I just read this article.
I don't share the author's feeling of hope and maybe enthusiasm that the tide has turned and the gig economy has reached its peak and is now on the descending slope. I fear we've only seen the very beginnings of it.
The only way to put a stop to the gig economy is for government to get heavily involved. The objective of every corporation is to reduce labor costs as much as possible, and that will never change. If technology allows companies to cut labor costs, they will take it, always.
If the world population was in a free fall right now, we wouldn't have to worry so much about a gig economy, but world population is expected to grow, at least for another thirty years or so, and we can reasonably expect to add another 2 billion or so people on the planet, all who need jobs.
Instead of this author's vague musing that the number of traditional full time jobs are picking up, I'd like to see what occupations he's talking about. The only areas I know where traditional full time jobs are still available and growing, aside from the professions (doctors, lawyers, accountants, etc.), are the areas that help to create the gig economy, such as IT people, and tech jobs, whose function it is to figure out ways to replace humans with AI.
No, I don't think it's looking so good.
So driver earnings will not increase long term because of the shift in the supply-demand curve will cancel any increase out. One realistic solution is for the employers—excuse me, the “platforms”—to limit how many drivers can work at any one time and thereby altering the current lowest common denominator model designed by the “heads-we-win, tails-you-lose” oriented entrepreneurs. Is this not a fundamental basis of all workplace wage and hour legislation of the past one hundred years? It reminds me of the difference between the contemporary sky cap at an airport and the scenes of Dickensian competition among coolies jostling for work outside a colonial rail station of the 19th century.
3
No one seems willing to point out that the state still declines to protect the gig workers who overwhelmingly staff its colleges and universities. Adjunct faculty deserve to be treated with the same respect we will now afford Uber and Lyft drivers: a living wage and health benefits. But sadly, these principled stands don’t seem to apply to the state itself.
5
Let's just talk about drivers instead of over-generalizing. I don't see how driving with Uber is any more awful than driving as a licensed cab driver who is paying the "mortgage" on a now worthless medallion. And I note that no one is mentioning the consumers -- people without cars who can afford Uber to get to the doctor, etc., but can't afford a metered ride. I have used Uber a fair amount and I can't say I've met an unhappy driver -- they've all, to a man and a woman, been cheerful, interesting, and talkative. Plus their cars are new and spotless. Somehow I feel this Uber/Lyft business is a great model, and now we want to make it unworkable. Thanks for nothing.
1
You forgot to mention that this brutally efficient form of capitalism is not generating any profits for some companies like Uber. How brutal does it have to get?
it's not truly a marketplace unless the rider (demand) and the driver (supply) determine the price. you don't see ebay or amazon marketplace or etsy setting the prices for you, and then taking nearly a 50% cut after adding up all the fees.
4
I wonder why there is little mention of this independent contractor concept in reference to FedEx Ground. Their drivers are not employees of the company, must buy and maintain a truck, must deliver packages on time to the standards of FedEx.
2
At the very least these gig employers/platforms should be forced to give employment references upon request. That way workers who want to can use it to build their work history and get better jobs if they want it.
That way for those who want a side gig they can have it but for others it can lead to something more. This would also benefit these companies as it would be easier to screen future workers; making it an easier politically lift.
It's often observed that business hates uncertainty. So why do business leaders think workers are any different?
1
The so called gig economy is not good for gig workers. For the most part the pay is worse, certainly it's more unstable and devoid of benefits. What it does is further line the pockets of gig business owners. It also masks how weak some of employment market is. How many gig workers are doing it because they couldn't find regular employment and would prefer regular employment?
5
If Uber goes out of business, maybe California will be forced to adopt world's best practice public transit. But that's unlikely.
A French judge said it best during a trial when an Uber shyster argued that Uber does not have to give its drivers benefits because Uber is a tech company and not a car service company.
Sayeth the judge: Why don’t you demonstrate that for the court? Please ride your app this second and let’s see if you can go anywhere.
2
The root cause of this problem that the Gig economy brought to the surface is that by Federal Definition, a contractor is not required to have a business license OR a contract with their employer.
In certain industries, there are licensing requirements, but none of those industries is a GIG, they are businesses that work on a contract basis.
Should that handyman or maid working at your home need a business license? I would argue they should. If they don't, then they are employees who just happen to have a couple of part time jobs.
If lyft and uber want out of these regulations they can just require their drivers to have a business license and then dispatch rides on a business to business basis.
To assist the transition they can use a company like Legal Zoom to help people incorporate and front the cost of the licenses, getting paid back over a short time (you can incorporate for 99 bucks), and then provide quarterly docs those corporations need to file their quarterly taxes.
This would substantially change the Gig business model substantially and force workers to make better choices in how they earn extra money or even full time incomes.
People who don't want the responsibilities of being a business should not be in business; they need to be employees someplace.
I can promise that once people had to file their business reports and taxes, fewer would complain about things like Social Security taxes and why employers don't just hand out pay raises.
2
Having owned a small entrepreneurial chemical business, I am painfully aware that the "cost" of hiring workers adds up to around 30% over the cost of their wages. Having some form of comprehensive health care - like Medicare - which all participate in, would allow businesses to focus on their customers needs.
It is easy to understand why many new entrepreneurial businesses prefer to have "contract labor" - one less thing to worry about. Much better to have society support human basic rights, health, clean air, clean water; so that human capital can be effectively employed to build a successful business.
Making companies pay for stuff which the government should be providing, puts US business at a big disadvantage when competing with the modern industrialized world.
2
@Geoffrey Brooks Yes. Because of workers, there is absolutely NO profit to be made in business, which is why there are no businesses in the world and no obscenely wealthy stockholders and CEOs.
Oh, wait ...
2
The current low unemployment won't go on forever, but there is nothing at the moment which would bring an end to the factors which cause a shortage of well-paying permanent jobs. In the next recession more of those permanent jobs will be lost and employers will be able to build up their gig work force again. There is little reason to expect the increase in gig jobs to come to an end because of "free-market" economic forces. It will take deliberate political action to change things. Laws like the California one may help, but what is needed is major change in the nature of the economy. What we have had, whichever party is in control, is a trickle-down economy in which profits are paramount and the benefit of workers is at best an afterthought.
4
Until we have universal health care, the gig economy is limited. As long as most people and their families get their health care from employers (ages 18-64) then full time employment will top the gig economy. Also working for Uber or Lyft is not the same as selling your handmade crafts at a fair. Your a gig worker vs. an entrepreneur picking up extra cash for something you love to do. Big difference. But gig work might be appropriate for retirees, students etc. Additionally, Walmart and Starbucks should be offering their employees health care and decent wages so people don't have to do gig work.
1
Drivers have passengers’ lives in their hands. I cannot entrust my life to a gig driver even if the fare is cheap. Those who have pride in their work can do good jobs. It is not easy for gig companies to have good reputations from consumers.
1
Please explore the toxic role of private equity vultures in driving the gig economy and the acceleration of cutting benefits, pushing layoffs, age discrimination to hire younger -and cheaper - replacements
9
"Research by economists employed by Uber has an almost radical implication: that the company couldn’t raise hourly compensation if it wanted to." Why radical? This makes perfect sense. Here's a task that requires nothing but a clear background check and driver's licence. People continue to join and stay on these platforms because the combination of the money and flexibility makes sense for them, and the only way to increase hourly wages is to restrict access to work, which will be the obvious result of AB5.
1
True, in capitalism, many will go hungry and a few will starve. But in socialism, everyone will go hungry.
2
@From Where I Sit Whereas if the government regulated capitalism with an eye to economic sustainability and didn't just lie down for corporate interests, EVERYONE could eat.
2
The middlemen that receive most of the money makes the gig economy unattractive. The middlemen presents a contract that prevent a company from hiring gig workers directly, workers can only be furnished by the middleman. Because the middlemen don't have the staff to perform specialized work functions, they go to other middlemen, each receiving a percent of the earnings of the worker. Offered at $150/hr, a PhD worker may see $25/hr. That's what kills the gig economy. Some staffing agencies require the worker to become an employee for the duration of the contract. The worker is paid a salary for 40 hours but billed to the customer company at an hourly rate. The worker may work 60 hours a week with the middlemen pocketing the difference between the salary and the hourly rate.
4
As far as I am concerned the demise of Uber, Doordash, et.al. cannot come soon enough. The companies, wildly overvalued anyway, simply dressed up feudalism as something new and innovative.
Nothing new about shafting your employees, yes, employees, and laughing all the way to the bank . . .
12
Would be interesting to know - truthfully - how many commenters use Uber, Lyft and/or Airbnb. How many would continue to use them if their fares/rates were to go up once they were required to play by the rules taxi companies and hotels have to follow?
These companies didn't grow in a vacuum. Lots and lots of folks use them, and a lot of those folks read the NYT and vote for Democrats.
Not saying I approve of these companies, but lots of us are complicit in their existence.
4
Well Ginny, my son-in-law works at UBER, in downtown San Francisco, in the technical end of things. He makes a very, very comfortable wage (even for the Bay Area, VERY comfortable). They treat those guys very well. Yet, I've never used UBER. What put me off was surge pricing. A headline I recall was $900 for a ride on a busy night. If I don't know what it is going to cost me, before I even call them, I'll just drive my own vehicle.
There has always been a fairly large off the books gig economy. House cleaning, drug dealing, house painting, prostitution, car repair to name a few, have always provided a bit of cash to help people through rough patches. Problems arise when you decide that can be your full time job, but have no way to report an income to Uncle Sam. That kind of work doesn't get reported in these studies I imagine.
3
Yay!
as a full-time teacher struggling to prepare classes after my first year on the job, I was amazed when a new temporary part-time teacher arrived and simply asked if he could have the folder with the class materials so he could just walk into the class with it and start teaching ...
I nearly fell off my chair laughing - 'I WISH !!!'
I know the Khan Academy and MOOCs were supposed to take over the world with instant online education replacing the need for dedicated teachers.
So what happened ? That was like ten years ago.
My observations were that online short courses worked for professionals who already had the job, had the degree and just needed to pick up an extra skill. They could knock that off in their spare time at home.
But teenagers redolent with hormones learning completely new concepts and stuff for the first time ?
I reckoned the first time they hit a word or something they didn't understand, they'd flick over to social media, get distracted, stay there until 3am, then sleep in till 10am - huh ? was I supposed to go to school today ? ... zzzzz ...
That's why I encouraged my good students in class to help the struggling students ['Why should I !?' - 'because I'm watching and you'll get better marks' - 'retention 1 year after:- lecture, 5%; teaching others, 95%']
So - I'd sit back and watch - struggling student hand goes up, and two top students run over to be first to help them, in their own language, both developing new skills - ‘twas wonderful !!
4
There is no “gig economy.” What we are seeing is the Millennials are even more corrupt and inhumane than baby boomers. They are exploiting the fact that the “MiddleClass” is a fabrication - that they fell out of the job market and/or cannot make it on an average wage so they “need” to drive Ubers or Lyft to supplement.
I personally saw the repercussions of the 2008 crash. Dozens of people in my neighborhood lost their jobs and their homes went into bankruptcy. Many who managed to hang on became drivers.
The unemployment numbers are a sham and I wish that The New York Times would continue to cover the very story that inspired Jonathan Franzen’s story “Freedomland.”
11
"Business has been on a multidecade campaign to shift more economic risk from its balance sheet onto its work force — through de-unionization, routine use of layoffs, outsourcing and the use of independent contractors."
