becomes a curtesy, not a necessity.
My point: If "society" "requires a decent base pay", then waiters are going to get shafted, unless by "decent" you mean $40+/hour. The people getting screwed by tipping culture are not the front-of-house workers, but the other employees and the customers.
I think the most compelling argument is to point out that the people doing the real work in a restaurant--the cooks and the dishwashers--are paid much worse than the waitstaff, who really aren't even necessary.
the qualifications for FOH vs BOH staff are really not that different, except that you have to speak decent english to be a server. either one you can get hired on the spot with no experience if youre willing to start on the low end. ask any cook whether they would rather do the server's job and they'll probably say no.
I'm not suggesting to "replace" tipping with anything. I'm saying you should pay waiters enough so they don't depend on tips. Tips are a nice bonus, but they shouldn't be necessary.
Which is the situation in most places other than the US.
Here in Austria waiters are grateful if you tip them, and they might think you're cheap if you don't tip, but they still make enough to live even without tips.
This isn't always a bad thing, but on a whole, it does distort the market. At some point you have to weigh up if the good effects of this are worth the bad effects. If there were higher taxes, costs, or otherwise more risk for investing, it would limit that a lot.
I have business ideas, but I'm completely avoiding the VC game for now because I don't want to play the "build now, figure out profitability later" game where I'll likely be be forced into a profit model I don't agree with. My current approach is:
1. brainstorm solutions to problems I see 2. brainstorm a few profit models for the best ideas 3. Build an MVP, waiving the profit model initially (free trial and whatnot) to validate the idea 4. Implement profit model 5. Seek funding for growth 6. Exit
The VC game seems to go 1, 5, 3, 2, 6 (step 4 comes when?), which seems super broken. It seems like VC funding -> IPO is the profit model for many projects, and the board (after IPO) is left to figure out how to sustain that.
VCs are backed by large amounts of capital because most government policy has been to stimulate growth and the only way they know how is by giving away large loans at insanely cheap (in many cases even negative in real terms) interest. This means that VCs can actually lose out on money by not taking those loans and investing it, and that in turn drives a lot of speculatory investment, as well as inflates asset and stock prices which the government then uses to show how good it is.
This is why you correctly spotted that step 4 is not a requirement for start ups anymore, because so long as you are big enough to be speculated on, you're good for funding. Whether that means it's broken really depends upon your definition of working, as a lot of people believe it's fine because all seems to be going great. This is the gambler's fallacy. It's all fine, until it isn't.
Step 1) Use VC money to subsidize the price so that the market price is below cost
Step 2) Continue to use VC money to subsidize while competitors, who don't have the same cash, lose customers and eventually contract or die off
Step 3) Once you are the only real player, use your dominant position to raise prices
1) VCs invest money in companies hoping that some of them grow very fast
2) some of them do grow fast, so more VCs invest more money
3) the really really big companies IPO and the VCs make a lot of money
All of this can happen way before your step 3.
Most of these pump and dump startups just IPO and their shares are brought via funds and such.
I bet income inequality gradually rising due to these VC funded startups
1) Invest in startups and show/push fast growth
2) Leverage FOMO to get more investors
3) Collect management fees
Once in a while get lucky with a unicorn. Bonus.
- borrow ungodly sums of money at near-zero rates for a decade, and splash it on anything that moves.
Moral hazard? never heard of it!
Never use Uber, Lyft, Doordash, Uber Eats, AirBnB etc. No exception irregardless how easy or cheap it may be. It's a small sacrifice but can and will make a difference.
Using these services to me is like asking a waiter to pay for part of my meal. When it comes around to paying the bill are you able to face someone and ask them to pay for part of what they just served you knowing that they are barely making a living?
- incumbent taxis are also predatory services that abuse drivers, arguably worse than Uber/Lyft - and they're a shitty rider experience in many many ways.
- hotels are OK but rarely provide kitchens, let alone friendly hosts who bake you killer banana bread (yesterday's stay)
- delivery from individual restaurants is rarely available at all, and thus you're going to call a Postmates/etc to help pickup. Delivery is all-but-required when feeding a large group, e.g. work function.
I'm sure it's usually pretty easy to convince oneself that others won't give up the comforts so nothing will change and just continue using the services.
Great, but is taking away bad jobs really the best way to do that?
You can thank the likes of Uber Eats, Deliveroo, etc. A lot of restaurants would've otherwise had their own service, and some actually replaced their own service with these companies.
Everyone that stayed over would become friends or friendly and we'd provide anything they requested.
The problem is the trash hotel nearby doesn't like competition and reported us to the city.
Airbnb corrupted that by incentivizing a business model where investor groups buy up entire properties solely for Airbnb use. That's very different from what you're describing. They're acting as full-scale hoteliers, but evading hotel regulations and zoning laws by setting up shop in residential neighborhoods. And of course, reducing the overall housing supply for all the people who actually live in that area.
