At the Uber for home cleaning, workers pay a price for convenience
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There was a court case recently concerning FedEx's declaration that many of their drivers in California and Oregon are "private contractors", even though the drivers drive FedEx trucks, wear FedEx uniforms, follow FedEx schedules, etc.
The 9th circuit court of appeals ruled that the drivers are actually employees:
http://www.leonardcarder.com/news/75-1%20Opinion%20and%20Ord...
Sure, you can put a bold disclaimer like this in your terms of service, in big capital letters so your customers can't say they missed it. But in the event of a legal dispute, courts will consider how you act as well as what you boldly assert. To quote the Homejoy regional manager interview for the article: “Finding qualified talent, individuals who have experience working in this industry, bringing them in to interview and onboarding them — all that takes more time than it takes for a client to go online and book [...]” and it is these services, presumably, for which HomeJoy takes a cut of what the client pays.
And therein lies Homejoy's future legal problem, in my amateur (non lawyer) opinion. It's not the fact of brokering home cleaning services or even making some money out of it - if they were to charge cleaning providers a fixed fee such a monthly listing charge or even a fixed per-job administrative charge for taking care of the billing, then this claim would be easily sustainable. But Homejoy is taking a fairly substantial chunk of change for their expertise; if we take the example of Mr. Walker, who can make $2000 in a good month and has excellent ratings, over a year he might pull in $20,000. It seems like Homejoy would make $7,500 - $10,000 suing the figures in the article, although Homejoy says it's 20% (http://www.mercurynews.com/business/ci_23983355/homejoy-ceo-...).
Now there's certainly a skill in recruiting and qualifying potential independent contractors - we'll leave aside the question of whether this is something an employer does - but since they don't engage in any sort of training or professional development for their cleaning people, that recruitment and qualification process is fixed cost, whose market value can be assessed - and which I suspect tops out at $1-2000, even including expensive outside services like criminal background checks and so on. Then there are the ongoing expenses of carrying insurance, amortized costs of arbitration providers, payment process, and backend operations...perhaps another $2000 a year, since I'm assuming Homejoy uses the very best products and services the market has to offer.
Even after these generous evaluations of costs incurred per independent contractor, Homejoy seems to be taking a large brokerage fee. By contrast, when I look at the rate structures of online securities brokers (who are by definition matching buyers and sellers, as well as offering a rather more complex software platform to trading clients), they just have some minimal account liquidity requirements and fixed fees of about $10/trade. Homejoy's clients and cleaners might reasonably ask just what it is they're paying such a large amount of cash to Homejoy for over time, because while it's a growing business and they presumably intend to endlessly expand the range, reach, and quality of their services, that's not likely to translate into expanding income for the people who do the cleaning, as there's an upper limit on the amount of money people are willing to spend on residential cleaning services.
Eventually, though, he’d rather be in the position of the bright young staff on laptops whom he had met when he was taking his cleaning test, one of the last times he’d see anyone from Homejoy in person. “I sidled up to them and said, ‘How do I get to where you are?’”
Oh, Mr Walker, what a silly question! Just go to business and/or computer school, after you've paid for the cost of your transit, communications, cleaning supplies, and both the employer and employee share of social security on your self-employment income. You can start by familiarizing yourself with IRS procedures for determining whether someone is an employee or an independent contractor: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employ... Alternatively, you could work as a customer service representative, where you'll only make $13/hour but you will get awesome benefits, from free food to paid holidays to a pension scheme: https://www.homejoy.com/job-listings?gh_jid=15535#openings-b...
If you tell them the job AND direct them how to do it, employee.
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employ...
"Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?"
The article never seems to go to the question of "Gee there are Janitorial Service companies that offer all of those things, the workers who feel they deserve those things should seek them out at those companies." Except those same companies are losing business to the Homejoys of the world.
That suggests to me that there is a structural imbalance in the availability of labor and a wage floor which prevents that labor from being engaged. That we're getting more people working, is that a bad thing? That more people can get rides in the city is that some how evil? I get that it is a challenge if you're organization is competing with another that isn't similarly constrained, but is the right answer to constrain the competition, or is it to loosen those constraints? Are we trying to keep existing businesses in business or get more people employed?
As the article states this guy gets DC bus rides for free. That annoys me. Homejoy users should pay the full cost of getting their home cleaned. It does not make sense for tax payers (including myself) to be providing a subsidy for home cleaning service.
Is this really the a wage floor or just indirectly abuse of the a social-safety net for cheaper services by the wealthy?