As long as businesses continue this, and they have every intention of doing so, employees will suffer, people who need jobs will suffer. The gig economy is not a secure foundation for future planning unless one has more than enough skills and expertise to find a new job shortly after the current job has ended. Businesses advertise jobs in such a way that it's almost impossible to decide if we are qualified for them. They want the perfect applicant to fill the job rather than the one who has the experience needed, may need some training, and who is more than willing to put in the work. When they cannot find their purple squirrel, rather than being realistic about their requirements they complain that there are no Americans available to fill the job.
None of that is true. There are plenty of older, experienced Americans in need of jobs. But we expect to be paid decent salaries and treated as human beings rather than widgets. We're tired of being told that we're valued only to be downsized once we're too expensive and even if the company has a banner year in profits.
If our politicians want to work for us they should tighten up the labor laws, support unions, and stop giving out welfare to companies that don't need it.
9/15/2019 8:10pm first submit
11
I've worked freelance since 1996. So has my neighbor. We both used to work at the same advertising agency. When it was bought out, we went out on our own. She does design. I'm a writer. It has its ups and downs. But we've both paid our respective mortgages off of our freelance work for all these years. So it is possible to work this way successfully.
6
Sometimes the government's job is to prevent socially undesirable races to the bottom. Here is a paradigmnatic example. Cali is doing the right things.
7
Gig workers of the world, unite!
You only nothing to lose but your car keys!
2
It is not socialism for taxpayers to demand that the investments they made (via taxes of all kinds that are levied on us over many decades) in the basic research and development that made it possible for the “crowd- and cloud-based” companies such as Facebook, Google, Netflix, Amazon, Apple, along with the mobile platform-based companies (Uber, Lyft, etc.), to exist. These companies would not exist if it weren’t for the semiconductor manufacturing industry. That industry has been supported for decades with government funding of early research by DOE, DARPA, NIST, the network of national labs, and many university research labs. The business models of these “crowd and cloud” companies would not be possible without semiconductor technologies that actually comprise high-performance computers and “cloud” servers. Companies put their R&D investments into technologies that they believe will have a relatively quick pay-off. Shareholders rarely want to be told that R&D expenditures may show results in 20-30 years!! That is often the timeline that it takes for basic R&D to have any hope of being profitably commercialized. For more on this topic, please see my columns: https://www.smerconish.com/news/2019/4/2/getting-a-return-on-investment-is-capitalism-not-socialism; and https://www.smerconish.com/news/2019/6/4/artificial-intelligence-ai-a-noble-end-for-humanity.
7
If you can't plan, you can't prosper. If you can predict, you can't plan. That is the core of what is wrong with the gig economy. No predicting, no planning, no prospering.
8
Back in my day, I worked for a while "under the table". No health, unemployment, or disability insurance. No paid time off, no retirement. I was young and dumb and didn't know any better. After I wised up and got a "real" job, life became measurably better. The gig economy sounds just about as dismal, with about the same financial prospects as being an Amway salesman.
13
the gig economy is exactly that dismal. Sure,one can cobble together several gigs and never sleep, never have a vacation and always be on. It's the worst of the 24-hour world becauae there is no rest and no benefits. It's an ever running hamster wheel with the stock owners, angel investors and bright boy entrepreneurs cleaning up
5
Freelance psychotherapists available at a moment's notice...sounds like a plot from 'Cheers'. Freelance pilots available, freelance financial advisors....you get the picture. At least the comments section is still freelance!
5
The only way to cure this is for Govt to provide the benefits to the people in which case it would not matter if you were a rugular employee or a contractor and then the companies cannot exploit you. I am sure this fits into much talked about Socialism. But you cannot solve problems when companies can’t afford to pay benefits or don’t want to. How long are we going to postpone it just because we don't like the word socialism. The true definition of socialism is doing most good for most people. I don’t find anything wrong with that.
7
@jaco
We are not Venezuela. We are more like Western and Northern Europe and their socialism is doing fine
In Venezuela neither Capitalism nor Socialism will work because the leadership is corrupt. I am aware all anti socialism like to give examples of failed Socialist states but never successful states
6
Capitalism is the problem. Profit is the root of all evil. We cannot count on people to simply be okay with being well off. They always want more. Even the most altruistic of $billionaires cannot be counted on to pay fair wages.
13
so when 75% of uber drivers can not drive for uber if uber functions as an taxi employer, as the best case scenario (in this case, uber will have to buy and maintain the cars, buy the cell phones and pay for gas in addition to the administrative costs and tax costs associated with maintaining driver employees), or for the worse case scenario, 100% of uber's drivers are fired in California because uber has to close, what will the left think? Is it okay?? The california democrats have no sense of responsibility and business operations, and really no sense of anything and these sort of things have not entered in their thought process because they are not capable of any. Besides that, Californian's will lose a convenient and relatively economical transportation method. The vote for AB5 was 100% democrats yes, 100% republican state legislators, no. Who voted correctly?
5
Democrats!
6
@sh
I'm sure the drivers could hire some smart guy's in college that could come up with an app that would keep the drivers on the road. They could be paid hourly or at a flat fee. Then the drivers won't have to pay out billions of dollars to a handful of MBA's.
Oh yeah, then Californian's will not lose a convenient and relatively economical transportation method. But it might cost them more.
5
@JoeG that's right. If Uber can't pay their employees a livable wage the they don't deserve to be in business. Taxi companies know this, just as hotels know this with Airbnb. It's why textiles, furniture and most labor intensive manufacturing moved offshore. Employers wanted more profits and primitive economies had the cheap labor along with lax environmental laws. There are consequences to unfettered capitalism. Bad consequences.
7
If you don't want to be part of the gig economy, don't be. If you want a gig where you can work as much or as little as you want, at the time of your choosing and only at the time of your choosing, knowing that the freedom is a trade-off for full employee status and that life is all about trade-offs, you might want to be an Uber or Lyft driver.
5
@O'Brien
Dude, that makes no sense.
6
@Max Deitenbeck
Ironically, it's the same pitch multi-level-marketing people use to recruit. Recruit your downline and pretty soon you won't have to work at all! Money will just be rolling in!
4
It's just more of the same. Huge corporations squeezing people for everything they've got because because they can.
In the current case, with less security and stagnant wages, people need to supplement their income. We shouldn't expect the Ubers of the world to act any differently, but they should expect to be treated any differently either. They are asking for regulation, just as their mining and manufacturing predecessors did. It's about time they are regulated and unionised.
7
We need a speed train immediately built from JFK to NYC , from LaGuardia to NYC, from Newark to NYC. Use eminent domain and then all car services become unnecessary for all airport traffic.
15
@Ralph Petrillo That is a brilliant idea!
1
@Ralph Petrillo I'll get to work on that, be back with you in 2050, maybe 2060.
@Ralph Petrillo yes, the whole petsonal vehicle model failed years ago but somehow people are still stubborn enough to sit in traffic wasting time and burning fuel just to have their beloved cars and trucks.
1
I noticed that republicans, gearing up for their next campaign are suddenly remembering that they were supposed to be fiscal hawks. This is a ‘smoke and mirrors’ Houdini trick that makes the vast majority of Republicans enter a trancelike state. Oooh. Ahhhhh.
I realize that my point is only mildly associated with this article. However, we all know where this leads... now that they have permanent tax cuts for corporations they can keep hammering away at education, roads and health insurance supplements. Cuts to these programs results in higher consumer costs.
Education fees, road taxes and sales taxes have skyrocketed in republican states and districts. This is the secret to how republicans tax middle class and low income families. All of this is with 1-2% raises and lower salaries than 10 years ago. The gig economy is about 2nd and 3rd jobs that help meet basic fundamental needs like housing, education and insurance.
5
As the NYT pointed out, slavery is the root of capitalism, and little has changed with that business model. Want to know why Wal-Mart has shootings all the time? They use local police forces as their 'security', albeit after a crime has occurred. Same with their health benefits. Why pay for benefits when the taxpayer can fund emergency rooms? Happy Sam Walton wasn't happy because he was paying high wages in rural areas. He knew how to exploit.
Uber can't make a profit under its current slave-wages model, so they certainly won't if they have to treat drivers as humans. In a nutshell, ALL these 'capitalist companies' rely on exploiting both their workers and the taxpayer. Sad.
13
Uber , and Lyft have caused to much traffic. The way to control this traffic is to only allow them to operate five days a week in major cities. So Uber is only open Monday to Friday . Lyft from Wednesday to Sunday.,traffic will drop by 25%. Then all workers must be unionized to control these companies. No driverless cars permitted for twenty years to be taxi or private car services.
6
Just the commoditization of workers. Professionalism has left the building. SAD!
5
Obvious from the beginning that Uber/Lyft et al were anti consumer and anti worker. Never game them a dime.
People need to put their wallets where their loud mouths are if they want to see real change.
5
@R
Yeah! Don't pay attention to supply and demand!
Ah, I was looking forward to becoming an American rickshaw driver in my retirement. Darn those California socialists! With their steady income, minimum wages and health care. How old fashioned! How traditional, ugh! Clearly, if I demand economic security I'll just be "twiddling my thumbs" and not competing.
The Orwellian tone in this "Upshot" is striking: “Freelance workers" who "will reshape the nature of companies and the structure of careers;” "app-based gig work;" the opportunity to "supplement" my full-time job. It all sounds sooooo cooool! Who doesn't want *that*? No more worker exploitation, poverty wage jobs or corporate greed, just "platform based freelance work!" Koool!
15
First of all, while I use both Uber and Lyft, as an engineer the idea that these companies are high tech or gig is laughable. They are a glorified taxi service with readily available and not ground breaking GPS and other technical programming. The innovative part is being able to provide and entice people to use their own capital investment (car) to do a job best suited for part time workers. What a model. Innovative? Maybe. To a point. A. Model we want more of? No. We can and should do better by people.
In my experience some drivers use it to tide them over for a while, some because they can set their own schedules to earn extra money because their is a lack of real jobs for them, but none of them think they are part of some amazing hi tech leap forward. No more than VRBO is high tech....or people delivering groceries via internet or phone apps.
Most Americans today have no idea what real technology driven jobs are or who does them, and how to get them.
When I was young we started with building things, taking apart things, experimenting with circuits and radios and rockets. Real tech learning experiences. Experiences that propelled us to advance and learn more and aspire to real tech jobs.
Playing a video game is not the same as designing the circuitry that makes them possible. Too nuanced a thought? Gamers use tech developed by others. Those others are seldom known nor recognized by the media nor the public at large.
15
Several years ago, I worked as a contractor for two years, but I was really an employee. I worked st a company desk with a company computer and worked their hours. I was put in charge of 3 people. At that point, I was listed on the company’s management org chart. But I was still a contractor.
My time there ended when the company ran it of money and stopped paying the contractors, most of whom were really employees like me. We all walked out. We could have sued, but that would have been expensive and pointless anyway (try collecting a judgment on your own).
The law in the company’s home state required companies to pay employees, or executives could face jail time. As contractors, we had no protections.
We got our money after a few months, but it was a very stressful time until then. Plus, some people aren’t as “lucky” as we were.
This new law is a big step in the right direct for worker rights.
11
In California, you all should have gone to arbitration with a good employment attorney. He would have proved you were actually employees, you would have been paid what you were due. I know, been there.
3
It would be easy for a business to compete for the best workers if they allowed healthcare and wage benefits for all workers, not dividing by full or part time status. For full time status a business could be more generous with vacation days and other bonuses.
The problem with gig workers, as a business owner, is you don’t control their time. The problem for the employee is there is not much employment protection.
