"Gig/Contract economy" is the analogue of outsourcing, except for the cheap workers being drawn from local population.
Its a logical consequence from corporations wanting to reduce wages and legal trickery to avoid work liabilities and benefits for the workers. Its exploitative and ruthless example of what "capitalism" becomes when law doesn't hold the punch, companies just figured out the necessary mix of legal and tech means to avoid the system being labeled as "work" and pay fair wages/expenses per worker. Expect this type of "work" to increase and subsume new sectors of economy as they figure out how to transform them into uber model.
>What's it called when the gigsters have to front their own capital to get the gigs? Pay to play?
Normal freelancing/independent contracting. And yes, there's a dispute about whether the classification is legal, my point is just that there it's not something Uber invented (edit: or any of the other on-demand startups).
No. Its like being paid per each function of code developed.
There is a segmentation of work into deliverable units(rides, deliveries). If programmers were replaced by gig economy, it would look like freelancers getting paid pennies for creating tiny pieces of code(with large competition between them for speed and performance):
e.g. a gig where you write function X of project Y, which is then graded for performance and compliance and paid 60 cents, with a twist:you are only paid if your function is the best one among all submitted.
With gamification and ratings, the competition become very fierce and people get near zero income, making the job unsustainable except for those living in third-world countries.
"Cheap" is extremely misleading here. The gig economy has known data points where it has worked extremely well for a large number of people working within the rules defined by the companies who created these services. I heavily recommend Brad Stone's The Upstarts[1] as proof of this idea. There are Uber drivers and Airbnb hosts who did all types of incredible things because of the freedom that was a direct consequence of the gig economy. Sure, Uber Eats may be a raw deal, but let's not castigate a huge sweeping idea that has changed the face of humankind probably for the better.
Thats corporate PR fluff. All the freedom in the world is worth very little on near starvation wages and total disposability of workers. The goal of "gig economy" is not independent free-thinking freelancers, its large pool of easily replaceable drones working for fraction of real wages.
You can't support a family with being bound to such a labor scheme, nor you can't afford to be sick, less productive or unavailable/deficient in some productivity metric - as any change in productivity immediately reduces your income.
If all economy was based on such cheap, disposable labor there would be fierce competition for basically slave wages.
Corporate propaganda attempts like this shitty book hide its basically robbing the workers of their fair wages and benefits. In 10 years these "incredible things" uber drivers "did"(realistically a fraction of them) will not amount to nothing significant, while real jobs allow one to accumulate enough savings to be financially stable: gig economy hyper-exploitative nature means you are paid the minimum possible, that you have no financial stability, no fixed income, no insurance and zero employer responsibility(you really can't even try fight it legally on below-minimum wage).
Gig economy replacing real jobs will lead to drastic drop in lower and middle class income, it will destroy whats left of outsourcing/offshoring and whatever union jobs remaining.
How you can't understand "Sure, Uber Eats may be a raw deal" will become the norm very fast, with competition driving down wages and ethical race to the bottom. Gig economy subverts ethics and laws with clear economic benefit to corporations: they don't give a rats ass about flexibility, employer "freedom" and "independence".
Thats all PR fiction, they just want their cheap labor that could be replaced at will and paid as little as possible.
These people are destroying real jobs. You have to see the entire market: where Uber gives a "job"(with no liabilities of a real job), it(by competing on same sector) reduces wages/jobs of other people, driving down average quality of life and median income.
Gig economy only benefits corporations long-term: for them you are just "disposable human resource" not worker paid wages. While you can imagine some bottom-tier income being preferable to no income, its a bargain with the devil, allowing the companies to pay below minimum wage and remove all external expenses - the independent worker has now to absorb them. It creates a norm, where you don't really have a choice between this bottom-tier income and nothing, as real jobs are replaced with gig/contract schemes.
Their claim is they're opening up new markets of their own, e.g. prior to Uber taxis weren't as widely used for bar-hopping or casual trips, prior to Airbnb people would not travel as much as they would look at the hotel prices, decide it was too much, and just not attempt a trip, prior to Taskrabbit someone who bought a new item from Ikea would assemble it themselves instead of finding a rando to do it for them.
Is their assessment incorrect? Are there examples of (a) gig economy company entering a market (b) average income and quality of life driven down and (c) a causal link between the two?
To me it seems like bad economy is the reason those companies came to be in the first place - as soon as sectors like construction or energy or manufacturing start growing and hiring, who's going to consider an offer to drive for UberEats?
It makes products cheaper because it exploits workers more ruthlessly, "who's going to consider an offer to drive for UberEats?" isn't a choice where industry is destroyed and only a UberEats-level job is available(companies which had fair wages(taxi drivers) were driven out of the market).
Service economy differentiates itself on a multitude of dimensions, of which price is just one. By that notion McDonald's should've driven everyone out of business because who's going to buy a $5 or $7 or $10 burger when a $1 cheeseburger is available? Gas station coffee or vending machine coffee should've destroyed all other coffee businesses, as what fool would pay $4.50 for a cup of coffee when a 50c cup is available at the corner 7-11?
The competitive forces at lower segments of the market determine the overall economy. The people who serve you 4.50$ cups of coffee can't afford to drink them.
When your gig-level job can't pay for 4.5$ coffee, you'll switch to lower segment too, and 4.5$ coffee becomes a luxury for a shrinking minority.
The comparison gets moot because you typically don't pick the company who delivers. You just pick whatever's cheapest or selected by default; instead, you pick where you order your food. Because that's the largest factor affecting the quality of the food.
You'll have different segments indeed. Say we keep it simple and you got two: a luxury one and one for the (poor) masses. Most people won't be able to afford the luxury one, so they'll grab the cheap one. (The cheapest one is still either not drinking coffee at all, drink it at a place where its free ie. at work, or bringing your own coffee in a vacuum can.)
Generally (the exception being catering to travellers such as a drive-in near a highway) you won't see a McDs in a rich neighbourhood, and you won't see a luxury restaurant in a poor neighbourhood. Neither the customers nor the workers live nearby.
Also, don't forget people are loyal to brands.
As a final note, I'd be rather interested to see which local brands have disappeared over the years, if that can be attributed to fast food businesses such as McD's.
As for you not buying the view, that is exactly what was being described in the link with first hand experience from a taxi driver in The Netherlands (heavily regulated market by law) which I posted elsewhere [1].
Yes, I have to agree with you here. Gig economy might reduce quality of life in developed countries but in SEA countries like Thailand, Indonesia, Vietnam, gig economy is helping local populations to actually increase their income. Yes, USD5-8/hour might sound low, but in this side of the world, it is better than nothing.
Outsourcing is the overarching concept to which offshoring and nearshoring belong. Obviously its much cheaper to outsource work to countries where wages are fraction of work rates in developed world. Startups use it agressively to reduce costs.
Now we have some economy sectors where offshore locations don't make sense(work is service-oriented & local) and bringing foreign workers is more expensive/legally complicated than a job is worth for the company.
Thats where "gig economy" model comes in: it allows exploiting local workers for much cheaper wages, without bringing foreign labor. The outsourcing part is what work there was(regular food delivery jobs) made into granular contracts and "gigs"/"tasks", which divide the labor into independent segments(e.g. deliveries) where task distributed into local labor pool(as some kind of cloud computing with the humans being servers).