My wife and I have been using Homejoy for the past several months now, and I'm never satisfied with the results. After every cleaning, I tell myself that I'm going to look for a real cleaning service company next time. But then the low prices keep me coming back to Homejoy.
I've found the quality of service from the Homejoy cleaners to be insufficient. Every time it's always a different problem (I try to schedule cleanings when I'm home). One cleaner spent a disproportionate amount of time cleaning the toilet, and then didn't have time to clean the bathtub (I ended up scrubbing the bathtub myself after the cleaner left). Another time, the cleaners forget to dust off the TV stand, and I had to do it myself. I've had to clean or re-clean something myself about 80% of the time I've used Homejoy.
My complaints may sound insensitive, and fall under the category of "first-world problems", but when both my spouse and I are working long hours, hiring cleaning services can become very helpful (it's a common anecdote that hiring a housekeeper can save your marriage).
As the article states, my suspicion is that in this "independent contractor" model, Homejoy does not adequately train its contractors in cleaning, nor are the contractors they hire experienced in the cleaning industry. I remember reading that Homejoy used to put their contractors through an orientation/training program, but it's obviously not enough.
I've used other housekeeping services from real cleaning companies before, and they've always done an amazing job, especially compared to Homejoy. They're just usually two to three times more expensive. But maybe next time I'll really switch back to a real cleaning service (or at least try to find a city-single independent on craigslist).
I've been a Homejoy customer for over a year. My wife and I have had the same cleaner for nearly all the appointments. We are very happy with the work she does.
For me, the killer application of Homejoy is in the scheduling and billing. Other local cleaning companies that had staff did not have the same web-based scheduling and payment tools.
Not sure how they enforce it, though.
I've been using different cleaners every time because of my experiences. But maybe next time, I should try sticking with just one. That way, the cleaner and I can start to build a relationship and they can get to know our apartment better. Then, maybe we can have a better overall experience.
In my experience with HomeJoy and Exec (now HandyBook), they understand the value of recurring revenue and are actively pushing for customers to have regular service. For this kind of service, I would think that would be very normal.
Scheduling is basically on autopilot, unless there's the odd case of my cleaner cannot come (weather, sickness, other stuff), or my cleaning date falls on a holiday. Being able to have Homejoy handle all the details of adjusting appointments (since they know my desired cleaner's full availability) is nice.
We'll see long term which of those two areas is more important (i.e. running a cleaning service, vs writing software for a cleaning service).
I find this a step backwards; but it remains to be seen if this is just a harbinger of change or just a passing fad.
If the trend continues, this could mean a massive shift in the US's labor force from salaried jobs to independent contractors. A lot of folks in the Valley view this as a positive innovation, but I think this is a clear case where the free market is not going to work out what's best for our society.
Imagine a future world where companies like Uber are the norm. A majority of the workforce will face issues like: * No regulation on working hours (i.e. the industrial revolution v2) * Massive healthcare costs born on the taxpayer due to lack of employer provided healthcare (i.e. going past what we already see with corporations like Walmart) * Lack of retirement benefits for the workforce as they age (401k, pension, social security). People may argue that the government shouldn't force people to save, but what is likely to happen is that the taxpayer will bear the burden of supporting a lot of this population. * Lack of unemployment insurance which means that our labor force will largely be unprepared for the normal boom & bust cycle of our economy * Lack of worker's comp which means that employee's won't be shield from low probability high risk events
The scenario feels like a deja vu; during the Industrial revolution, we hit a point where technology progress was leading to inhumane working conditions for manufacturing workers. Eventually regulation caught up, but this was definitely not something that the free market sorted out on its own.
Are we really prepared to live in a society where independent contractors are the majority of our workforce and lack basic labor protections?
No, our society is not prepared to handle this new way of coordinating labor. I'm sure the political process of agreeing about how to change will be pretty rocky. But the industrial revolution didn't wait for societies to prepare, and I don't see any fundamental reason to think we can't handle this.
In any case, I'm sure health insurance companies are pretty happy to know they have people volunteering to play the role in this reenactment of Baptists and Bootleggers.
But the changes are happening around us, and I think this "independent contractor" model will be a big force during this new "industrial revolution." Companies, empowered by technology, are trying to become more cost efficient, and in a short-sighted way, the single largest cost sheet for any company are its employees.