So, in the meantime, Uber should start hiring many more gig workers and consider paying them cash. That would keep their drivers’ as independent contractors and, as added plus, Uber wouldn’t have to issue a 1099 unless they pay over $600. Gone would be non compete clauses because if you can only make under $600 as a worker, you’d have to work for many more companies.
2
I've always viewed the "gig" jobs as a means of supplementing one's primary income. If someone is passionate about a field that isn't particularly lucrative--say a Case Manager in a substance abuse treatment center--gigs could provide a few hundred extra bucks to make it possible to stay in the field. Obviously, that doesn't address the core problem. But it could keep one in a job they love--that is much needed in their community. Ideally, teachers should be able to lesson plan in their free time--not deliver pizzas. So I won't glorify an industry that has exploited many who rely on it for primary income.
2
It was and always was an unsustainable model for Uber and Lyft. They can’t pay drivers enough to be profitable, and self driving cars are further away than they had hoped.
Basically we got a few years of rides subsidized by venture capital, but the party will be over soon and they will go the way of moviepass.
11
To be totally honest it's very easy to see how the US had slavery for so long and getting rid of it resulted in a huge war. A massive percentage of Americans are fine with other people either working for free or close to it...and this in 2019. I can't even imagine what 1860 was like.
29
'What’s happening is you’re seeing more people using some of these new ways of getting work to supplement their current jobs"
Which is exactly why California's law regulating them as employees make no sense. They are already employees of another company.
They want to earn the money from Uber, Lyft, TaskRabit, AirBnB as, well, a side gig.
Drivers are not integral to Uber’s business plan? Hmmmm. Uber is not integral to my travel plans, said this person who used Uber quite a bit. Don’t knock the workers who put millions in your pockets. If you could’ve done it all yourself, you would have, but you couldn’t, so you didn’t. Share the wealth. Pay your drivers a living wage. Until then... bus, subway, walking.
7
Soon, driving a vehicle will no longer be an occupation.
As the population of the earth grows from 7.6 billion to over 9 billion by year 2150 and automation and robotics reduce world wide jobs from about 4 billion to 2 billion, climate disruption will decrease historically arable land and fresh water. The severity of the consequences of over population and a changing earth climate will depend on how wealth generated by technology, (robotics), is shared and how well human reproduction is reduced. Six billion out of work and starving humans will not remain docile and immobile while their children die and a walled off one millionth of one percent own the world. The politics, borders, walls, armies and gated communities of the past will not work in the new world that is fast approaching, nor should it.
6
Good times! Fun fun! Can't wait!
5
@Kevin Katz
No grandchildren.....I presume. In fact no one at all is likely.
1
Uber is losing billions of dollars every year and that’s without the drivers being fairly compensated. It’s an absurd situation that primarily benefits the paying customers because the true cost of these services are being subsidized by those involved, Uber and the drivers. How are companies like Uber going to stay in business? These gig jobs require continuously trying to recruit naive and desperate people, because eventually people figure out that they are hardly making any money, as they eventually figure out the cost. This is a case of capitalism being aggressively anti labor, companies losing billions of dollars to subsidize a business that exploits workers, with no profitable future, unless self driving cars are perfected. I thought the market is always going to be efficient or the business will fail. What’s happening here? Uber is an example of the fraud that exist in some capitalism. How are Uber shares worth anything? Who would buy a business that loses billions with no reasonable expectation that it ever will make money. It really makes me wonder, what’s going on?
7
Uber’s value is perhaps in the data it collects and the methods of analysis it is learning as to when and where people travel as well as how much they’re willing to pay for it. If they can hold on until driverless cars become ubiquitous, they will become king of the mountain.
2
I tried the gig economy. Awful. Some international publishers make you wait up to 75 days between invoice and check.
I'm a 65-year-old adjunct instructor with a master's degree that I'll never get paid off. I get a W-2, but no benefits. I work at the pleasure of the college, and my weekly hours are limited to 20 by the laws of NC. In six years of service, adjuncts got a 25-cent raise (at my three-year mark) and none since. In that same period, full-timers have gotten bonuses. As always, they enjoy lovely things like health insurance, paid time off, and the knowledge that their income is stable.
A couple of years ago, the state legislature extended the period between when I work and payday by an extra 10 days. It can be as long as 6 weeks before I see the pay for having taught a class.
15
I was an adjunct for four years. Holy cow, here’s your $2000 to teach a class, no benefits, create those lessons, cover the early morning classes, grade those tests, counsel those students...exhausting.
7
@Suzanne
People who get themselves into these low paying predicaments, clearly aren't math instructors.
2
@h king
But if you have to eat?
2
If Uber and Lyft we’re truly a platform they would operate more like Craigslist and Fiverr where people list their skills and prices. As a consumer I don’t get to pick the driver the system assigns one to me. On a platform both the supplier and consumer are viewing each other and agreeing to work together at a set price. But these companies are assigning the talent and the pricing. So it’s not a platform when I don’t have a choice. Because frankly I want a driver who speaks English, is local and knows my city and has a great driving record and doesn’t just stop in the middle of the street for drop and pick ups.
I limit how much I use these apps because of the varying quality of the drivers and if I ding them I risk being kicked off the system. So no it’s not just a platform.
11
They were allowed by Washington to ignore the law defining employees. California finally clamped down.
Now do the REST of the low-paid, non-managerial, told-what-to-do workers who are classified as contractors throughout the economy.
10
I'm surprised by the number of comments suggesting that if some drivers are willing to do something, it should be legal. So if illegal immigrants are willing to work under the table for $5-8 an hour, we should also remove all minimum wage laws in place since before we were all born too? A true exchange model would allow drivers to bid on each ride at different rates, not give a rate and send it to drivers to accept or reject. Limit orders have been around since stock trading was done on phones. These drivers are the domestic equivalent of illegal immigrants undercutting the minimum wage laws. CA just closed the loophole.
17
In 1928, SCOTUS decided that government had no place telling a worker what wage they should sell their labor for. That decision stood until FDR turned us toward a liberal agenda.
2
Why cant the Uber and Lyft CEOs tweak the model a bit to limit the number of drivers they hire at each town/city depending on all the data they have regarding need, then call them employees paying them benefits. It will be a regular job with a living wage for some drivers with excellent driving records and there will no more congestion from high number of Uber drivers. IT will lead to more ride sharing and some will have to wait a while for ride sometimes. That would be minor inconvenience.
4
If the companies capped the number of drivers they will individually allow to drive in a particular area, other companies will pop up to provide the means for more drivers to work in that town. Now, local government could step in to maintain the limits you suggest that would apply across the industry but then we’d be back at the medallion system that has collapsed in NYC.
1
@Jana
I waited about three minutes for my Lyft ride from the airport last night. If you limit the number of drivers, my wait would maybe be thirty minutes and the car, likely dirty.
Oh, my god, you would have to wait thirty minutes, horrible, just horrible.
3
Craigslist charges $5 per post for "Service Offerred" postings. If Uber truly sees its drivers as contractors and itself as just a platform - then it should only charge a similar flat fee per transaction regardless of dollar cost of the ride.
The moment it goes beyond providing the platform by impacting driver's services it becomes an employer.
8
So economic analysis shows that gig work is useful for people in transition and as an addition source of income to supplement existing work? Good. That has always been the foundational premise of these jobs. They were never supported to be someone's primary source of income.
It was fever dreams and hand waiving from unions and their supporters about the threat of gig work for traditional work (employee, 40 hour work week, benefits package) that led us to the passage of AB 5 in California which would force all these workers to become employees. Some may benefit, but many will lose an important source of income. That it is also faddish to hate on "tech companies" didn't help.
Maybe the policy makers will read these reports and come to their senses before they kill a perfectly fine way for people to make a few extra bucks.
2
Our current legal definition of "job" is anti-labor. When an individual works more than 24 or 30 hours per week, week after week for a particular company, it is not a "gig" job. It is a legitimate job which has been reclassified by our legislators as a way to deprive the employee of labor rights, a "go around" that benefits the employer alone. These are not small, hourly jobs at a deli, or an occasional "shift" by a nurse. These are real jobs, like accounting, or computer programming. Elected officials should be ashamed, and the media should finally tell the truth. People take "gig" jobs and "contract" with major employers because they are must eat and pay rent. There is the desperation of poverty. Our nation has too little heart and not enough morals to do the right thing for labor. It is folly to think that business owners will do this because it is "right". When we allow gig labor to prosper, we are providing financial support to companies like Fortune 500's. The gig economy is how the "Reagan Economy" ends for the middle class, unless we force change in the ballot box. Kudos to California.
17
Years ago when I decided to leave a very good job with good benefits to become an independent contractor I was very scared. My courage to make the move came from a simply moment of clarity. If I'm not worth what I'm being paid they will know almost immediately and will pay me less.
Information is becoming cheaper and more available. That will continue to squeeze wages and profits. It's very hard to add value to commodities and we are commoditizing everything.
3
An important trend, thanks for putting the update above the fold. Chris Christie was again dominating the Sunday morning shows with the fiction that the economy is great because the unemployment rate is low. Individual 1 will most likely hammer this bent nail all through the next year.
The truth, meantime, is that in a gig, part-time, side hustle, adjunct, independent-contracting society of workers making a minimum wage frozen in place for decades, in which trillionaires pay no taxes, and corporations' provision of health care is an application for Medicare (which is slashed in the Republican budget); IN AN ECONOMY of record bankruptcies due to the cost of illness, in which half of all Americans do not have four hundred dollars in the bank—the reigning model of underemployment and wage theft is not a selling point.
I'm a teacher. My taxes went up three grand this year while the first trillionaire on Earth paid nothing. I'm paying Bezos' way.
I am not better off than I was before that massive, photocopied, scribbled, mess of a so-called tax bill that gave the national trust to the Kochs and Adlesons of this putative democracy. I can't deduct my state and local taxes from my federal taxes because my state did not vote for kakistocracy.
If that outdated measure—the unemployment rate—unless it is renamed the "Underemployment Rate" —if that is a talking point, then the Fourth Estate has failed us.
And then what news will be fit to print.
16
Without regulation, the “gig economy” has only resulted in app based servitude. Lax labor laws and enforcement have simultaneously allowed corporations to outsource far too many core job functions. This has given employers the ability to squeeze out older workers and literally steal their hard earned benefits. We don’t need massive social programs for healthy workers, we need far stronger labor laws and a level playing field.
7
Using cellphone technology to match services to customers doesn't seem to have anything to do with underpaying employees. Why are we confusing the two? Because Uber tells us to??
2
We need to keep pushing back and pushing back harder and harder against these companies that exploit their fellow citizens.
5
From a practical standpoint, wait until these Uber and Lyft drivers understand that they will no longer be able to deduct any of their expenses on their state and federal tax returns when they are considered full-time employees of the companies for who may drive. In many instances this will have a deep impact on their actual net income. One of the very good benefits from being a contract worker in this type of endeavor is the ability to deduct all kinds of expenses on a business schedule on your personal income tax return. Thus, these drivers can either depreciate their vehicles or if they lease them, they can deduct the cost of the lease to the extent the vehicle is used for their business. They get to deduct the cost of gas, maintenance, insurance, registration fees, carwashes, tires, and the like. This adds up to a lot more than minimum wage over the course of a year. Be careful what you wish for folks. It also allows the professional driver to drive the type of black SUV that they can charge a lot more money for each ride for an increase their income.