If you're going to be pedantic, at least be correct. The commonly understood meaning of 'outsourcing' is to use foreign labor. So commonly understood that even Webster includes it as part of their definitions:
: to procure (something, such as some goods or services needed by a business or organization) from outside sources and especially from foreign or nonunion suppliers
: to contract for work, jobs, etc., to be done by outside or foreign workers (https://www.merriam-webster.com/dictionary/outsource)
That does not jibe with common usage I hear in the field, despite what Webster says.
For example, young startups frequently outsource CFO functions to someone up the street.
To be truly pedantic, your definition doesn't say remote workers, just foreign, without specifying their region. OP talked about local workers in contrast.
Not only does the definition not say I am wrong (it includes the thing I said) but I was speaking in context of OP's comment (about location)
So you complained about my lack of precision and to do so you lost even more and didn't actually understand the context.
From my understanding (and Wikipedia agrees with me[1]), "outsourcing" simply means paying someone to perform work outside your company that the company would otherwise perform. For example, my employer outsources payroll to ADP, and outsources office cleaning to a service company rather than hiring its own cleaning staff.
[1] https://en.wikipedia.org/wiki/Outsourcing - "In business, outsourcing involves the contracting out of a business process (e.g. payroll processing, claims processing) and operational, and/or non-core functions (e.g. manufacturing, facility management, call center support) to another party."
As a comparison, $17.40 is what a rural carrier starts with the us postal service. [1]
After a strike in the '70s postal workers could bargain. This has led to stable, unglorified, mid pay jobs. The bargaining was and is key.
Now, if you sign up as a City carrier you can (with luck) become "regular" in 90 days. You will get 23 paid days off, eligible for federal pool health insurance (quite good 2m pool) where you pay 25% premium, never work Sundays, guaranteed 40 hours work a week, no email, stress, home by 5pm.
I was looking at the job board here in Canada and saw a rural postal delivery job. It said it paid $15,000 but $7,500 of that was for vehicle expenses. You need your own vehicle with a plug able to plug in the post office light for the roof.
I can't see how this would appeal to anyone or how it is even legal. If you worked an eight hour day that's only $3.60 per hour.
Rural in usa does not necessarily mean "rural" all rural routes i know use postal trucks. They dont have any businessess and share an office with business routes
A lot of RFD and there rural delivery is done by local folks with a magnetic sticker on the side of the car that says postal service. In my experience it's all mothers with no other job who can pick up some extra cash while the kids are at school.
Which doesn't contradict your statement that "all rural routes i know use postal trucks", just says that conditions are different in different areas.
FWIW , where my vacation house is, the postman also delivers Amazon packages and wears no uniform while at home in Palo Alto the postman, Fedex etc all have uniforms.
Not gunna lie I've always wanted to be an urban postal carrier. When I was flunking high school adults would ask me what I would do if I didn't go to college. They weren't happy when I said "postal worker." I didn't do college and now I'm a programmer. I still fantasize about a low stress job like that, maybe later, when you I've socked away more money...
For a while the key to a successful pension plan was to assume that the stock market will grow at some unrealistic number, and if your numbers did not add up, just throw in another unrealistic number to boost the forecast.
As it currently stands, the global economy is awash in capital, so low rates and tepid economic growth are here to stay.
Outside of Thomas Picketty no one is able to run a large-scale investment fund that consistently generates annual returns of 10%+ year-over-year.
Curious who in the USPS isn't delivering on Sundays when their little trucks are everywhere on Sunday. Still comparing this to Uber is a bit absurd. Uber is contract for hire/etc - there is little more needed than being clean of record and signing up. Good luck getting into the USPS. Plus with Uber and similar your workload is what you make of it.
So while Uber is on many people's shit list we must not make comparisons which are in effect meaningless. Instead we need to compare them to direct competitors, the other for hire services and other private delivery options on the low end. The higher end open delivery might be FedEx Home, FedEx and UPS are similar to USPS, you have to first get past the hiring process and live under someone's schedule and tight rules
New carriers are "temporary" until a route is open. They do the sunday and holiday deliveries. They get fired every 360 days and after 5 days they get rehired.
Thats why i said "lucky" there is a two tier structure
I rode for UberEats for two weeks and made roughly £22 an hour.
To be fair, this was when they were just coming into London and offering crazy bonuses to steal market share from Deliveroo, but still, this isn't controversial - if someone pays you bad wages, don't work for them...
It would be better if they offered the job with reasonable wages and conditions. If consumers are not willing to pay enough for Uber to be able to offer this, they have a poor business model or are in the wrong market.
You could say the same about any regulation, if you cannot manufacture something at a reasonable price without polluting more than allowed, you need to change your prices or adjust your business model.
> It would be better if they offered the job with reasonable wages and condition
Out would be better if kfc rained from the sky, but that's not an option.
Why is their business model "poor"? If prices go up, so will what is considered a "reasonable" wage. What's a "reasonable" skillset that an employee must offer to get such a wage.
Difference with pollution, is that its fine to just not pollute. Just not employing makes the situation worse.
Because it relies on exploitation. It offers pennies for work that ha real risks involved. No insurance, not even bike maintenance is offered. You're on your own and if you happen to be the unemployed, unprivileged youngster from the outskirts of Stockholm (quite common) and anything happens while you're riding for one of these companies (car hits you, pedestrian walks out in front of you, etc.), at best your bike is busted and you can't even pay back the money you borrowed to buy it just to get the job. At worst you'll have serious injuries and you'll need treatment that you'll get for relatively little cost only because this is Sweden not one of those fucked up countries where health care is terrible and you'd go bankrupt if such a thing happened to you.
That's why the mode is poor. It makes me sad that all these delivery companies build thir business on exploitation.
Well said, and on top of that the pressure to deliver in a short amount of time is high. Which leads to taking risks in traffic. Sure, that might go well usually [deliberately not gonna make examples where it can go well], but there's still a higher risk than abiding the traffic law. You can actually read in the article that the reporter broke the law, on multiple occasions.
One thing it has going for it is that as with a lot of jobs you get better with practice. You learn to take your breaks, you get better muscles (as with any physical labour job), etc. However, what happens if you retract a muscle one day? In a normal job you'd call sick, and in EU if you're on contract that means benefits.
What we need is two things: one we need laws structured to make this type of self-employment illegal (since the relationship between contractor and contractee is clearly top-down, and requires near to no expertise), and two we need active enforcement of this law.
I want you to dig some ditches for me. It will take you one hour per ditch to do, with some fairly strenuous work. For doing this, I will pay you the grand amount of $5 a ditch.
Would you be jumping on the chance to supplement your income after a long 8 hour day? especially if i told you that you first needed to buy a shovel out of your own pocket, even though I'd let you dig up to four ditches a day?
When the majority of new jobs do not pay living wages, this argument breaks down.
Sure, people want gig, part time work. They aren't the issue.
Over 40 percent of workers make minimum or below on gig wages.
The vast majority of new jobs pay these wages and they aren't enough. People work at a net loss, the impact being we, who can make it, subsidize the business models by social spending, and or people live terribly.
We aren't bankrolling good jobs lost. A majority of Americans struggle economically today, and those numbers are climbing.
The usual argument is it becoming cheaper to live. The reality does not align to that expectation.
We need to fix this. Either is fine. It really does become cheaper to live, or very large numbers of people need more from their labor, or we accept a much lower standard of living and tepid demand that goes along with all that.
Minimum wage exists for a reason. Minimum wage is per hour. What we need is to have this type of employment to be illegal, and we need to have this actively enforced.
I find it mind boggling it still exists, and I suspect it is because of illegal immigrants falling for it. Incidentally, that's also why the reporter was so easily hired: there's a huge demand for low paid workers, but actually this is illegal competition with minimum wage workers.