My gut non-PhD economist feeling is that AirBnb has very few people from the bottom 2 quartiles participating in it in the first place. It's wealthy land owners offering short term rentals to people with substantial disposable incomes.
Cash and capital poor people are largely excluded (priced out) from the platform altogether, whereas on DoorDash and Uber/Lyft they comprise the vast majority of the service providers.
The latter part is the worst. It's one thing to be a dick but at least if you are then own up to it and be a dick to everyone equally. But this is literally the worst, as it explicitly aims to exploit the most vulnerable (who may not have a huge social media presence or a contact within the press) while attempting to keep a good public image (given the company is still around I guess that's working).
When I need delivery, I'll check to see if they offer it in-house. For pizza places I know they hire their own delivery staff, so I make sure to tip well.
Secondly, you have the option of giving a nice tip. I suspect they'd prefer that over not renting their Airbnb or whatever service they're offering.
DoorDash is litterally taking the tips left for the staff though ...
Give cash instead as long as this is the case.
Ride hailing is regulated, in part, to ensure that people aren't being taken advantage of. It's also regulated to make sure that taxes and fees are being properly collected.
Taxis and private bus services weren't always regulated, but they became regulated because they took advantage of their customers. Similarly, regulations are placed on ride hailing to that passengers get what they paid for and there is at least some accountability.
If you live in the US, you have to give up a lot of services if you don't want to buy from people who are underpaid..
Does this mean something completely different in the US compared to the rest of the world? How is anyone in this business being underpaid?!
Relocation agents (employed or freelancing) can easily bill $1000/day over here so I was a bit confused.
She was freelancing and looking forward to Obamacare -- having not had healthcare in 15 years.
I took note of that, because to me not having health insurance seemed completely unreasonable. I almost left the continent when HR tried to convince me I should trust "retroactive" insurance -- and I would get the policy after 30 days, lol.. maybe in just paranoid :)
I have to assume any VC taking part in a business that needs additional human labor to scale and hence has significant marginal costs is simply betting on being able to dump the company in the public markets.
The reason the sequence matters is that, for DoorDash to need to raise its payments to its workers in order to keep them from running to the other employer, that other employer needs to be able to hire all of them, or at least so many that DoorDash finds its access to the labor market significantly restricted. But clearly a new entrant starting small will not be able to do that; they can only do it once they get big. But they will not be able to get big if they are charging higher prices for the same service as DoorDash.
So, no, much more reasonable assumptions are available to justify my inference.
You have those. What's wrong with trying alternatives? There are good reasons to contract out services. If you're building widgets maybe it doesn't make sense for you to also employee cleaning crews or maintain your own transportation infrastructure - why not contract out these non-core services?
On a side note, the kind of question you raised typically can be reduced to "I don't understand why anyone would do something different, therefore they shouldn't do something different" ... it's in the same spirit as a UFO consipracy theorist who may say "This light in the sky isn't Venus, isn't a satellite or a plane and isn't anything else I'm familiar with, therefore it must be aliens". You have to be careful with setting constraints on innovation because YOU can't envision why it makes sense.
I'm not trying to disparage people, but without some level understanding of economics, it's not obvious that whatever rate you receive is not your 'wage'. These gig jobs don't pay wages, they pay something closer to a fee. Maybe it's more like rent. Somebody else can comment on the pedantic differences. Point is, the relationship is skewed in favor of the party doing business, not the party providing the service.
So what? This is capitalism, you have the freedom to seek other opportunities elsewhere. Hold up. If this is your business model, you are dependent upon the current wave of de-regulation. What are you going to do if/once the pendulum swings the other direction? What happens if minimum wage ever becomes something reflective of a living wage?
These gig jobs posit themselves, subtly, as a 'side-hustle'. Something which shouldn't have to exist, but does, simply due to the lack of well-paying jobs for those without advanced education.
They just don't make as much money, so are inferior.
Unless of course, customers don't tip. Then your suggestion is not an inferior competitor.
Extending that to restaurants may be a bit of a stretch.
Because that's the model. Let's make a story good enough to be funded and then pay ourselves with that money. The business just has to appear to be a good enough bet to sell it to the money.
You already can live your whole life and never leave a house, working remote or playing the stock market, having everything delivered. It's grim. And it's coming.
Isn't that a food court? I'm not sure you've described a particularly grim future. I mean, there's lots of grimness in the future. But you haven't described it.
Same with the user perspective. I use UberEats because it has all the restaurants. I'm not going to download the 2nd most popular app.
Brand awareness among both diners and restauranteurs. Integration with POS systems and financial plumbing.
Economies of scale might exist any time you have infrastructure that can be shared.
Got it!