The next time you drive in an Uber that is in ramshackle condition you might begin to get the picture here. Oh and did I mention that they can also deduct the cost of personal health insurance , life and disability insurance and many other myriad benefits such as a 401(k) plan and a SEP retirement plan as well. All of these benefits will disappear when these gig contract workers are reclassified as employees.
5
@Unhappy JD
You make excellent points. Thanks.
This article ignores the horrible aspects of the US labor economy, its low wages, its lack of unions, its miserable lack of universal health care while pitching the gig economy as some new freedom. It is anything but...
I've worked as a software developer for almost 2 decades, the kind that was paid as temp labor, although unlike most task workers well-remunerated. I was getting paid too well to complain much, but it was obvious that the task-rabbitting of America was a new road to serfdom.
5
It seems like smart phones and shiny apps have deluded a generation of people into thinking that they can somehow enjoy the benefits of a traditional way of life. I am constantly amazed at the magical power that people attribute to these small little communication devices we carry around in our pockets.
1
Yes. Guess what. Technical people know they are simply radios. Complicated for sure. But at the end of the day they are radios with functions added including video. The genius that is unsung and not recognized by most even intelligent people in the world today is the very small number of people who developed and continue to advance the micro miniaturization of the electronic circuitry that makes such communication possible.....
3
"Business has been on a multidecade campaign to shift more economic risk from its balance sheet onto its work force — through de-unionization, routine use of layoffs, outsourcing and the use of independent contractors."
Indeed. Business has essentially internalized profits and externalized liabilities. That's the ultimate expression in removing risk as something to deal with as a businessperson. Disgusting.
Capital and labor had better learn to live together or we might as well cash in our chips, leave the table, and let the Chinese have our seat.
9
Uber/Lyft are Enron-style Ponzi scofflaws that have never made a profit. There is no social need for these "services", drunks can find other ways home without driving. And by putting more cars on the road, especially in some of the most congested urban areas, they produce a net social negative. We need less cars, not more.
4
I live in NYC and do not own a car. I started using Uber in 2011 after major surgery that left me on crutches. My options for getting around were either hailing a yellow taxi on the street (near impossible when you are unable to stand without two arms on the crutches, and forget about in the rain), or call a pricey “limo” company, that told me they would only take customers who were airport rides on certain days and times.
Uber was, and remains, a godsend to me. I appreciate the drivers, who are almost without exception courteous and friendly, and always tip.
1
The white elephant in this room is the power of business in our democracy. At this point, helped greatly by 'Citizens United', businesses have pretty much taken over our government and made our votes worthless.
They have bought our local, state and national legislatures and can pretty much rig the system against all of us.
If no one takes a stand now we'll all be back in the 1890s with the robber barons or characters in '1984'.
The writer is obviously oblivious to all this.
5
I just always looked at the gig economy as a real lousy deal for workers and a great way to enrich a few guys at the top, nothing more. The faster they could rid us of it the better. Companies like Uber are just cab companies that were trying to cut out workers compensation, social security, retirement and the CEO could keep the money.
161
@scott
I agree. If Uber and the like, did employ only people who were looking some additional income, I would be all for it. But its like the fast food industry who justify their low pay by saying their workers are just kids earning some money after school. In fact, most of the employees in fast food are adults working full time. In short, the companies are lying.
20
@scott t absolutely. I had a supervisor who told me that temp jobs were wonderful. She said that as a temp I could switch jobs any time I wanted to, that I could set my own rate of pay (news to me), and that there was more freedom being a temp. I asked her if she'd like to switch places with me and have to give up paid vacation and sick leave, health insurance, and other benefits offered by the company. No answer.
The only ones who benefit from temp/contract jobs are employers. And they find every way possible to circumvent time limits on temp positions when it comes to hiring, limits on what temps are allowed to do, (I know this because as a temp at that same employer I was asked to do a few things I wasn't supposed to do. I did them because I wouldn't have had a job otherwise.), etc.
What it comes down to is that employees have no rights or protections. We can thank our government for this. We can thank them for allowing employers to abandon their end of the bargain when it comes to the social contract between employers and employees, employers and the community at large, and the fact that employers have no intention of changing anything.
13
@hen3ry
while I agree with a lot of your post, this line "The only ones who benefit from temp/contract jobs are employers." is inaccurate.
The workers who agree to that rate of pay for that job also benefit.
You are using a broad scope claim and it scoops up everyone like high paid tech contractors, medical contractors, and even seasonal retail workers.
The independent contractor status has been abused by big corporations to shed employees from janitors to secretaries to clerks to lawyers and accountants and every thing in between. Corporations whose CEOs are making billions pay contractors a pittance and give no benefits or even sick days while they make even more on the work of these “independent contractors”. It’s one thing if a well laid professional wants not work for a variety of clients but secretaries can’t do that! People need jobs with a set salary and benefits with retirement plans to plan their lives and pay their bills.
115
The gig economy is a mess, except when used by a few people who want a bit of extra spending money.
No insurance, no regulations, huge percentages taken out of the pay, workers too easily signed on without proper background checks and dangerous situations.
I worked for a dog walking company. Because we were “independent contractors”, we were not trained, properly insured, or paid well. Areas were over-saturated with walkers so that nobody could get enough business. The app itself was problematic, constantly crashing or messing up appointments. The help line was impossible to reach when emergencies (dog bites, for example) came up. Customers were often as unhappy as walkers.
The gig app jobs are great in theory but lousy in practice.
67
@Bill The Walker
The other side of that coin, so to speak, are the professional pet sitters, like me, who have years of experience, liability insurance, registered with the state, trained in pet first aid, etc. The "gig" sites like Rover undercut us - so do the kids next door, or the friendly neighbors - who may, or may not do a responsible job. I take pride in my professionalism, and charge accordingly. But there are many who look for the cheapest deal in town.
5
Perhaps a better idea would be to focus on NOT making companies responsible for providing health care and insurance for their employees. It’s a crazy problem that traps people in “traditional” employment. Healthcare should be provided by the govt, and I’m still baffled as to why that’s so controversial for Americans.
The vast majority of uber drivers ive talked to are not interested in being “employees”. It’s a spare time extra cash gig, which may not be crazy lucrative but for the most part serves its purpose as designed.
81
Well over 100 million people receive healthcare through their employers and are satisfied with it. Asking them to give it up for some bureaucratic nightmare is unreasonable and unrealistic. Lobbying for more residency slots in the United States is a laudable goal. I truly think this one issue could decide the election. I'm clinging to my employer provided insurance like the NRA does their guns.
3
@Lannock The irony is all these companies DO use the government (or force them) to issue healthcare for their employees - Wal-Mart and gig workers end up in emergency rooms with no insurance and guess who picks up the tab? This is the dirty little secret Republicans never want to talk about.
21
@Jonahh @Lannock Not a big fan of WalMart, but it does offer health insurance.
The California law is simply recognizing the reality that Uber drivers (and people working for other large gig corporations like Uber) are NOT actually independent. Uber exploits its drivers and it is past time to put a halt to that.
10
Uber can exist in its present form for three simple reasons: (1) below-market, subsidised taxi fares generate consumer enthusiasm, (2) exploitation of employees, including the ridiculous characterisation of them as contractors, allows for lower costs, (3) investors' failure to realise that items 1 and 2 will both be short-lived.
8
We must end the. War on the poor. If US Corporations are that greedy, they must be nationalized. It’s sick that so many must work multiple jobs to survive. What ever happened to retirement and Unions? We must outlaw bribing Congressman! Our government is completely owned by Corporate lobbyists. There must be laws to end the system as it is. It does not serve the people anymore, and too many are suffering. Congressmen must be sent to prison if they’re caught taking bribes, and the bribers can share their cells. No train cars since 1981? We’ve lost our way. The pentagon announced they'd lost over 2 Trillion $. On Sept10 2001, knowing no one would notice the next day. The edifice is rotten to the core, and must come down.
2
To add to another comment below about tech CEOs behaving like feudal lords as they treat gig workers as serfs, a lot of industry stories are so bizarre that only someone thinking himself as a lord would dare attempt.
Two examples:
• owning a blood boy whose duty is to supply the CEO with fresh blood in an armchair transfusion whenever he feels tired
• owning a lunch girl whose duty is to spoon feed the CEO with his lunch so that all he has to do is masticate and swallow
Maybe a proper hanging of these feudal lords are in order. Beheading and flaying might work, too.
2
The worst thing that can happen to an independent (Rebel) is, to become domesticated.
1
cool story.
I will argue California law makers pretend to be liberal but they are incompetent at anything besides scoring political points. My business will be affected by this one size fits all contractor law and I pay my people way beyond minimum wage. The growth of my business has constantly been inhibited by outdated parking zoning regulations. I have not been able to lease a suitable location because I can't acquire enough parking. News flash city council there is NO parking in Los Angeles. These zoning laws are 25 years old. We should have a high speed train from LA to san fran and vegas. We should allow developers to build straight up with no parking in downtown LA near metro stops. Los Angeles recently allowed home owners to turn their garage into a rental unit which is something most homeowners wanted to do years ago but was prohibited. A fine example of how lawmakers won't keep up with shifting tides. The state is stuck in the 1980's. California is only progressive in ideology but not action. Traffic is a nightmare. You can't afford a 1 bed apartment if you make 60K a year. Public schools are a disaster. Nothing changes, it only gets worse everyday, and now the state wants to punish business owners. I constantly consider moving to a more business friendly environment. I encourage caring for the the less fortunate but don't slap together bills that will only cause confusion. Uber will dodge this law and everyone else will suffer. They announced their strategy. This is a show.
1
The California legislature is in bed with Labour. They love to kill innovation,efficiency,out of box thinkers.
They are also very naive and hypocrytical.
People who drive for uber or lyft do so voluntarily. In a way they are franchisees and certainly not employees. Many people drive to supplement their income. They have the freedom to choose when, where and how long they drive.
That will be all over now. Thanks to the so called "progressives".
1
“To Uber, the men and women who drive passengers in cars summoned with the company’s app do not count as its work force at all. Rather, they are its customers, according to the company’s securities filings.” This is ridiculous, and just an excuse for a company refusing to take care of its employees. Uber needs to get over itself. The fact that some tech guys started the company doesn’t change the fact that it is a TAXI company. And you can’t have a taxi company without drivers. Those drivers are their employees and should be paid as employees. Calling something part of the “Gig economy” doesn’t change what a business is in reality. If you need people to perform a job so that you can make money, then they are your employees.
5
The last thing that big government and big labor want are workers who are free, autonomous and have a market for their services, and so they are trying to crush the gig economy with regulation and restrictions. The idea of a free person waking up, deciding to sell their labor to other people using Uber, Lyft, Bellhops, Care, FancyHands,Etsy, eBay or any of dozens of others must keep both SEIU and CVS, Anthem, and WalMart up at night. The attacks on Uber in CA and elsewhere are attacks on the idea that one individual, can help another directly, with only an app between them, and cut out all the big business, big regulation in our lives. Don't let it happen!
1
The elephant in the room are the taxi unions, who write large checks to liberal candidates for just this kind of legislation. They've been trying to kill off the ride-share companies so we all have to go back to the miserable, overpriced taxis.
2
I saw an article where an HR person was moaning about how this law is a “huge social experiment” that will wreak havoc in the employment world. Wait, what? You mean you don’t think that commoditizing people’s work and disrupting whole industries at a time by exploiting the insecurity and inequality of our current economy isn’t a “huge social experiment”...?