If that cannot be worked with without increasing the cost of delivery the solution is very simple: increase the price of the food in combination with delivery. Let the customers pay a fair price for their food plus delivery instead.
Someone should also look into Amazon Mechanical Turk. It has the very same issue we discuss, but it has a benefit (for Amazon): its not specific to the physical world (like delivery) and is world-wide, and therefore can also exploit world-wide.
When there exists a social net, isn't it obvious that the existence of poor costs money? Plus, that money disproportionately comes from the lower and middle class in the form of tax.
So in reality all you're doing with an underpaid gig economy is allowing corps to indirectly make money off of taxpayers instead of just the customers / companies involved in the service.
TLDR; You're paying a tax for someone else to get their food delivered.
That's not true; if no one offered "underpaid" work we'd pay more tax, so that interpretation doesn't work.
What you don't understand is that whike "existence of poor costs money", underpaid jobs do not made people poor - you'd have to assume that if companies where held to a minimum wage, that they just pay that (and/or raise prices), rather than employ less.
If companies are held to a minimum wage, then they'll pay it. Sure, maybe it becomes more cost effective to invest in technology that requires them to pay less people... but I would argue they are doing that already (especially in the context of Uber), regardless of whether it's gig or minimum wage.
Rich people don't buy more stuff in proportion to what they make. So the more money that moves from the lower and middle class, the less business opportunity you have. I'm not going to use 10 times more uber eats than someone who makes 10 times less than me.
It's not a hard problem to solve in theory. Just figure out how to move money the opposite direction and business will boom! It doesn't even have to be a socialist structure. Maybe we just tax companies for their external negative effects?
The idea goes like this: drive to the bottom is not beneficial for the society as whole and therefore it is reasonable to establish some form of minimum wage.
As this prohibits very low paying jobs (i.e. better than nothing) then it would be fair to offer unemployment benefits in return.
Which means you also have to control immigration so that you don't get too many poor immigrants on those benefits.
Now the same poor immigrants that would have suffered from a low wage, suffer from never entering the country in the first place, and suffering a low wage in their home country with no benefits.
Wrong premise. It's better to design your economy in a way that doesn't privilege shareholder and investor "risk" over employee and citizen risk.
Why should be corporations be given a free hand to act in ways that increase costs, increase personal risk, and lower opportunity for all but a tiny subset of the population?
> If consumers are not willing to pay enough for Uber to be able to offer this, they have a poor business model or are in the wrong market.
This is a very elitist view, as it benefits only high-margin businesses, usually catering to the richest parts of the society.
It just so happens that margins generated by Neiman Marcus, Whole Foods Market, or a white-cloth Michelin-starred restaurant will allow it to survive. Margins generated by a clothing thrift shop, corner bodega or a taco stand - not so much. Scores of businesses in the latter group are shut down, some are exempted (US conveniently does not enforce minimum wage laws on self-employed or family operations), some rely on undocumented labor and cash economy.
Economists who advocate this, meanwhile, find the nest hot topic for conferences and panel discussions: "Food deserts in poor neighborhoods - root causes and possible solutions".
Back in the real world, the job exists without Uber - delivery drivers have existed for a long, long time. Deliveroo, Uber Eats, etc have primarily just shifted work away from individual restaurants employing drivers to the Uber model.
The alternative is for Uber to invest in increased productivity, just like other industries. Making each worked hour give more return. They could supply better bikes, as another poster suggested less downtime for drivers, better algorithms to cut the length of the routes, higher fees for customers... I'm sure there are clever people that can figure it out.
> so its better for a job to not exist rather than exist without reasonable wage?
This is quite obviously a false dichotomy. Its not necessary bad when a job doesn't exist (e.g. the job 'head of slave labour team' doesn't exist anymore), and the obvious best outcome appears to be a fair wage for a (therefore existing) job.
Uber doesn't seem to follow local laws. For example [and this is really one of the many examples], in The Netherlands you need a license to drive a taxi which made UberPop illegal. Uber didn't care, they launched it anyway. This appears to be the modus operandus of Uber: shoot first, ask questions later.
The way they try to get drivers for Uber as documented here (again, in The Netherlands, article in Dutch use Google Translate) [1], underpaying them after they're in, is also disheartening and only benefits Uber; neither the customers nor the drivers. So what Uber did there was invest in driving their competition away. Of course, people don't wanna pay for pennies, but that's why they have the Uber brand. They use this branding together with state of the art technology to get customers (workers and clients).
The more this information gets out, the less victims Uber is able to make.
That's quite likely correct. Maybe they'd be forced to fix the downtime issues, allowing people to make the same amount of deliveries/wages in fewer hours.
> but for some people, that's simply not an option.
In the article the author tries two options: Uber Eats and Foodora. So, yes, in theory there are probably some people who would rather have the Uber Eats "work when you want" schedule rather than Foodora's but that very much falls within the realm of what fastball was suggesting with "if someone pays you bad wages, don't work for them."
Just because you don't value that type of flexibility doesn't mean someone else won't value it. It seems like the more options there are for people looking for jobs the better.
Uber uses hype money to incentivize working for them and tanking Deliveroo, able to absorb losses for years, allowing them to drive out competitors out of business. Then Uber drives down their own prices.
What do you do then? Change jobs? For an industry where the exact same thing has happened because of some moron with VC money that thinks that regulations are for the small people?
GP wasn't implying that every rider should start their own competitor. Juno is an example of a ride hailing company that corrected for low driver wages through market mechanisms.
Starting a business that has a profitable business model is easy. Just go to investors with a reasonable business plan, and you can get funded. There are angel investors in every town, everyone has relatives, etc.
- Some workers are pressured to rent a scooter or an e-bike. Having bike carriers is cool, but they prefer faster and long ranges. They rent from companies that have a deal with the parent company. This makes it even more difficult to earn a profit.
- On some countries, you must register as self-employed or freelance. Taxes and you also pay for social security.
- This highlights something interesting. These companies have a pool of riders at zero risk
- The part about few orders really depends on the city and the part of the day you work. Busiest hours can give you a solid 7 - 10 deliveries on a 3 hour period.
I don't understand what is wrong with Uber Eats charging whatever price they want to charge. If $4.4 is too low just don't work for them. There are probably people for which this is a good price. If not, it's Uber Eats problem, not yours.
It's not black and white. What looks to you like the free choice of people choosing to work for $4.4 may look to others like a forced situation. What I think you're missing is that your assumption that everyone can freely choose and has alternatives is clearly mistaken.
> may look to others like a forced situation. What I think you're missing is that your assumption that everyone can freely choose and has alternatives is clearly mistaken.
Could you please elaborate? I don't exactly follow. Nobody is forcing them to work for Uber. If what you mean is they have bills to pay, etc, it's not like Uber can just magically decide to pay $9/hr, they will likely need to cut most of the jobs at that point anyway.
Simplistically: people can either work or not work. Nearly everyone will chose "work" because it's nice to feel useful, even if that work doesn't pay a living wage.
If people are not earning a living wage, societies can either let them die in the street or subsidize them. Most societies will choose the later, because they're made of humans and not monsters.
That means that there really is a minimum wage, but it's paid in part or in full by the society. Companies that pay less than a living wage exploit the "humans don't like watching children starve to death" vulnerability and effectively steal from society. Additionally, paying a lower wage lets them offer a lower price to consumers which can drive out companies that were paying their customers an actual wage.
