Want a Steady Income? There’s an App for That

(edit: I agree that uncertainty certainly doesn't help the problem.)

I can't speak for US or Australia, but in New Zealand if you're an employee minimum wage IS minimum wage. Some employers hate it and would rather that not be the case, but we have contract workers for that style of employment, which are more-or-less at will, but the rules are different surrounding those and it much harder to "prove" someone is a contractor rather than an employee (it'll come down to things like: having sick days=employee, having a uniform provided=employee, organizing your own leave=contractor, it actually get's quite complex to prove someone is a contractor even if it states they are one in their employment agreement).

You need a $640 cash cushion and you can handle variation like what you list. On minimum wage it's hard to collect that cushion, I'm sure. But much harder is the discipline not to use it.

ETA: and that's assuming 40 a week, which for minimum wage employees is an awful assumption.

I will refrain from commenting on how tragic the situation is in the United States for the simple reason that I don't live there. But your description of the situation doesn't make me want to move there except for a very cushy job.

Here in Japan unemployment is quite low, and health-care is nationalized, so the situation may not be as dramatic as the one you describe. But contractors at low paying jobs certainly hold the shitty end of the stick: all my friends in this situation live with their parents, they simply cannot afford to live alone.

For instance, a clothing store pays a number of people minimum wage to work the registers, keep the racks/shelves stocked and organized, and clean the place. Then they pay (not substantially) more for a few managers to keep things running smoothly. Usually there are many more employees than managers, and while an employee might be promoted to manager, there are so few openings that the average employee can't expect to rise at all. There's no reason to give these people any significant raise because they can be replaced in a week with another kid at minimum wage. The only incentive to pay a little bit more for someone who sticks around long term is because they tend to be more reliable in terms of showing up for their scheduled shift, but even that isn't uncommon enough to be worth much.

It's the same for any position that doesn't require a developed skill. Stocking shelves, unloading trucks, cashiers, cleaners, some basic customer service positions like a host(ess) at a cheap restaurant (the people who greet you at the door and show you to your seat for $8/hour).

I would guess that there are at least in the tens of millions of these positions in the US, so probably at least 5-10% of the population. Some of these are students who will rise out of it by getting a degree and landing an entry level position elsewhere, but I doubt that covers the majority.

And people will fight over these jobs, simply because they don't have skills to get a better one, and need to either work 2-3 jobs at once to get by, or pool their resources and live in a group with a number of other people who work the same jobs or only slightly better.

Here's some examples [1][2] that cover a small group of the described jobs. This accounts for a bit under 8 millions jobs. The site there isn't granular enough to get many other positions, as they are lumped in with others that earn more, like "Hand Laborers" which has a median income a couple dollars higher and adds a few million more jobs.

[1] http://www.bls.gov/ooh/sales/cashiers.htm [2] http://www.bls.gov/ooh/food-preparation-and-serving/food-and... [3] http://www.bls.gov/ooh/transportation-and-material-moving/ha...

NOTE: I'm not saying any of this is right, or good, or the way it should be or has to be, just that this is the way things are.

Japan used to run the other way around, where the salary was solely a function of age (or rather, how long a worker had been working in a company, but that was essentially the same). I don't think it makes for a healthy economy either. But I'm also not entirely convinced it's that much worse than the "free market" you have in the US.

I don't have any form of competence in terms of economy, but sometimes it feels like the economy we are living in right now is optimizing for the wrong things. It is becoming more and more efficient, more and more optimized, but not at all for the common good. Maybe for quarterly results?

It would be good to see some solid data, because one thing that surprised me while travelling in the USA was the extreme poverty I saw just down the road from extremely wealthy neighborhoods.

Not to say that Australia doesn't have its own set of problems, particularly in Indigenous Communities, but this seems to operate at a wholly different level.

Really? There's a big difference in terms of structuring, risk, ownership etc.

When you sell the receivables, your risk is gone. Whether your customer ends up paying or not is no longer your concern. Whether he pays two months late, is no longer your concern. Whether his company goes bankrupt, or he flees the country, is not a concern. You got paid, your financial relationship with your customer just ended. You have no obligations or responsibilities. You need not sue him, chase him, you need not collect payment.

That's NOT a loan. You just sold your receivable to a collecting company. In reality, you didn't borrow money, you SOLD a loan that in essence your customer had with you, but now has with someone else.

When you borrow money, you simply borrowed money. It changed NOTHING about the fact that you still haven't gotten paid. You're still at risk of a customer not paying, you still need to chase him, maybe even sue him. You still haven't actually earned any money. All you did was increase your risk by borrowing money that you have to pay back even if you don't end up getting paid in the end.

The former is a sale of your risk, the latter is a loan. They're not the same and not at all identically structured. In fact in one way they're completely opposite.

What is preferable depends. The former carries less risk, but the discount is higher than the interest you tend to pay. For example to sell a 30-day receivable might cost you 3%, which is a lot of money compared to the <1% you pay to borrow money for 30 days, especially with some collateral (which reduces your interest rates as the risk with collateral is lower, but doesn't absolve you from your debt if the collateral ends up being worthless!).

So these are two different products with different cost/benefit rates, one offloads a lot of risk and alleviates cash flow issues at a high price, the other doesn't really reduce risk but alleviates cash flow problems at a relatively low price.