5
If anyone wanted true insight into how a gig economy operates, they would’ve/should’ve spoken to musicians. We’ve been operating within that world, literally, since the dawn of civilization.
In addition to playing music we’ve also had “day jobs” and know that the gig economy is based on hustle. It’s also based on ups, downs, ebbs and flows. The beneficiaries of our work make way more money than we do (record labels, label execs, bookers, promoters, etc.) much like the dot com mavens in Silicon Valley. Musicians also know that such an economic model does not provide health insurance let alone sick days or a 401K.
The biggest difference is we musicians willingly enter this life fully aware of its ups, downs, successes and failures. The modern day gig economy was sold to the public as a viable alternative to traditional work. Now this is proving to be wrong - and is shocking people. Instead of The Economist, people could’ve ducked into the local jazz or rock club and asked the cats during their break “How does the gig economy work?” They would’ve told you all of this now suddenly surprising news.
109
@Patrick C Yeah, but music and the arts are honestly a luxury for most people who're looking to fulfil basic needs like food and shelter (and yes, I've made money from music when I was a student). So transportation I agree shouldn't be staffed by "temporary workers".
4
@Patrick C While your point is valid, the problem is musicians don't kill people. Gig workers who drive for Uber or Amazon (as cited in an NYT investigation) DO because they are improperly trained or not trained at all. And, like when Dominos used to have the 30 minutes or less delivery policy and pizza delivery people died or killed people, the drivers are under tremendous pressure to adhere to a time schedule.
9
This is so spot on. What’s old is new again.
2
These jobs are not really freelancing. Freelancing implies you get your own customers, provide your own work, etc.
Uber and the like do the marketing, sales, provide the technology, instruct the driver on the route to take and handle all the payments. That doesn't sound like a freelance worker to me.
3
No matter how hard academics try to erase the tawdry sounding "gig economy" with the far more respectable term: "platform economy", it's still just lipstick on a pig. A pig that challenges the notion that since business owners take the risk they should garner the lions share of the profits. The gig economy pushes risk down onto the shoulders of the workers. Sooner or later those workers will be voting for socialists.
This particular pig is an existential threat to the fat cats. Marie Antoinette didn't see it coming, do they?
58
So I recently purchased a black Camry to replace my car that was totaled in an accident. Not my fault BTW. Then read the article about the black camry being the choice for Uber drivers. My family got a kick out of me being all set for my "gig" job with a black camry. It's a great car and I can see why Uber drivers and others love it.
1
Driving Uber is grossly underpaid. Most people drop out after their cars start to fall apart. It is just plain common sense. You can't operate a motor vehicle for less than 60 cents per mile, and Uber rides are frequently less than 10 dollars and take 20 minutes or more to complete. What Uber relies on is continuously driving subcontractors cars into the ground and moving on to the next sucker.
5
There was a case before the Pennsylvania Supreme Court about an unemployed person working for Uber while looking for a new job. He was denied unemployment compensation because he was ruled a business owner. In Pennsylvania you can get partial benefits based on income.The arguments around this issue is at https://www.law.com/thelegalintelligencer/2019/09/11/weighing-uber-drivers-status-pa-justices-eye-unemployment-benefits-in-gig-economy/.
1
" Freelance workers available at a moment’s notice will reshape the nature of companies and the structure of careers,” said a 2015 subheading in The Economist. " Statements like these just demonstrate the total superficiality and lack of any analysis whatsoever in publications like the Economist. There is no such thing as the sharing economy and there never will be. It's just bandwagon reporting. No depth no questioning no analysis and whatever the next hot story on the economy is it will be reported about again with the same gushing superficial spoon fed pablum method as the last trend.
2
Better prop up the Sackler opiate empire if you think society is going to accept a reality with only fake jobs.
I hope Uber and Lyft pull out of California.
1
The “gig economy” huh? Make your own hours! Work as much as you want! Don’t be
a corporate drone! Freedom! The gig economy is just another name for working a grueling number of hours, getting paid a pittance, and not being offered benefits. When the bright, shiny new euphemism comes calling, watch out. You’re probably being played for a sucker.
3
@Marc If you are a true freelancer, then you are an entreprenuer. There's no need for a fake term like these people who do not market or sell and use a corporate tool to get their job done. At worst, they are contractors. At best, they are employees.
The stupid phrase "gig economy" can't die off fast enough. Only Americans would try to invent some catchy phrase for what the rest of the week just calls being poor and underemployed.
4
"That, in turn, helps explain the stark divide between the views of Uber executives and those of the labor unions and California lawmakers who want Uber’s drivers to become employees, not free-floating independent contractors."
Of course, let's not ask Uber and Lyft drivers what they want because they largely want the flexibility over health insurance. But the unions see a whole cascade of dues-paying members and the legislature sees a new source of taxes. But, let me tell you something: I am a nursing student. I can NOT work a scheduled job. If I were told when to work (which I would be as an employee, I'd be screwed. Further, this is what I signed up for. I love driving for Uber and Lyft. But, as usual, California never met a regulation it didn't like. So let me just say this: Please, please don't tell me the conditions under which I can make a living. After all, like any other driver, if I don't like it, I can leave it.
3
@Victor Then why not just call them employees with a flexible schedule? Uber provides the technology and even gives them the driving instructions. It acquires the customers and handles the payments. It does all the marketing.
All employees can quit if they prefer.
3
@David From you mouth to the California legislatures' ears. That's what most of us just want.
1
The price of all goods and services should reflect the cost of health care and minimal retirement and disability benefit (i.e. Social Security in this country) for all workers and providers. After that, let productivity, innovation, and good business models prevail. All else equal, businesses moving to other countries where they can avoid that justify tariffs.
1
@Charles Why would prices account for health care, retirement and disability when the seller and buyer are not promising any of these?
Wouldn't the cost of daily life be more significant? Housing, clothing, water, food, sanitation and of course paying taxes?
@David
We should let the markets determine the cost of clothing, water, food, sanitation and of course paying taxes while the buyer and seller are equal otherwise. The cost of universal healthcare partially covered as a tax (making it progressive) and, additionally, included in the costs of goods and services (making it consumption based) gives everyone a starting point. Your lifestyle, and its ensuant cost of living is, well, the American dream. We need to set universal healthcare and education as the provided staring point for everyone and figure out a way to pay for it.
1
It should be remembered that the California proposed law is the result of a California State Supreme Court decision regarding the test of what makes a worker an employee versus a contractor. The law to codify that decision was sponsored by California unions and put forward by Assemblywoman Gonzalez, who is a former union official from San Diego.
The proposed law is poorly crafted, as a result there have been so many exemptions incorporated into the law that it now resembles a brick of Swiss Cheese. The only people who have not been exempted it seems, are those who either did not have the influence or the money to get an exemption. As a result of this everyone associated with the bill is suing everyone else associated with the bill, and there is already a high dollar ($90 million) referendum in the works to overturn the bill.
There is no doubt that the gig economy has resulted in abuse of workers, and that some sort of protection is needed. It is also true as seen by the number of people working in the 'on demand' industry in either a large or small way, that the gig economy is filling a need. This proposed law unfortunately does not adequately address either issue. It should be sent back to the legislature with the instructions from the Governor "We need protections for our workers, but this bill is not it. Try again."
3
The number of individuals in the Gig economy grew by 50%, from 15 million to 23 million, we see in Figure 1 of the research done by Bret Collins for the IRS and quoted in this article. I find that interesting, as well as these facts:
"Surveys find that more than 30 percent of the workforce is engaged in some sort of freelance or gig work"
"Fully 86 percent of the expansion of the 1099 workforce is due to gig participants in the labor OPE with no other earnings from 1099 work"
In my opinion, we should take a pragmatic approach: those working full time (e.g. 40 hours a week) should be entitled to benefits. Those working a few hours can remain "independent".
1
@George Benaroya, why are only full-time workers entitled to benefits? For some, they don't have the option of working full-time because of family obligations. Does this mean they shouldn't be given the opportunity to get benefits like a 401(k), unemployment or healthcare? And what about the employers who would rather hire two people and give them part-time work than hire one person with full-time work just to avoid having to provide benefits.
Your solution really only works for business owners.
To be honest, gig work is just the latest way for the rich to use the slaves they have always required for their wealth.
8
@Brent Miller If it doesn't work for business owners, then it doesn't work at all.
@Brent Miller
Where I work there is a union. Full timers get the most benefits, but part-time also get some benefits. They are paid for snow days closing if they were scheduled to work, they get some vacation/personal time off, they can contribute to a 403b, etc. I think that's the way it should be.
2
Regulations to even the power equation between companies such as Uber and gig employees are certainly necessary. The question remains is whether this can be achieved by attempts to shoe horn the gig economy into a traditional industrial model. Is it possible to retain the independence and mobility of gig workers and provide protection? The confusion surrounding CA attempt may in part be due to legacy interests on one side and gig companies on the other without a comprehensive hearing from the gig workers themselves. As our economy becomes increasingly service oriented, gig companies will continue to grow. And public policy will continue to evolve.
3
@van schayk You could educate your populace so they make good decisions for their lives and not depend on central planners to authorize their lives and choices.
Many of the issues of employee versus independent contractor arise because companies are expected to pay for a raft of services for employees. If the govt offered insurance and a 6 month unemployment, the lines between employee and independent contractor should disappear. Employers who are responsible for health insurance, workers comp insurance, unemployment, etc, are naturally going to look for ways to avoid those costs.
4
@Chris Mcc Government is free to provide benefits at taxpayer expense. It should focus on itself, and not demand that others do what they want done.
Business is designed to pay you for the services provided. All else is not their concern, and that concern should be handled by government.
After all, water, housing, clothing and food are far more "requirements" for life than health insurance and unemployment insurance.
Uber is not a market, but a digital platform. The real market for drivers occurs when they can easily work for all the digital platforms at the same time: Door Dash, Postmates, Caviar, Lyft, etc. Then market forces are working for the driver and they have access to the total supply of delivery jobs, not just the slice that one company has captured. Unsurprisingly, each company takes shady, downright distopian steps to prevent a driver from working for more than one platform.
7
But of course the one step that almost all these companies do not take is...to make their drivers employees instead of contractors. That says it all.
11
shady, yes. I dread so cold updates to the app of Lyft and Uber, which I drive for, because they tend to do some shady irritating thing to block the other. for example we were has a little icon that would appear over the lift icon that you have to press to accept the ride. The competition is good. to an extent. but the app updates require more clicking more attention to your phone while you're driving. it's downright dangerous all the involvement they want from driver. please be careful pedestrians. we're not looking at the road as much as we used to because we're trying to get up to that gold standard $15 an hour.
8
sorry. I'm the writer of this. I was using a voice app and failed to proofread. thanks if you tried to read it LOL
1
1) If gig economy companies (particularly Uber who started all this to begin with) had not been so greedy from the beginning, they would have adopted less controversial approaches to the workforce they need to operate. Instead, they put all the burden on the workforce.. and eventually the resulting blow-back results, followed by government stepping in to correct the abuses. Instead, Uber, and subsequent followers in the gig economy, looked at free cars (the owner carries all the burden) and contract labor (with no ability on the part of the contractor to actually negotiate terms and fees) as a windfall for the company.. and went for it. This approach also gives the company a dodge on any liability involved with their business.
2) If the gig economy cannot survive effectively under an umbrella of more normal (fair) labor practices and compensation, then it was simply some derivative of a ponzi type scheme to begin with.. where the company abuses the labor force for company gain and does not give two cents about the labor force.