Whether or not the statement "nearly everyone will chose to "work" is true, the problem that must be solves is how to incentivize someone to do the work that no one wants to do.
It's entirely possible that providing a "living" wage to a food delivery person just isn't worth it for consumers so they would rather just go get it themselves.
The conundrum is creating a system where there enough incentive is created to do the work no one wants, but at the same time distribute resources so that everyone is provided some definition of "standard of living". This is difficult when the value of (most) human's work is ever decreasing.
There are some jobs which need to be filled by humans who have very little skills. These jobs need to (or can) exist (because they cannot be automated, yet). Fortunately, cutting the workforce also means there will be less delivers and thus less revenue, so these people would get hired anyways. So paying the people really comes down to how much to charge the customer. I would think that most customers would not mind a $3 delivery fee (whether this is included in the price or a extra markup does not matter). Assuming the delivery person can deliver to 4 people (which should be possible in cities), they make an extra $12.
The $3 markup only becomes apparent when a competitor is cheaper then the other players, in which case the competitor gets more orders and make more revenue. Now if there was a law, called minimum wage, which forces employers to pay enough to make a living, there would be no extreme price cutting. Still, about the same amount of people would be employed (maybe slightly less, but most people will still order the meal whether it is $20 or $23 assuming there is no cheaper alternative which fits there needs).
If we do not have those protections, we end up in a situation similar to the Industrial Revolution in Europe where people (and their children) work for 12+ hours a day and still starve to death. Those jobs would exist anyways because the demand does not decrease significantly if the wages rise (this is of course not true for every industry) but by having two competitors cutting down each other at the expense of the employee is bad for everybody if you consider the long term consequences.
So would you describe Sweden as a place with poor quality social safety nets?
According to the article people who want to deliver have at least two choices and one pays significantly more than the other because Uber doesn't have enough volume right now and the volume they do have tends to go to people who have been delivering for some time.
The article says that with Foodora you can make more money starting out, but they schedule when you work. With Uber you just work whenever you want. People trying to decide which service they want to work for are going to use those factors to make a decision. I think it is hard to claim it is exploitative when people clearly have a choice where they work. Keep in mind Sweden doesn't have particularly high unemployment either, so there are a lot of other options out there in addition to these two.
> So would you describe Sweden as a place with poor quality social safety nets?
No, but a proposition like that doesn't address the details.
Reading through this thread its clear that Sweden doesn't have minimum wage; they have strong unions instead (FWIW, I don't see how those are mutually exclusive). Problem is that unions are circumvented partly or completely by freelance constructions like the one we're discussing (another example would be MLM constructions). That needs to be addressed, by law enforcement or lawmakers (politicians). In order to achieve that, publicity like this may aid that goal.
But is that the fault of Uber (or Walmart)? Isn't them having a crap job better than no job? Yea it's not awesome that the pay is low, but at least they are employing some people. If the pay was higher they probably couldn't create the same service at a sustainable price point?
The 'at least they get paid' argument is the one also being used by those who order takeaway food, and those who buy blood diamonds, blood gold, and entire clothes industry alike.
Nevermind the fact these people work in terrible conditions. Nevermind the fact these people work with chemicals which are unhealthy. Nevermind the fact these people ignore traffic regulations because they need to arrive on time. Nevermind the fact these people are children who go down in dangerous mines with gas which can also implode at any time.
It is a fallacy. The real solution to the issue is far more simple: let those who desire takeaway food (or who desire diamonds, gold, or clothes) pay a fair price, so that the workers get paid a fair price.
Easy to say. I can move anywhere, work at almost any company, get a great wage, etc. We are the exceptions. 1.5 million American families, including 3m children, live on less than $2/person/day. That's not by choice.
Half the planet lives on less than $2 a day. That's $2 in our buying power. What would you buy with $30/month where you live? Not rent. Not gas. Flour? Bag of rice? Hope you can find a cheap source of (probably not clean) water.
Right but that's $4.40 in Sweden, you need to scale that down to the equivalent for other countries. It would be significantly less in places where it's common to live on $2 a day.
There is always less unskilled jobs than people willing to get them therefore the salary will go down to some minimal value if not regulated.
For example there are people who don't have to pay for an apartment and they can agree to work for $500/month and people who have to rent won't be able to compete with them.
The problem is people will prefer Uber Eats over competitors because they are able to deliver food for such a low price. The employees of Uber Eats are the ones paying for this not Uber.
If that is the case then you would expect that the article would talk about how busy Uber Eats was. Instead it says the opposite. He didn't make money because not many people were using the service.
He lays out two ways people can work in delivery. One pays significantly less for starting out, but doesn't require you to work specific shifts. The other lets you work whenever you want, but you are very much subject to what demand comes in. You have a lot more consistency when you don't have control over your schedule.
The market will work to price everyone to free. We see this with creative work, where most people have an effective negative minimum wage. You're better off working at a mcdonalds than write, draw, or create, and many places essentially pay nothing for creative work like reviewing.
For many creatives, they literally had to abandon capitalism and go back to the feudal patronage model with Patreon and kickstarter. The market priced even skilled labor down to effectively zero, since there was just so much produced.
We draw lines where society deems them to be drawn. Its okay for Iran to sell organs. Is it okay for women to be property as is the case in some countries? Child brides? Of course morality is subjective.
I don't want to live in a country where slavery is required for people to barely survive. I'd like to be on the right side of history. And if part of the tech industry has to be gutted or burned down, so be it.
You didn't actually explain why. You just mentioned unrelated issues.
'moralising' is actually a pretty good answer. When it comes to certain actions like organ donations, we're utterly terrified of the idea that someone will feel like they 'have' to do it. Getting a million dollars, even though it would have an amazing impact on your life, is bad because you'd feel pressure toward doing it. Getting a small payment would also be bad because you're being taken advantage of. But you can do it for free if you so desire!
This kind of reminds me of the Econtalk episode on "why the law is so perverse". There's a sense that people can't make rational decisions under conditions of extreme stress.
"I think part of the reason is we worry that there could be at lack of judgment there, perhaps. Someone under that unattractive choice. It's related to Mike Munger's concept of euvoluntary. It's a person who is clearly under duress no matter what: even if they enter into it freely, it's such an unattractive option, to call it a free choice seems somehow perverse in itself."
Thanks a lot for that reference. I listened to that episode, it's got a really interesting idea related to a "marketplace for organs" that I hadn't heard about before.
They describe setting up a consensual "kidney club". The idea being that if you're in the club and need a kidney, one member of the club is chosen at random and compelled to give you a kidney, but likewise if you have kidney failure and would otherwise die you get a kidney from a random member.
This sidesteps the usual concerns about implementing a marketplace for organs. I.e. even if you're a billionaire the only way to insure yourself against kidney failure is to enter the pool of potentially mandatory donors, and you can of course stay outside the "kidney club" and not have to donate to anyone, but then you also die if you have kidney failure.
Katz points out that the reason this doesn't work is that current law can't compel you to donate your organs, even if you've previously signed a contract to that effect, but that this creates a market failure & tragedy of the commons.
Implementing a system like this seems like a no-brainer and a benefit for everyone involved, but it's blocked by current contract law & the inability to force people to undergo medical procedures they consented to in the past.
You are not taking into account differences such as cost of life in the country. Almost every single country that has minimum wage, when brought back to US levels, has it higher than $4.4/h.
Minimum wage isn't a matter of having a certain amount of money. It's being able to live with dignity.