Personally, I think Capitalism as we know it will reach its limits once technology reaches a certain threshold of efficiency; we just don't need as many people working the same amount of hours anymore.[1] (isn't that the very definition of efficiency?) Then we as a society will need to figure out another way to live (new-style of feudalism? welfare state?). But until that new model comes in to play, and we're in the middle of this new "industrial revolution", the contractor model will be set to dominate.
[1] http://www.technologyreview.com/featuredstory/515926/how-tec...
The only way this is a passing fad is if customer or employee risk aversion suddenly drastically increases. I don't see any compelling reason why it would.
Workers are only willing to do this because, as you read in the article, the only other choice is to be unemployed. They are not choosing this voluntarily.
In so many ways, we are all subsidizing these companies.
"“They may be able to paint someone’s shed this week,” says Dr. Standing, a professor of developmental studies at the University of London. “But they don’t know what will happen next week.”
He views peer marketplaces as part of a larger global phenomenon, in which labor brokers encourage people to work on contingency without basic employment benefits or protections. The companies essentially channel one-off tasks to the fastest taker or lowest bidder, he says, pitting workers against one another in a kind of labor elimination match.
The flexible timetables of project work are a trade-off for regular employment income and benefits. Retailers, restaurant chains and other employers may require more rigid work schedules than piecemeal gigs, or, worse, keep their workers guessing from week to week about which hours they will work. But many of those employers also offer workers benefits like disability pay or commuter discounts.
Uber, Lyft and TaskRabbit, for instance, do not regard the workers who provide services to their users as employees. The companies say they are simply arenas, like eBays for gigs. They require their service providers to work as independent contractors and, as such, the workers don’t qualify for employee benefits like health insurance, payroll deductions for Social Security or unemployment benefits."
http://www.nytimes.com/2014/08/17/technology/in-the-sharing-...
Or perhaps that if the government services you describe (e.g., free money if you don't work) did not exist, workers would have a stronger bargaining position to request higher rates from homejoy?
Could you clarify your counterfactual?
As noted in the article I link and quote further down the thread, these companies utilize an often-desperate workforce that will take whatever they can get to work. These companies keep their workers as independent contractors without any benefits. Sometimes that is fine, especially if someone is working as a Taskrabbit during his/her weekend to make some extra money. But the reality is that many of these people are relying on these services for nearly all their income and then leaning heavily on government support to make up the difference (i.e. what keeps a roof over their head or food in their stomach).
I am not making a case for any wholesale policy change on the part of these new services. I am just stating that there is baggage here and that maybe it would be better if benefits were offered through these jobs to their workers/contractors so that the customer pays for the complete cost of the service and that business model, instead of taxpayers.
And I am no economist or expert in the matter ––– all I know is either from news articles or anecdotes. Maybe I'm wrong.
If the price of a persons labour is insufficient for their living needs the only option is to draw it from society (welfare/charity) or have them suffer. Trying to pass that on to the customers or the employers of labour directly will result in unemployment.
“THE COMPANY DOES NOT PROVIDE CLEANING SERVICES, AND THE COMPANY IS NOT A CLEANING SERVICE PROVIDER. . . . THE COMPANY OFFERS INFORMATION AND A METHOD TO OBTAIN SUCH THIRD PARTY CLEANING SERVICES, BUT DOES NOT AND DOES NOT INTEND TO PROVIDE CLEANING SERVICES OR ACT IN ANY WAY AS A CLEANING SERVICE PROVIDER, AND HAS NO RESPONSIBILITY OR LIABILITY FOR ANY CLEANING SERVICES PROVIDED TO YOU BY SUCH THIRD PARTIES.”
This is the kind of things that eventually lead to class action suits, but settling this via the courts takes years.
We have some major structural employment issues going on.
Homejoy is resolving those structural issues by making it easier for buyers and sellers to find each other.
That's a structural issue: just as aging pulls people out of the labor pool, the increased substitutability of capital for labor is pulling out working-age adults from the pool of workers who are realistically able to work. Homejoy etc. does help the people at the margins of this pool who wouldn't otherwise be affordable to employ (e.g. due to overhead costs), but it doesn't obviate the basic structural trends happening.
When I gave a rating of literally "Meh. 5/10" for a decent but not impressive cleaning job, they went nuts--found me a new cleaner, offered discounts, said they would work with the cleaner to make sure she learned lessons, etc. way more than i would have done if i were hiring her directly.
On the other side, if a cleaner thought my house was disgusting or hated my cats or something, I presume it would be easier for him to decline the job than if he were an employee of a service with contracts and reputations.