26
@Chuck What you call "normal labor practices" are in fact a modern invention.
Regardless of whether rideshare services continue to exist in their current form, workers lacking specialized skills who can't lift 50 pounds for hours on end are still going to have a hard time. Much less visible are the now-threatened middle class desk workers who have always relied on the friction inherent in transportation management to put food on the table. It's taxi dispatchers and freight brokers who are losing the most from Uberization.
3
Things I'd like to know about Uber and Lyft: adequate driver training, what type of insurance do they need to have, and how many customers tip them and at what percentage. Don't forget these drivers have to pay for their own cars and upkeep on them: not cheap.
5
The "gig economy" is simply a euphemism for worker exploitation. As long as labor remains a business's biggest expense it will seek ways to minimize and eliminate that expense.
With classic capitalism excess profits were reinvested to expand the business, hire more workers and serve more customers. Modern capitalism exists to serve investors at the expense of workers and customers. The delicate balance that once existed between worker and capitalist has shifted greatly toward capitalists, w/ assistance from Republicans. It's time to rebalance the scales.
Warren 2020
44
@Aristotle
Well Stated!
@Aristotle The gig economy resembles COBRA health insurance coverage. It can work as a temporary stopgap income but it doesn't suffice as a permanent solution. Anybody who believes employers when they attempt to mobilize worker support for the gig economy as in the worker's interest is smoking too much dope, legal or not.
3
@Aristotle So your proposed solution is to increase the costs and hassles of employing people?
I wonder how many commenters (or author of article) have actually used UBER and more importantly Talked to the drivers.
I travel to LA monthly and used to rent a car but now I use Uber, and so talk with 8 or so drivers per trip. I've been taking my own poll of sorts to learn about why they drive, how often, what else they do, and do they like it?
Overwhelmingly, the Reason they do it is for the Freedom it allows them, whether doing it "full time" or "part time". Most drive part time and are happier about it than full time drivers, but these switched because, even if not more money than previous job, the Freedom tipped the scales. They could spend more time with kids, for example, a top benefit.
The Majority, Part Time drivers use the opportunity to make extra money for a zillion reasons, all of them meaningful to them. Even something as random as driving for a few months to remodel a bathroom. Some do it just to get out of the house and talk to people. ("Otherwise I'd just be home watching TV"-- an older gentlemen in West Covina).
Depending on When they drive the pay can be good--weekends, evening, holidays. Many drivers would rather work on New Years eve and make 500.00. But pay has been incrementally reduced since the beginning. The fact that Uber went public will again decrease pay because shareholders want earnings, and there isn't enough to go around.
Now the new California law.
I'll be asking how this affects them.
I wonder if the lawmakers will.
18
I'll do you one better- I've been driving for 3 years in the gig economy full-time. The flexibility is great, but the pay has rapidly decreased in that timespan, so now I work 6-7 days a week.
If these companies want to promote the benefits of flexible part-time jobs, then they shouldn't allow any workers to work more than 15 hours a week on the platform. Right now they rely on exploiting desperate full-time workers to provide the service and the ability for people with better full-time jobs to have flexibility side-gig.
10
Just wondering what’s behind the random capitalization in your comment.
2
@Beth Barror
What makes you think that these drivers are telling you the truth?
Does any worker trash the company they work for to clients, especially while they're on the job?
Do you go into a Whole Foods and expect the workers to disclose the changed worked conditions that resulted from the Amazon takeover?
4
"Gig Economy" is a buzzword created by the likes of Uber and Lyft to hide what it is really about. It isn't about freedom (as they like to say it), it isn't about benefits that preserve basic human dignity (which they like to forget). It is about making some extra cash which is ok to finance a newer phone but perhaps not enough or consistent to live your life with basic dignity.
Uber (and Lyft) like to call themselves transportation platforms not ride hailing companies -- that is how much they care about the gig economy they have created.
Perhaps the silver lining in all this is that the enormous amount of investor cash that Uber and Lyft spent on subsidizing our rides went to the consumers pockets.
There is no evidence that Uber/Lyft saw their drivers as asset. Their whole system is setup to pinch pennies out of the drivers without raising too many eyebrows. And yes, we the consumers (including myself) are very very good at forgetting pesky moral questions when we need a ride.
20
"Business has been on a multi-decade campaign to shift more economic risk from its balance sheet onto its work force — through de-unionization, routine use of layoffs, outsourcing and the use of independent contractors."
In other words, businesses are reacting rationally to external difficulties often created by governments.
5
@Gerry Professor Yes, and government can provide the basics if they'd own up to taxing for the benefits they pretend they demand businesses provide instead.
I'm quoting here from a paragraph in this informative column:
"Business has been on a multidecade campaign to shift more economic risk from its balance sheet onto its work force — through de-unionization, routine use of layoffs, outsourcing and the use of independent contractors."
This information set out above is apparent all around, but having it put succinctly in this paragraph was helpful to me in confirming my conviction that this approach to life in the First World is simply WRONG. It's the haves clearly exploiting and abusing the have-nots.
If this is capitalism, then it's time for us to lean to socialism to help us create a more humane world. I understand that "socialism" is a touchstone word, and a frightening one to many people who cling to "capitalism". It's time for people to rethink our most basic values. I am trying to do that.
28
@Judith It's not capitalism when government sets the price, sets the benefits, sets the schedules....
I know many folks that are “permanent contractors.” They prefer the arrangement the way it is.
They source their own Insurance, fund their own retirement, pay the employer’s-side taxes themselves, and accept a higher top line compensation in return.
Should they not be allowed to do this?
4
@Adam Of course. If they meet the legal requirement in that state for being a contractor they can do it. Companies like Uber and Lyft are just trying to skirt labor laws in order to make higher profits.
31
@Adam Under normal contractor practices, the contractor and the company negotiate and sign a term contract that stipulates what they will do and what they will receive in compensation accordingly.
Under the gig economy... the company does not do this, and in fact constantly adjusts fees (compensation) hourly as demand conditions fluctuate, and to fight off competitors. This gives the "contractor" in a gig economy scenario zero control of the contract terms for compensation.
Two very different scenarios... and this distinction needs to be made when discussing the use of the term "contractor" where the gig economy is concerned.
12
@mike
Exactly correct. These companies are exploiting the term "contractor" in their favor and at the detriment of the drivers.
8
“used primarily as a side hustle for people whose main household earnings come from a more stable type of job.”
This is just insulting to these workers. Calling this work a side hustle ignores the elephant in the room, their ‘stable day jobs’ aren’t livable wages. If most workers need a ‘side hustle’ to cover essentials then our economy is failing all of us.
167
Agreed. I am a two job worker myself. Most of my coworkers at the second job also work two jobs, including the college students. This is especially true in certain parts of the country.
13
@Michael
Their stable day jobs aren't livable wages in most Blue cities, that's for sure.
4
@Michael Or perhaps they want more money than their skills provide in a single job?
1
Mr. Irwin wrote:
"Business has been on a multidecade campaign to shift more economic risk from its balance sheet onto its work force — through de-unionization, routine use of layoffs, outsourcing and the use of independent contractors."
I practically stopped dead when I saw this casual observation made near the end of this article, because it encapsulates the dominant reality of my economic life. Yet it seems so rarely highlighted or spoken about so plainly or directly.
"Layoff culture," as I call it, has become so normalized over the last 30+ years that it barely seems worthy of mention.
It strikes me as a major source of economic, cultural and personal despair. And as the central most corrosive provocation of income equality, where one can get glimpses of people who aren't devastated by a layoff, evidently because of such a robust cushion of wealth. Which is as demoralizing a way of being divided into haves and have nots as there is.
The workplace can be a great equalizer, where we can be side by side with people a little better off and a little less well off. And lets us befriend and support each other. But the overhang and specter of the possibility of layoff never lets us feel secure.
I miss that sense of security. At the start of my career (mid-1980s), re-training rather than firing seemed a more common ethos. You could almost assume that's what would happen if the business or technology shifted.
73
@N R
My father a UAW member 1950s and 60s. Life persistently interrupted by strikes and layoffs. Nothing new today--except that many people more mobile. After a plant closing, my father commuted 2 hours each way for four years until a new plant opened in our city.
That plant also closed, subsequently.
If we as consumers want free choice, no business is guaranteed to continue operating as it had been.
Of course, consumer choice does not account for all disruptions, but certainly more than typically reported.
1
@Gerry Professor
"consumer choice".....
This is often the excuse used to justify the fact that Americans do not want to pay the fair price for the goods and services they purchase. The price of goods and services should reflect the cost of health care and minimal retirement and disability benefit (i.e. Social Security in this country) for all workers and providers. The gig economy, for many, is nothing other than an "American sweatshop". There is plenty of "let them eat cake-itis" in this country.
5
This is one ugly result of the financialization of our economy. Maybe Yang is not so crazy after all. Last one out,please turn out the lights.
6
It seems to me that the only people really benefiting from Uber’s Ayn Rand experiment besides the founders and few early in investors is the car companies that sold far more cars than they would have otherwise .
In fact, it makes wonder if the real reason for this company’s continued existence when most people can see it for the pipe dream that it is is Big Auto’s investment in an idea that is so addictive to people that it would break public transportation once and for all
11
@Dani Weber
Ayn Rand has done more to damage this society with her economic ideas that just enable corporations to destroy humanity.
Her economic positions have been shown to be a hoax but the white conservatives love to believe in anything that enacts them to hold onto power.
@Dani Weber
Not really. Some of the car companies actually have plans to draw the business away from gig economy companies... via autonomous driving technology and their own ride share business units.
No... this is simply an exploitation of normal contractor practices and laws for the benefit of the bottom line of the company running the service.
That Uber and Lyft still are not profitable when their drivers are on average making minimum wage or less just shows are poorly these companies were designed.
62
@Paul
Venture capitalist can pour money into anything that will break unions but cant pour money into start ups to address climate change, dementia, . The wall street way .
4
You could say just the same things about Madoff Investments and you would be just as right and for the same reasons. Companies like Uber and Lyft are not companies, they are grifts.
3
@Paul,
Profits were never the point. The point was always to claim that they were a "tech" company, not a boring old transportation provider, so they could have a ridiculously-high pre-IPO private valuation. Then once they went public, the insiders would cash out and make a ton of money. Which they did. What happens after IPO really didn't matter once the real money was made.
That the stock prices of both Uber and Lyft are foundering well below the IPO level tells you that current investors think the whole business plan is not sustainable. The people who bought at IPO are way underwater and there's no reason to expect that the share prices will ever recover.
6
Economy supposed to give workers earning and additional income / support towards bad times.
Economy or a participants can't survive at this thin contractor role where there is bare bone income even though a worker works the same way.
11
“many people use the gig work to survive difficult financial moments in their lives — such as being laid off or having their hours cut in a more traditional job.”
In my community, my city, this is not a novel concept. When the factories were laying off forty years ago, we young factory workers were doing the same thing, picking apples, selling door-to-door, anything, to keep the income stream flowing.
It is not surprising that low-pay no benefit gig work has wormed its’ way into our society. Cheap employers love this stuff in bad times.
Yes, Uber employees are just that, employees. They are not contractors. I’d walk before I’d Uber, as long as Uber treats them as contractors.
53
The biggest thing holding back the gig economy is health insurance. If we are able to provide health insurance to every American at an equivalent cost and quality as can be found in corporate America the gig economy will flourish.
20
Agree!