The reverse is people in countries with a low cost of living such as Indra or the Philippines come to work in Canada or the US. A $11 hour minimum wage here is probably equivalent to $50 hour back in the worker's home country.
Compare what rent or a house costs and food basics you'll see that to a worker quality of life depends on the minimum wage but mostly on the cost of living.
You can probably make that argument for slavery too. Both would be wrong. Back at my first university where we went over macro economy and countries, they told us every county must at some point step in and set some basic rules. Not setting these basic rules means going backward in civilization benefits (Not to mention other countries stepping in because they simply advanced more).
So, we evolved out (in economic and civilization sense) of slavery, as we evolved out of unreasonable minimum wages, with the help of governments (enough people saying: no). In a complex system such as a modern western economy, one can has these cracks (work for an hour to buy a loaf of bread and milk), which is very close to slaving, and because these economies are modern in other aspects, they can buffer than. But, the road is still downhill.
The government that doesn't care about it's people, will self destruct eventually. No matter the form. It's a historical fact.
In this very narrow case of Uber, Uber will self destruct eventually, as they subsidize prices to ensure growth. Once they stop doing that, then they are just another Taxi company with an app. And most of the Taxi companies already have apps. So it will be down to the drivers (who in the case of Uber will be paid even less).
The above hypothesis will be tested fairly soon, as Uber is having their IPO this year in fact.
Time and time again, Uber has shown that undercutting their competitors in pricing is not done through smart technology or better business models, but by avoiding regulations and getting away with inhumane wages.
The rates and stuff don't look like the main issue, the quote at the summary of his Uber section gives more insight - "The deliveries are too few". I dislike Uber as much as the next guy, but it sounds like they've either got too many couriers or not enough partner restaurants to make it worthwhile for the guys they have working or them.
Yes, the rates are quite good if the system works as intended. From the article:
> “Hello Erik! Today you are guaranteed 300 SEK per hour in “generated amount” when you deliver with Uber Eats during 11:00 am – 1:00 pm & 5:30 pm – 8:30 pm. Hope to see you online!”.
The problem is that you need to accept 1 - 1.5 deliveries an hour to activate this, which wasn't possible for the journalist due to the reasons you're mentioning.
We could be talking about lots of things when "their actions" - they're no stranger to controversy or being kinda shitty to their employees - so what specifically do you mean?
Yep, my impression was that Foodora was vastly more respectful of their riders, even though they certainly did push them physically (which is only fair enough I guess).
Uber deserves the bad rep they are getting.
Great write up by the journalist; I'm jealous of all the riding KMs. :)
I order rather regularly from Foodora in Frankfurt/Germany. Their riders mostly do their best to look happy, but I can't help feeling guilty when I order when it rains/snows or there is even harsher weather (there was a particular nasty thunderstorm that made me crave Burritos...). I always give them an additional tip in these cases.
There's been bad experiences/odd situations though. Once a rider spilled half of my chili con carne on the stairs up to my apartment, without telling me so and bolted after he gave me the soggy paperbag with the rest of my food. I got a 10€ Discount Code out of that, but that hardly covered the cleaning of the walls.
Then now two times it has happened that Foodora called me roughly an hour after ordering if the Food had arrived yet, because they've "lost" their rider/couldn't contact them anymore. I really hope they just stole the food and didn't have an accident in traffic, but I'll never find out.
This made me think about the time I saw a deliveroo rider being carried away in a stretcher after an accident. It upset me to think that I'm pretty sure theres a customer waiting for their food and most likely cursing the rider/ sending angry emails
I wonder. Would the delivery guy be happier to have no deliveries during a snowstorm (and thus no tips, or possibly no hours)? Maybe if their needs are well backstopped by the government. But otherwise perhaps not.
This is essentially an argument against having a minimum wage in general (and more broadly, certain labor regulations). It's a complex issue that we could argue about for pages and pages of comments, but suffice to say the vast majority of the population in the US, let alone Sweden, disagree with you.
Which is that in some cases it is better to have some unemployed people and some (ideally a lot more) people earning a good wage, versus both groups earning a crappy wage. Combined with a welfare system.
Not at all, no. Throughout the world, unemployment is correlated with the local minimum wage - as the minimum wage increases, unemployment decreases. Somalia (no minimum wage) has an unemployment rate of over 60%. Increasing the minimum wage in US states produces no negative employment effects.
There are, of course, paid professional conservative economists who will tell you whatever their bosses want them to in support of pro-billionaire economic policies.
> There are, of course, paid professional conservative economists...
Accusing the other side of bad motives without evidence is the refuge of people who divide the world up into "good" people who think like them and "evil" people who have different opinions that aren't worth studying.
It's intellectually lazy and kills intelligent discourse.
Consider the golden rule here. Are you a paid shill by unions? Are you an agent provocateur spreading socialist propaganda? Is this something the other side should accuse you of without evidence to dismiss your opinions wholecloth?
Should we all adopt this tactic and assume everyone else's motives are suspect unless they tow our preferred party line?
How would that ever produce useful conversations in any way?
If people adopt a certain position and you can't conceive of them adopting it without something sinister going on, then maybe you haven't sufficiently studied their perspective.
> Increasing the minimum wage in US states produces no negative employment effects.
Why not increase it to $500 an hour then? When you increase the price of cigarettes, people buy less cigarettes, when you increase the price of cars, people buy less of it. What do you think happens when you increase the price of labor and why do you think it has magic powers that makes it avoid these basic laws of economics?
What about people who prefer to work for Uber for $4 per hour rather than stay unemployed? Would you tell them "Sorry but this is inhumane, I can't let you do that to yourself and I'm ready to vote laws to forbid you to do as you please with your free time and send people like you to jail if they persist"? Do you know better than they do what's best for them and how they can use their own body? Doesn't that make you an authoritarian?
Whenever someone trots out the "basic laws of economics" it usually means they're trying really hard to ignore the complexities of reality and force the world to fit into a simplistic and wrong model in their head. Study after study supports his position while yours is purely ideological and not in alignment with the facts. Rather than even discuss the facts, you've flipped to accusing him of being an authoritarian, and you think you're being the rational one here... really?
Try and understand that not everyone thinks employment is the end goal, rather being able to live a decent life is and that requires a livable wage and most of the western world has decided it's better to have a decent safety net that defines that floor than to let people be forced by circumstances to work for less than a livable wage. Try and understand what the words "wage slavery" mean to those who find meaning in that term, regardless of how you feel about it.
All democracies are authoritarian in the sense that you use the word; the minority will always feel wronged in some way by the majority forcing them to do things they're ideologically against. Using the word in that way makes it meaningless and makes your argument look weak.
Do your budget sometime with an effective wage equal to $4 an hour. What does it cover? What can a person do effectively with that $4 an hour? Will it lift them out of poverty? Can they live on an effective wage of $4 an hour working 40 hours a week and even afford shelter and food?
I mean, do people not get how little money this is?
So how come the studies find that by introducing minimum wage no jobs were lost, it just increased prices by a very small amount?
A 2004 study of available literature, “The Effect of Minimum Wage on Prices,” analyzed a wide variety of research on the impact of changes in the minimum wage. The paper, from the University of Leicester, found that firms tend to respond to minimum wage increases not by reducing production or employment, but by raising prices. Overall, price increases are modest: For example, a 10 percent increase in the minimum wage would increase food prices by no more than 4 percent and overall prices by no more than 0.4 percent, significantly less than the minimum-wage increase.