Of course there are no guarantees about how they will dish out that $7M insurance fund but based on my experience with them, I have a feeling HJ would err on the side of paying more and maintaining their reputation.
Do you have any reason to believe that outside of a need to avoid cognitive dissonance? I ask because it is well-known that for some services (e.g. Uber) refusing open contracts will result in penalties or termination of the agreement with the service.
When most people give "5/10" they mean "terrible, but did not shit of the coffee table".
Did they check with you what you meant by 5/10?
Fast food is too expensive for this person. That doesn't strike me as an awesome situation.
Boiled down - full time jobs good, contract jobs bad. Reasoning? We talked to this guy who has a cute kid he is struggling to protect. We also talked to a regulator who gets ink for saying it is awful, just awful.
If contract is undesirable then apply for work at a traditional cleaning service. He now has the experience through HomeJoy, seems doable.
Should he be making what the coders and web devs who built HomeJoy make? No. He doesn't have those skills yet.
Society owes him:
1. The opportunity to learn the skills to compete in our economy. (With our education system, I fear he's not received what he is owed here...and if so, injustice.)
2. A free market to "find your wage" or "start your own" based on the extent to which you can build things others want.
This guy is a hard worker. Software is eating the world and changing the rules. When that happens, many opportunities and new niches are created. I hope that the regulators realize this and let it continue. I hope that this guy finds a profitable place in the changes.
As a society, we're moving toward a new economic model. One that's superior in terms of creating output and wealth, but strikingly materially inferior for lots of people: it requires a different and much less broad-based skill set than the old economy required. It's possible for an individual to find the odd piecemeal job that requires those old-style skills, but extremely difficult to make a real living off of it.
Short of turning people into soylent green or magically educating everyone to above the current median skill level, I see the only real solution to this problem to be a basic income or a job guarantee. (I don't, however, see any way for US political institutions to create those solutions.)
I see improving education as the best solution here. There is plenty of room for innovation and improvement.
Obviously better education would be the dream solution for taxpayers, society, and students, but so far as I can tell it's just a dream that never translates to reality.
We point at education, but we don't exactly supply it with the capability to perform what we want it to.
I wonder if the worker in the article is representative of most Homejoy cleaners. He takes the bus to get across town, which turns a 2.5-hour cleaning into a 5-hour task. I think all of the cleaners I've had so far have cars, so in those cases, they're making $50 for 2.5 hours of work and maybe 15-60 minutes of commuting, instead of 150 minutes of commuting. The economics are much better in that scenario.
My anecdotes do not address the issues of workers comp or unemployment insurance, but the people I've met through Homejoy so far seem very happy to work there.
If I were an employee, I'd say that too. Especially given that they are rated by the clients. If you were badmouthing your own employer, the chances of you getting a 5-star rating are significantly lower.
The cleaning service I used tried to move a dresser to clean behind it better and in the process scratched the hell out of the wood floors. I appreciated the over eagerness to clean, but it was still a big screw up. The company handled it, we got estimates from a few refinishers and they cut us a check for the highest one.
I know that this is possible with an independent contractor, but I know its highly unlikely that that would happen.
I pay a premium for the service because of that, and because they treat their employees well and pay a good wage with benefits, the employees in turn work their asses off for it and the owner has a waiting list of new employees every time he has expanded his team.
Service economy is great for people in our line of work who can command a high rate and have something to lose if we screw up. I'm not convinced that it works well pushed down to this level with people who already have so little.
With rotating crews this process has to be repeated each time, and the results are always very different.
I would much prefer a more personalized service that is a bit more expensive, but keeps the crew consistent and gives better benefits. Sadly these are very hard to find.
I currently use a person that has a small team so usually 2-3 people come to my house. And they usually spend 2-3 hours cleaning. So we've got 6-8 person-hours (which fits with Homejoy's estimate if 1 person came). I pay a flat fee of $180 for them to clean my house... so roughly $25-30 an hour.
I don't know what my person pays her employees (it seems mostly a family business) but I have to believe that NOT paying for Homejoy's cut puts more money in all their pockets. Maybe I should just be thankful I found a good cleaner for a good price.
They give you the option to rebook the same cleaner but it is weird. We changed it to clean every week and our person did not show up. then we change it to like clean once a month and they did.
The receipt gives you the cleaners address and name
There's nothing that Hacker News hates more than any suggestion that the world we live in is less than perfectly fair and equitable.