@TK Health insurance would help, no doubt. However, in the specific instance of Uber, there are lots of other expenses carried by the driver: gas, vehicle maintenance and repairs, vehicle insurance, the employer side of payroll taxes, footing vacation/sick time. I do not know how any driver makes a living wage, although a lot of drivers don't realize how little they actually make until they are hit with taxes at year end or expensive vehicle repairs. It's easy to get pulled in by the cash flow, particularly given the ability to cash out throughout the day.
All that aside, most of the Uber drivers with whom I have spoken value the flexibility of the schedule. There are those who would choose that flexibility over the benefits of being regimented employees.
In the long run, not sure the Uber business model will support the obligations toward employee drivers.
1
I had my own very successful consulting business for over 21 years and during that entire time, all the people who worked for me were on a W2 basis, where I ran payrolls, withheld Federal and State taxes, FICA, Medicare and Unemployment, and included them in my general business and worker's compensation insurance.
One of our close friends recently let us know that her "significant other" had been working "under the table" for a company now for over eight years. So, for all that time, you and I have been paying their taxes, both the "significant other" and the employer, who somehow hasn't been audited to find huge sums coming from their "petty cash" accounts. I've been thinking of turning the company in to the IRS. Unfortunately for the "significant other", he's got over eight years he's not contributing to Social Security, and let's just say, I don't think he has an "investment portfolio" built for his retirement.
One of my friends let me know he started to drive for Uber a few months ago. I had to let him know that he should sequester a healthy percentage into savings, so when he does his taxes, he can pay the "self employment" tax.
55
It's about the money. How to make it and how to avoid taxes.
It's also about avoiding regulatory agencies that dictate how to do business.
17
The writer doesn't seem to factor in two things. The so-called 'gig' economy (and every class war needs a cutesy name) steals worker time by forcing labor previously paid for by the company - for instance, supermarket cashiering - onto the customer. This time-theft happens every time we're put on hold, forced to use inefficient automated systems that use our time while saving them money, or forced to take 30 minutes to register in yet another online system just to download our transcripts from an online system (printing also at our expense) when the same task was previously accomplished in a 3-minute phone call to a human. All the
profits accrue to them only with their theft of our time.
Second is the expense that gigged taxpayers also pick up, of the health care, emergency services, police services, housing costs, and other extraordinary expenses of an economy with an burgeoning underclass. The profits are skimmed by the capitalists in their enclaves while the costs of this economy, truly a last gasp of vulture capitalism, are borne by the increasingly poor middle class. The wealthy never learn from history, perhaps because their housekeeper and tutor did their homework and their parents bought their way into college.
205
@Sara
Well stated.
This is a subtle, seductive process that we're lead into. The "paperless" billing system saves the investors money, not the customer. Where is the real "customer service?" It is shareholder service, strictly!
69
@Sara
Paying people to do self serving through lower prices or more stores or more store hours (and thus less travel time to a store or waiting in line) is part of the economy improving.
Standing in front of a cashier is slightly faster than self-checkout most of the time, but that time difference is so trivial that few people care (Bill Burr has an entertaining dissent on this topic). That cashier becomes free to do something more productive either at the store or at another endeavor.
The problem is not that the gig workers are deluded into thinking their gig is a career, it is that they pressure the earning power of people who previously thought their job was a career and have organized their lives around their work.
I suspect regulating price will be extremely difficult in this arena, but perhaps regulating quantity is worth considering. It is less of a free-marketish approach than a free-for-all, but, to borrow logic applied to power generation, permanent employees can be expected to fulfill baseload demand while part-time and contract work can mean demand spikes. Yes, this cuts down on the earning power of the baseload operators and the temp agencies, but it protects the livelihoods of many in both groups with only a modest extra burden to consumers. In short, it may be sustainable.
5
I don't see lower prices as a result of self-checkout systems. I would like to get a discount for scanning my own groceries. Removing staff and making me do the work is only helping profits.
125
Uberization of labor privatizes profit to the owner of the platform, devalues the actual service in favor of the platform, and socializes the costs of the service - from insurance, personnel liability, safety, training and supervision. It shifts the cost of the work, the cost of assets to the worker, while ignoring all costs of safety to the customer.
Putting a hitch in the ability of a company to thrive under that set of rules is good policy.
And a hitch is needed, because more firms will use the model to reduce costs. Think Amazon and other internet seller deliveries, moving to contract out the delivery to the first person who responds to the platform's notification.
There has always been a conflicting relationship between where value is created - with capital or with labor. The "gig economy" answers the question clearly. Labor is expendable, the asset wins.
33
These applications don't create employment relationships between drivers and the app company anymore than between the riders and the app company. The Uber and Lyft apps, Airbnb, Ebay, any auction or electronic exchange site, merely creates a marketplace for buyers and sellers of goods and services. None of these activities are wage jobs or gigs but rather opportunities for independent business people to either earn money by providing a commodity or service or to purchase same. If I'm selling or buying bond or stock index futures, say, on the CME platform, does this now imply an employment relationship? Of course not. The rideshare apps function similarly. The app, like the CME electronic platform, gives me a price quote on the ride and I can either fill that order, accept the ride, or take the bus.
9
@Frunobulax
Yes, the do create employment relationships.
For Uber to have a mere marketplace relationship with the drivers, the payments would all go directly to the drivers, who would then remit whatever commission owed to Uber.
7
Not really. That there are clearing, settlement, and payment transfer functions for transactions doesn't help in the employee/contractor argument. The analysis focuses more on issues of control over the worker. If their hours were set, the specific car was mandated and owned by the company, if they were prohibited from working for a competitor, if they had to wear uniforms, if these factors existed the employee argument gets better.
1
It doesn’t give you a quote until you accept the request. So you say yes to something without knowing the price you will receive.
1
Uber is only survivable as a company if it can switch from human drivers to UAV’s. Their entire business model is built on replacing capital with labor. Try replacing labor with capital (invest in self driving cars) without violating anyone’s patents or IP. Put the risk where it belongs: with investors, not workers.
7
@Jeffrey Schantz
If they have to license the cars from someone else, which of course they will, what does Uber bring to the table?
Either the license fees and other costs will eat all of their profits, or the producer of the cars and/or guidance systems will make their own taxi app and Uber shares will take their rightful place at the bottom of bird cages.
I find it shocking that Mr Irwin in his essay on the "gig economy" would fail to point out the essence of that "economy": the exploitation of workers by major corporations by denying them minimum wage, failing to pay the employer's contribution to Social Security, refusing to offer healthcare, or for that matter, depriving them of the right to organize and bargain collectively for better wages and working conditions.
Indeed, Mr Irwin quotes Professor Koustas's claim that workers use their gig work "to survive difficult financial moments in their lives.." What he fails to point out is how the gig economy is creating those "difficult financial moments" by incentivizing corporations to fire regular employees and hire those gig workers in the first place.
Mr Irwin claims that gig jobs "could make a part-time job at Walmart more competitive with app-based work in which workers set their own hours." Yet Mr Irwin fails to point out that Walmart exploits low-wage labor, and has permanently closed stores whose workers voted for a union.
It is long past due for The Upshot to begin publishing essays from the other side: from those who advocate for labor, from those who understand and will advocate for universal health care. The Upshot today reads as a newsletter from the American Chamber of Commerce.
237
What's not mentioned is that many of the tech giants here in Silicon Valley were also treating their highly trained engineers and others as contract workers. Google and others have vast numbers of people who work on their campuses who are not permanent employees. AirBnB fired something like half of its white collar staff when they realized they could get away with treating them the way UBER treats its drivers. It was no surprise that we in California finally saw where this was heading and past a law to clarify a state supreme court ruling that defines who is and isn't an employee. There was nothing new about the "gig" economy, it was just the old 19th century piece work economy that our ancestors fought to end with the 40 hour work week, sick leave and unemployment.
297
Part of the main problem is that normal jobs are not paying enough, taking extreme profits instead, Uber and Lyft do the same thing, when more than half of the pay goes t the company and nada for insurance, car maintenance or gasoline in the charge, just the driver time, and then low-balled at that.
Real Wages have nowhere near kept up with CEO or even inflation, and many people depend on these for a Primary job, not just a secondary.
I think the writer belongs in the upper classes and has no clue as to the real conditions on the ground of struggling just to survive, let alone catch up or, god forbid, ever get Ahead of things.
Uber and Lyft would do great to limit their profit taking from the drivers to only 5 to 7% of the actual bill, leaving most for the driver. Uber does not have to pay tons of people to do the booking, that being done on computer and the drivers themselves, so the Main Company does no have huge costs, they undercut the drivers who DO have larger costs of Insurance, licensing and fuel, let alone wear and tear on the car.
Treating their divers as customers, instead of their primary workforce, is these people's major fault: They are trying to take people's money for them actually doing nothing other than hosting a platform that connects rides to drivers. But with all the rules and regulations the Driver has to follow, and all the costs, the drivers are cheated badly and the riders overcharged.
People are not 'hours' to be used and underpaid for Profit.
96
Uber/Lyft are still losing billions of dollars. Developing and maintaining a large scale app is hugely expensive. Otherwise everyone would do it.
9
@Practical Thoughts
Uber was always nothing more than hype. They are a cab company. End of story. Yet people invested billions. And their costs are not just practical. The spend big dollars fighting regulations around the world. I don’t know the break down, but I am curious about what percentage of their annual costs go to development. Not management or marketing or research for self-driving cars. Just app development. I would guess less than you think.
26
@Practical Thoughts, "Developing and maintaining a large scale app is hugely expensive. Otherwise everyone would do it."
Actually, you way overstate the costs and you understate the greed.
Every local taxi company now has an app that basically replaces the phone call to the dispatcher. What Uber and Lyft do is nothing special and is easily replicated. (This is why both companies claim to be pushing for autonomous vehicles; they know their taxi business is not sustainable.)
4
You have to ask why anyone would accept a job in the gig economy. If the answer is that they had no better options, then destroying the gig economy will also destroy the jobs thereby created.
People need to recognize that companies see labor as an expense to be minimized. Making it harder and more expensive to hire someone will result in fewer jobs being created, especially where no specific skills are required. Note the increased used of tablets to place orders at restaurants replacing human workers. That's a trend that will continue as long as technology is cheaper than human labor.
13
@J. Waddell If it were the case that making it "more expensive to hire someone will result in fewer jobs being created," then the European Union should be an economic basket case; it's not. Instead, Europe is a vibrant economy with little overt poverty, where McDonald's workers in Denmark receive $20 per hour, plus retirement benefits and full healthcare coverage.
The truth is that corporate profits have captured the largest share of the economy ever at the expense of the American worker.
This is not economic truth, but instead Republican strategy to make as many Americans as poor as they possibly can while enriching the plutocrats and big corporations.
56
But if the workers just a commodity for businesses, the companies still need to pay the cost to produce and sustain this commodity, that is a living. If business could not pay the cost the model is not sustainable, and requires new model to address thin unsustainability.
6
@Sean
When we ere I Sidney Australia a few years ago, t price of a Mac was $7.95. With those prices they can afford to pay more.
For me, that kind of pricing will keep me out of McDonalds forever.
3
Any employer would like to have available an unlimited supply of workers who could be brought in by the day (or hour) for lowest possible wage and no benefits.
We need to recognize that, simply stated, this is wrong. The end result is the creation of a two class system. On the top are the feudal lords and on the bottom are the serfs.
Even the lords should realize that this system cannot last forever, as in 1789 France and 1917 Russia. And when it ends it will end very, very badly for them.