In a 2010 study published in Review of Economics and Statistics, scholars Arindrajit Dube, T. William Lester and Michael Reich also looked at low-wage sectors in states that raised the minimum wage and compared them with those in bordering areas where there were no mandated wage changes. They found “strong earnings effects and no employment effects of minimum-wage increases.”
A 2012 paper published in the Journal of Public Economics, “Optimal Minimum Wage Policy in Competitive Labor Markets,” furnishes a theoretical model that lends some support to the empirical insights of Krueger/Card. The paper, from David Lee at Princeton and Emmanuel Saez at UC-Berkeley, concludes: “The minimum wage is a useful tool if the government values redistribution toward low wage workers, and this remains true in the presence of optimal nonlinear taxes/transfers.” However, under certain labor market conditions, it may be better for the government to subsidize low-wage workers and keep the minimum wage relatively low.
Workers take their compensation in a variety of ways. On the high end, Google famously offers perks like food and nap pods.
But even on the low end, people are interested in things other than immediate cash on hand. For example, learning and mentoring to grow their skillset and move up in life.
Some of these opportunities come for free, and even immediately bring benefits. Other costs the business money.
Without a minimum wage, employees and employers are free to choose different trade-offs. And especially young people early in their career might be willing to put quite a premium on mentoring.
With a minimum wage, a big part of the space of possible trade-offs is unavailable.
Now---this isn't just idle talk: there's a bunch of studies about how one effect of (increasing) minimum wage is decreased social mobility and people getting stuck at the bottom. (Sorry, not enough time to look them up now. But can do, if there's demand.)
Walmart and McDonald's employ a big portion of their employers at minimum wage (and would perhaps pay less, if that was legal). Alas, the customers of Walmart and McDonald's are mostly poor people, too. If the price rises are real, those poor people are footing the bill.
Whereas rich people tend to shop at more upscale places where the minimum wage is not a binding constraint (ie people make more).
Instead of effectively taxing poor people to pay for other poor people via induced price rises; why not tax rich people with eg an income tax and distribute the proceed via a social safety net or a basic income to the poor?
In Many European countries the state covers when you don't earn enough. So it's against the interest of tax payers for companies to offer badly paid jobs if that means it becomes a race to the bottom.
Not sure about that - might be that Foodora would not hire people who cannot speak Swedish well enough. Also, Uber had no cardio/speed test. It seems that everybody with a clean criminal record can apply at Uber, but Foodora is more restrictive. Maybe like Play Store vs App Store.
Or, more precisely, Uber is earning by systematically stealing the waiting time of their drivers (e.g., by misleading promotions getting everyone out to wait for orders).
In contrast to Foodora, which pays for shift time plus delivery commission.
Simply, Uber is based on shortchanging everyone but Uber itself and pocketing the difference. Unsustainable, and I always use alternatives.
Per the article, Foodora-Stockholm doesn't pay for shift time on weekends. But it sounds like Foodora has work around the clock, but UberEats does not.
The question is: Why is Foodora dominating Uber Eats in Stockholm? Is Uber a late entrant? Shunned by restaurants? Shunned by consumers? Too expensive for restaurants or consumers?
However has to be said that uber eats is not their core business. I've heard about it before but never used it. They should probably leave that business to others.
I mean, how is it that, in one of the richest countries in the world(1), in the more abundant period of human history, there are people that have to accept those conditions?
(1) and, supposedly, one of the more socialist also!
Ironically, parts of the employee protection in Sweden is based on semi voluntary deals between unions and employers. There is no law for minimum wage, for example.
Are you referring to a previous article that says Uber Eats is just to juice up Uber's revenue numbers for their investors?
I recall that Uber ride-share accounting doesn't use top line as revenue (only the cut), but for Uber Eats, they are allowed to use the whole order as revenue.
So we need a minimum wage? Or "capitalism will self-regulate"?
Isn't this just yet another example that our system is a total failure that requires constant tweaking / intervention?
Imagine someone here writing a post about a program to perform a mathematical operation. It gives the wrong answer. It takes ages to run also. But if you attach gdb, set a breakpoint and increment the necessary variables you can get the right answer.
This is sweden; a country with a fine social safety net and no significant unemployment issues.
I have no idea if capitalism will self-regulate, but I'm not sure this is indicative either way.
The problem here appears to be that Uber is just plain lying about how much you actually earn. As the article seems to indicate, this results in the delivery crew calling it quits after a month.
I assume, if you had told uber eats 'employees' what's actually going to happen _before_ they go in for the interview, they wouldn't even go for it. Journalism like this will spread the word. More to the point, uber eats is one of the first such companies, so presumably people looking for a job in Sweden simply do not even consider they can be swindled out of a fair wage like this.
A few more uber eats and presumably word gets out and people will go online and do a little bit of research prior to taking these jobs. Between the vast numbers who won't even go for the interview and the fact that the few that do tend to wash out after a month, uber eats will soon find themselves with no drivers at all. At which point they have to pack up shop and probably end the adventure in the red (it does cost money to set up, advertise, etc), or start marketing that they NOW _DO_ pay a nice wage.
TL;DR: Uber is a shitty company that lies, but Swedes still need to learn they have to check what they're told for such freelance-based jobs, which is why they can currently get away with the scam.
> Between the vast numbers who won't even go for the interview and the fact that the few that do tend to wash out after a month, uber eats will soon find themselves with no drivers at all.
A significant number of the drivers are recently arrived immigrants with little chance to get another job. They definitely don't read Breakit. They are not in a situation to pick-and-choose. They might get by on a small wage by working crazy hours and sharing a cheap apartment with dozens of others in the same situation.
We need to side step the need for wage regulation by giving the employees the ability to negotiate wages. This can be done with a universal basic income. We should also reform the tax systems to ensure that the tax plus social security system is smoothly and monotonically progressive to avoid the problem that increasing your gross income can reduce your net income as often happens in the UK.
Yes I agree, that is a systemic change instead of a fudge. I'd only want UBI if it's funded by LVT though as otherwise rent will simply absorb UBI funnelling yet more money to landlords and banks.
I'd get rid of income tax and replace with land value tax. Perhaps something at the extreme upper (> 200k) end but mostly I'd make rentiers pay.
> Imagine someone here writing a post about a program to perform a mathematical operation. It gives the wrong answer. It takes ages to run also. But if you attach gdb, set a breakpoint and increment the necessary variables you can get the right answer.
Won't surprise me if you can find this on Amazon Mechanical Turk.
Also, on a related note, there's enough jobs in IT which are already low wage as it is.
We've asked you before to stop posting unsubstantive and/or uncivil comments to HN. If you can't or won't stop, we're going to end up banning you. Please fix this.
I saw an obviously distressed/very low income guy sitting on the sidewalk in Manhattan last week with a sign that said he had worked for two weeks with uber eats but they didn't tell him they will only do direct deposit not a cheque and he needed help because he doesn't have a bank account.
What do you think is more likely - that the man you saw is ignorant of alternatives to bank accounts and has attempted to solve the issue in good faith, only to be unable to find any way to get a bank account or proxy... or that he was lying and hoping to play on the sympathies of passers by?
I'm pretty sure that the law in the US and NY says that if someone has done work for you, you need to give them the wages they've earned, and whether or not they have a bank account is irrelevant. Not paying someone for work they've done is wage theft, which is a crime.
This might not be common in the US but a huge majority of South East Asian countries still do not have a bank account. That is why Alipay/Wechat is going to be beneficial for these people as they have a mobile phone despite not having a bank account.
Disclaimer: I am working on a solution for the 'underbanked'
If he has a driver license and a car - how come he can't open a bank account? Getting a driver license is much harder and requires more paperwork then opening a bank account I thought
There are many reasons people can't have a bank account. His name could be on the OFAC list or too similar to one on it. He might've bounced a number of checks for whatever reason and now has a bad record with Telecheck so is banned. Could provide several other examples.
aren't there accounts for such people, too? In germany/europe you can be homeless and has negative entires in "schufa" and you would still get a bank account (since 2016).
I don't think you need an address to get a driver license. To open a bank account you need to verify your current address with something like a current bill or pay stub.
I don't know how it works where you live. I live in Florida. When Florida became compliant with the REAL ID Act, we had to start producing proof of residency when renewing our driver licenses or applying for them. This means showing things like utility bills. Owning real estate is not sufficient.
Uber's 10 000 SEK per month for working 50 hours is an awful exploitative salary in Sweden. Usually that's the kind of pay you get doing sweat shop jobs as an undocumented immigrant, not working for a legitimate business.
Have you read the article? There's no 10000 SEK per month, it's just an empty promise; noone gets paid the described amount because the number of deliveries simply isn't there.
The best scenario mentioned was a guy who managed to get 6000 sek per month, and working much more than the 50 hours.
Here, in Montpellier, France there is a crazy competition between Foodora and Deliveroo, I don't know how healthy this is, they are just trying to kill each other so that the victor raises the prices, all that on the back of medicine students speeding with bikes while dodging trams and busses.
I have never tried those services since I live downtown and I don't really need home delivery.
I drive for Uber on the side despite my real job paying 7x more per hour. It's mostly an excuse to get out of the house and drive my car with someone else paying for the gas.
In the article he implies that Uber Eats has a poor retention rate compared to the local competitor.
Regarding why people apply in the first place. Uber is basically a household name around the world, so they can attract a lot of applicants. There's also little insight into the working conditions and comparisons to competitors. And the sales pitch is very misleading; you're told you receive weekly payments and how much you can expect based on weekly hours, except they don't mention you're quoted a monthly figure unless you clarify.
"The middle man PaySalary, which formally recruits Uber Eats bike couriers, then deducts employer fees as well as an administrative fee of 3.3 percent.
A statuary holiday entitlement of 12 percent is added.
After this, a 30 percent tax is deducted.
To summarize: If I am guaranteed a payment of 300 SEK, that translates to an hourly pay after fees, but before taxes, of just over 150 SEK plus holiday entitlement. That’s just short of 17 dollars an hour"
Why do Europeans brag about how great their governments are, then bitch about the mad taxes they have to pay for them?
To be fair, it's my impression (as a Brit) that Nordics rarely 'bitch about the mad taxes'. Such concerns are often doled out by those in countries who don't feel they get a good return on their investment — the Mediterranean countries and higher earners in the likes of France and the UK.
I don't think I would use Uber Eats even if they were available in Oslo, but I already outright refuse to order through Foodora. They might pay better, but the number of times one of their cyclists has almost hit me or my dog has put me off ever using them. They should at the very least make those boxes have easily visible ID numbers so that you can call in complaints about them!
I've seen noticed so many high voted anti-Uber stories across so many media channels recently - I can't help but suspect there is something more going on here
there are plenty of other companies pushing boundaries in other areas not getting near as much negative PR right now
I don't use Uber but I know many who consistently do without ever having a negative word to say about them
Users aren't complaining, workers are. I sincerely encourage you to talk to some of their "contractors".
When we freelance, we expect higher wages due to insecurity, having to pay employers share of taxes, having to pay for benefits. Compare that with these workers.
Uber is cheap because their workers are subsidizing it.
I don't understand the libertarian argument for allowing low wages. Let's say company X is paying low wages, which allows it to sell goods for cheap. If company Y tries to enter the market and pay higher wages, they won't get any market share, because their goods will be more expensive. So wages will stay low forever. Am I missing something?
If company Y is producing the same quality of goods as company X but trying to charge more money, they deserve to be out-competed by company X. Do you agree?
Equally, if employee Y is producing the same quality of work as employee X but trying to charge more money, does employee Y not deserve to be out-competed by employee X?
Employment is a two-sided market too.
Nobody would advocate for a minimum price for a packet of crisps just to save the poor crisp companies from earning too little per packet. It is obvious that if crisps were too expensive, people would stop buying them. The same applies for workers.
Minimum wage is just saying "if you can't produce at least $X of value per hour, you're not allowed to work at all". That's not fair.
Except that in one case you're talking about companies and in the other about people. I have no problems with companies dying, but I have moral reservations about people dying. The free market has no such qualms, it will happily set wages at a level where people can't survive.
> As an example, modern Germany had a long tradition of welfare state combined with no minimum wage
Welfare state as in? Having social benefits and minimum wage is not mutually exclusive.
Furthermore according to Wikipedia [1] the minimum wage in Germany is 8.84 EUR. You might say, "that's Wikipedia, that's no reliable source!" No sweat, go click the link first. For this specific information (minimum wage in Germany) they provide links to an English AND German source.
The missing piece is that no one is entitled to an unregulated market. Capital has the power to employ and in an unregulated environment, more power to determine wages than labour.
But in a modern democracy, labour has a different sort of power and I cannot think of a moral principle that says that labour should not distort the market using its power at the ballot box.
If a pro-unregulated market candidate can't win more votes than the guy who wants to support minimum wages, he doesn't deserve to win. And he doesn't deserve to enact his policies.
So an ancap can argue his point but if he can't win in the marketplace of ideas, then he doesn't win. Because that market is truly free.
> Minimum wage is just saying "if you can't produce at least $X of value per hour, you're not allowed to work at all". That's not fair.
That's an oversimplification, since it ignores what is paid to people who produce more than $X of value per hour.
Minimum wage says something closer to, "If you can produce at least $X+Y value per hour, you will be paid at least $X", where X is the minimum wage, and Y is the level of profit that a company needs to operate.
Assuming no upward pressure on X, a company will prefer to maximise Y and minimise X. Minimum wage laws are one way to apply upward pressure. Competition over constrained supply is another, but only applies if there actually is a supply constraint.
I agree with you that a minimum wage law is effectively a ban on pay for very unproductive work, but I disagree with you on what that implies.
If someone can't support themselves, then I believe that the wider community should help.
The two groups of people which I have in mind are: 1) those who can't produce enough value to support themselves, and 2) those who can produce enough value to support themselves, but who are not paid a large enough fraction of that value to actually do so.
My understanding is that X is set high enough so that people in group 2 will get a large enough share to support themselves (so it moves people from the poverty-stricken group to the somewhat-poor group at the cost of company profits) while still being low enough such that anyone who produces less would fall into group 1 anyway, and would therefore need other more direct help, independent of any minimum wage laws.
Is your position that for any X, some people will be forced into group 1 who would otherwise consider themselves self-sufficient, and that the cost to them outweighs the benefit to those in group 2?
> What about the people who are unable to produce at least $X of value per hour? They don't matter?
They get fired as soon as statistics show they don't meet their targets. We already have tons of those jobs in existence and the rise of technology only oversimplified this further. Case in point: a call center. Say the goal is you need to deal with X customers in an hour. That doesn't mean their problems are solved. And even if the problem is (seemingly) solved that doesn't mean their problems are solved in the best way possible. And yet, this is the basis of how call centers operate these days.