165
@John Graybeard
It wi end with the end of the federal reserve system in the US in the next bail out
@John Graybeard
Construction Industry now operates this way as the norm.
Go down to Home Depot or Lowes very early in the morning on a workday and see all the workers lined up hoping to be chosen to work for that DAY!
3
@John Graybeard The point is people wouldn’t work these jobs if it wasn’t beneficial to them. Maybe treat people like adults and stop trying to control every facet of American life?
2
I am not defending companies like Uber. However, I have known a couple of young retirees who drive when they want to, a couple of days a week. For them, its worked well. The same is true for students. The challenge will be to find a way to make flexible gig work available for those in circumstances who really want to do it, without exploiting those in need of full time employment.
21
@Lawyermom
I've always loved this conservative rationale about underpaying people because "they don't really need the money" or are in social cohorts that somehow, like seniors or students, exist in some fantasy category of semi-dependence and should therefore be underpaid.
Denigrating the labor of a few denigrates the labor of everyone and suppresses all wages. "Flexibility" or whatever desirable qualities you rationalize about "gig work" doesn't give anyone the right to exploit and underpay.
48
The point, which you missed, is that by definition these companies are not under paying workers, when workers are willing to work for those wages.
1
@Lawyermom,
Anecdote is not evidence. I'm sure everyone has a "friend" who drives Uber for beer money. But the majority of drivers do it because there are few better options available.
2
The "gig" economy is not the real problem. The real problem is the "permanent contractors" who do the exact same work as their co-workers but receive no vacation, no paid holidays, no 401K match, no job security. See most every adjunct, thousands at Google, Amazon, most big firms in America. This is the real problem.
362
@Sarah99
Sarah, there's a big difference between contractors and gig workers. Contractors work for companies. They're W-2. They pay taxes and are paid overtime, when appropriate. Gig workers get zero. Paid under the table. Zero workers' protections.
I gladly worked as a contractor for about a decade. I was paid much more than the "full time" people. I was also paid by hour, where the "full time" people had to work 50+ hours/week, with no additional pay.
Contractors and gig workers are very different situations.
9
It is not true. Contractors are not W2 workers, they are 1099 workers who pays their own taxes (including as and medicare) and do not entitle to companies benefits.
45
@Frank Perhaps what you say is true for some contractors, but that has generally not been my experience, from either side of that fence. For example, I am contracting in high tech right now. I get no benefits, no W-2, no overtime or PTO. I'm paid hourly. I pay my own payroll taxes and am responsible for my own health insurance. I certainly am not facing the same struggles as a gig worker since my hourly wage is high and my skills are in demand, but don't kid yourself that contractors are "like" employees.
61
The current gig apps is like a version 2.0. This is not the idealized final version.
The gig companies are in a race to establish market share and brand awareness. These industries only become profitable with automation and robotics. Technologies that are maybe 10 years away. The gig economy, at the low end, won’t need very many people.
These are temporary jobs/phenomena. They are developing the brand using the tech available today. Over time, you won’t have to worry about workers being exploited. They won’t need them.
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@Practical Thoughts
You do realize that once they get market share they start hiring workers for their own gig - to develop app enhancements!
Tech 'gig' workers have been around a long time, are called 'consultants' and are just paid more (if American) than the app worker. I did that for the last 10 years of my tech career (retired now at 77) and earned between $75 and $110 and hour, working 40 hr weeks. Now I occasionally fill in, working at home for a short time, for employees at companies I previously worked for.
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@Sand,
Coders and programmers are “high end” gig workers. $75 to $110 per hour is still close to $4k per week and you are working at home, in Tennessee? You are not the concern. It’s the common man and woman driving their car around town to earn a couple hundred a week.
From what I hear, there are shortages of programmers and computer scientists. There is no shortage of people driving around town. Hence the pay differences.
Everyone talks about how employers seek to exploit their workers, nobody talks about China. In the long run wages for low skill work will be set by China with its almost limitless supply of cheap labor; in the end, low skilled work everywhere will be paid at that rate. To the extent that we resist that trend we hurt our own economy and cede world economic hegemony to the Chinese.
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@Ronald B. Duke
But according to what I am reading even China is trying to out source to other countries like Thailand. Low wage hunting employers keep finding more desperate communities. When I was a business student we were taught to use linear programming to minimize production cost.
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@Anon; Yes; wages should only go up when employers cannot find workers willing to work for whatever they offer. If workers can be found at that rate then wages are not too low.
1
Ronald,
America has to upgrade its citizens for the 21st century. Not chase professions from 50 and 100 years ago. Most manufacturing is being automated, even in China. So manufacturing will return to the markets of consumption once logistics and inventory costs exceed labor/automation costs.
Americans are cheap. They don’t want to spend the money to upgrade our educational system and approach. That’s the salvation. Doing higher level work.
In 1900 you didn’t have to be literate to hold a decent job. Today, illiteracy is almost a guarantee of poverty. There were few if any computers doing anything other than word processing and data entry from the 1950s to the 1970s. Today, computers are in almost every conceivable system from RFID in retail to sensors in water utility systems. The ability to fix computers and machines have created millions of new jobs and revolutionized other industries.
But you have to know some math today. You’ve got to be able to read, understand and act on information with limited supervision. You have to adapt to technological change. Don’t have enough trades people, engineers, scientists, teachers, technicians and in many cases have to depend on immigration to get them. We are lazy.
Update your K-12 everywhere and change the curriculum for the jobs of the mid-21st and early 22nd century. Not hand wringing over competing for low skilled jobs from uneducated peasants in 3rd world countries. People are exploiting space tech now. Time to grow up.
The gig economy seems to be close to operating at its marginal utility with diminishing returns kicking in. The race to bottom in the share of labour’s return, in the form of ever declining wages would have had to stop anyways. That would have put the brakes on consumption and the resulting economic growth. How does one make subsistence wages and keep strong consumption going? Govts and Cities are probably realizing this early. If it’s inhabitants don’t have wages and they don’t consume, they are probably feeling the pinch of it too. Better to ensure the certainty of incomes of its inhabitants and keep the economy alive.
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Excellent point. I made the same one to a local grocery store chain, all of which are cutting staffing to the bone and turning customers into inefficient cashiers. If no one is working who can buy your groceries? Robots? I get wanting to trim labor costs; but give self-serve customers a little discount, then it's a win-win.
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The market will determine the wages and compensation, not laws. If the cost of an Uber ride increases, people will opt to use public transit, walk, bike, take their own vehicles or not travel at all.
Gig apps are not utilities like water or electricity. Nor are they providing a product or service generating huge net profits. Like the article says, when cost goes up people use less. Gig jobs are very elastic.
Laws will not make a big impact. Society will still be left with the challenge of providing affordable point to point transportation and dealing with the underemployment of gig workers.
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@Practical Thoughts. The problem is the financial model. They are just a communication platform but they are taking 50% of the revenue. Typical agent agreements usually give the agent less than 20%. Lyft and Uber have created a userus model. Dog walkers and house sitters don’t have to worry about capital investments, their energy and common sense is their capital. Drivers must purchase, maintain, and insure the vehicle- a costly process in most places.
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@Jean,
Developing the application, testing, maintaining and rolling out is hugely expensive. There is only so much a person is willing to pay for transportation. We are talking about personal chauffeurs. How much money is there to truly go around? No one was happy with the taxi model. Otherwise these apps would have never taken off.
The only way to get the cost down is to take the human driver out of the equation. A robot/automated car can work 24x7. Once this is perfected, Uber Drivers, Fed Ec Delivery, Food Delivery Drivers and Pickers will no longer be needed in dense metro areas.
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@Practical Thoughts. If the cost of a product or service increases, it's only natural that working folks will look to other options to lessen such an impact. Of course, if the wages and compensation of working folks are such that such an increase in a product or service will adversely affect them, this is only natural. As the article says, most of these 'gig economy' jobs are basically side jobs to supplement the [relatively low] wages of working folks. In an economy like the US, where most growth is as a result of consumption, the market alone will and cannot determine wages and compensation. That is why we have minimum wage laws that have been established by gov't. If working folks have more in the way of disposable income, positive economic growth is a beneficiary. Also, more disposable income helps to [better] cushion the impact of an increase in the price/cost of a product or service. Folks having to work two or three jobs to make ends meet in a supposedly 'affluent society' such as the US says what exactly?
10
It’s the Wild West out there in this Tech economy. A Lyft driver told me they only get to keep 50 percent of the fee. Fifty percent! And because they are not employees, there are no benefits or company liability in the event of an accident. Not a bad deal for the employer. That will change as more people rely on these jobs for full time employment and realize they’re being exploited.
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Companies like Uber would appear to have read their Samuel Clemens. The gig economy is just another version of Tom Sawyer, in chapter two of the Adventures of same, convincing first Jim (stopped by Aunt Polly) and next Ben - then other marks - of the art and joys of fence-painting. At the end of the day, Tom is rested and much wealthier, and the picket fence is whitewashed by the time, sweat and labors of others.
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@Laurence Ballard
Every time I read that book, I am amazed at how relevant and current it remains. It seems to be a timeless satire of America. It puzzles me why we cannot rise above it’s clear criticisms.
11
In a giant economy there is room for true entrepreneurs as well as those who just want short term work or a side job for some extra money. But to seek to gradually eat away at traditional employment wages and benefits from the bulk of the working public in any civilized country, denying people the opportunity to live a decent life, is nothing more than corporate greed run amok. It is also unsustainable, will destabilize the country, and a recipe for a revolution. It is beginning to look more and more like a return to taxing extreme wealth more fairly would amount to an intervention on behalf of people addicted to greed, and a public service to all. These corporations, and the people in control of them, have become misanthrops.
233
@GMR
Well said, GMR. As wealth has concentrated in the US, the concentrators continue to overreach until the differences become so egregious that either the government responds or the people respond directly with the guillotines. We are still not certain which it will be in the US, but I am looking into guillotine designs just in case.
8
@GMR
so you believe that companies have some obligation to YOUR chosen standard of living.
That is not the case, not the law, and not the way business has ever in the history of business ever functioned.
A businesses function is to sell its product, whatever that product is.
Personnel are tools to make that happen.
If you, the tool, don't like the compensation offered it is on you to find a different situation that does.
That may mean moving, going to different industry, working more, starting your own company, or getting better skills or education.
Those are your choices to make or not make. What you don't get to do is tell your employer that they must raise your standard of living by reducing their profit or raising their costs.
what you call "traditional" benefits and employment are factors based on the economic changes post WWII. Changes that were temporary as more workers demanded more and more from employers.
Today's workers try and insist they are entitled to be paid more for less work.
They are consistently unhappy with the rate they agreed to.
They like to claim the employer must change but that they themselves don't have to.
They are wrong.
It is up to the individual to keep their skills up and to take advantage of options, like moving to a new area, if they want to remain competitive in their employment market.
If the individual is not willing to take responsibility for their own future, I have little empathy when their income decreases.
"an improving economy has made more traditional jobs more plentiful"
The gig economy was always survival jobs, what people do when they must in a bad economy.
Our opinion leaders just refused to acknowledge that the economy was that bad. Instead, they saw desperation as a new and permanent normal.
This has other, larger consequences too. Those workers are also voters. They are not happy about survival jobs. They'll do them, but they'll vote their anger.
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@Mark Thomason
And what happens when the next wave of jobs are displaced by “tele-migrants”? Employers will always seek to hire people who can do the job for a fraction of the price. The Globotics Upheaval: Globalization, Robotics and the Future of Work by Richard Baldwin paints a scary picture.
2