What happens when people get fired? Well, in some countries you get social benefits and in some you don't but there's no country where those benefits are going to pay your bills AND allow you to enjoy any form of luxury. So what happens either way? They look for a new job. Preferably legal job, but if they can't, they resort to shady businesses. Grey areas. You know, like Uber*?
> Minimum wage is just saying "if you can't produce at least $X of value per hour, you're not allowed to work at all". That's not fair.
Non sequitur.
Also, inaccurate. You can't _legally_ work if you can't produce $X of value per hour. Of course you can work; it'd just be illegal. The oldest profession in world is, after all, prostitution. And there's demand for that.
Also, if you can find applicable work or not is not entirely up to the potential worker. That's supply AND demand.
Which means you end up working illegally (in a what I'd argue is an uncivilized society) or you end up with social benefits (in a what I'd argue is a civilized society).
Which means, following your logic: "if you cannot be profitable while paying your employees minimum wage a $X/hour, don't have that job available."
In other words, if you cannot pay your workers a fair fee while delivering food, don't deliver food at all. But I guarantee you its profitable. Food has been delivered for many decennia. I remember as a child in the '80s we had a minimum order fee, a delivery fee, and a radius where orders were delivered to. Some companies still do that.
Of course, we end up competing with migrant workers from less free areas in the world. But that does not mean we need to lower our standards to those of where those people come from.
As a final note, its important that minimum wage laws exist because they're roughly the minimum means to an end in society. The minimum required to have food, a roof, insurance, and basics like an Internet connection.
Not sure what country your from but here is Aussie we have many price floors in place for basic goods. Phone and internet being one of those goods.
Price floors on many products are considered here in order to maintain certain industries. Not to mention import taxes which also set price floors in a way.
Yes. Labour supply is not limitless. So in theory you could treat labour just as any other market good. Therefore, if there's an oversupply of labour, it will be cheap. If the supply is short, it will be expensive. There's many important caveats, and I don't claim to represent the Libertarian view fully, but that's the most important thing you are missing.
In theory, labor forces higher wages, they are not given by the business. What you're missing is that the power dynamic isn't one way with the company determining everything. Labor has to agree to accept low wages or the whole arrangement falls apart and either the company pays more or stops doing business.
Yeah, you're missing the greater economy that surrounds your microcosm.
Skill is not in abundance. People pay for skill and people with skill can demand pay.
People without skill have little value to offer. Is it better to price their skill at its true value and have them work or to price it at an artificial value and have them not work?
On the consumer end, lowest price doesn't declare a winner. Look at Whole Foods or Ben and Jerry's. These are companies that hire essentially unskilled workers who speak English well and look and act like my peers and they get paid more than minimum wage.
However, if I walk into a Walmart I'm usually surprised that the people working there still have a job. They're typically weird or rude and/or speak poor English (this includes supposedly EFL people).
Doesn't your argument basically assume the first company will always be able to hire workers? If wages are so bad, workers would seek other options, like developing a skill or taking a job in a different industry.
...Does this guy actually know any economics? He's pretty much just googling and copy-pasting without any real understanding. Here's a better article
The employment effect of the minimum wage is one of the most studied topics in all of economics. This report examines the most recent wave of this research – roughly since 2000 – to determine the best current estimates of the impact of increases in the minimum wage on the employment prospects of low-wage workers. The weight of that evidence points to little or no employment response to modest increases in the minimum wage.
1.5 million American families, including 3m children, live on less than $2/person/day. Half the world lives on less than $2/day (in our buying power). This isn't by choice.
I agree that's something we should be concerned about. I don't think minimum wage laws address that issue though.
If you want to help improve standards of living around the world, reduce immigration restrictions so that people can move from countries with few economic opportunities to other countries where there are more opportunities.
Personally I agree with most of what Bryan Caplan has written on the topic.
The are two arguments I see: the first is that if the minimum wage is higher, the cost of living increases, leading to the same problem as before. Of course this assumes the two are perfectly correlated, which is a flawed assumption.
The second is that if local humans are too expensive, people will use local robots or outsourced humans instead. While technically true, this is inevitable. Lowering wages might slow down the incoming problem, but it will always eventually exist regardless of local wages.
In the absence of federal support programs, are people who would drive for Uber or any of these gig-type apps better or worse off with the opportunity to earn $4.40/hr?
If you raise that wage, most likely the business model ceases to be worthwhile for Uber, so the job goes away. I don't think that means it is replaced with something better.
Used Wolt and Foodora (in Finland). The Wolt people usually use cars for delivery. Wonder how that factors in the profit calculations for the delivery person.
Anyhow, I'm really wondering how any one of these companies can survive when the VC subsidies run out. There have been other food delivery services here before them but the have been shut down for being too expensive.
On the other hand they had actual employees and paid their taxes etc.
Wonder how much tax avoidance is possible for foodora/wolt workers, or how much the corporations do "tax structuring" which seems to be all the rage nowadays for hipster startups.
> Anyhow, I'm really wondering how any one of these companies can survive when the VC subsidies run out.
The one with the biggest amount of $$$ and the (relatively) lowest cash burn will prevail, and once the competition is shot, raise the prices by (ab)using the now dominant position.
This is then followed by either an IPO or acquisition.
In food delivery service, natural monopoly/oligopoly might exist and companies could eliminate competitors which adhere to minimum wage or treat their workers better. The eventual result could be unfairly high profits for these companies, not due to a better system or innovation but from shady practices.
In general I believe well-implemented negative income taxes work better than minimum wages, but given the weakening power of less skilled labor and political situations that limit redistribution of wealth/income, minimum wages are justified in certain cases.
I've always liked the simplicity of a linear tax with a rather large tax credit and paying out rather than collecting when income after tax credit is negative.
I'm not sure if such a system can be made sufficiently progressive.
This is an interesting comparison between the two services in Sweden. I wonder how much variance we would see in the states with the "tipping culture". 4 deliveries per hour with an average tip of $2 is $8/hr by itself, exceeding the hourly "wage" paid by Uber Eats.
Sometimes I daydream about being a bike courier/messenger in a city like New York. I've even considered delivering sandwiches over the lunch hour in my current city, Denver. The author's descriptive of cycling in the rain tempered my dream a bit.
Physical labor is hard, and often results in shorter lifespans. I was once friends with a bike courier, both of us a similar age. I see him in the streets every few years. I just passed a few weeks ago and he looks old. At least a decade older then me (50). Barring an accident, I'll most likely outlive him by a decade, with a higher quality of life due to his accumulated aches and pains.
No one asks to be born into a society that doesn't allow someone to eschew its rules as they wish. There is literally no way to consent to being born. It is not a choice someone makes.
People are being born into a society they can not afford to live in, and have no options to leave it. I personally find that disgusting.
a living wage makes sense because at $4.40 an hour, you are going to get people who will not show up when they feel like it, will rob you to make up for wages, and will not care about your business because they cannot making a living at it.
What's hilarious about this example is that it makes more sense to work for them one day a week, eat a single meal you were supposed to deliver, and keep it up for as long as you can till they find out, because a single meal probably costs more than your entire wages for the day.
While not 100% analaogous, there was a fantastic EconTalk episode recently that touched on sweat shops and human behavior. I'm not attempting to say that UberEATS is an "American" sweatshop, but the relative wage in our market might result in similar behaviors.
That's about exactly what happened with Mr. Klumpp's CrunchButton - people learned very quickly that $6 per delivery kills your wages when college students don't usually tip and you can make only a delivery roughly every hour unless you get lucky with multiple orders coming in for the same food place. Most Crunchbutton drivers were actually losing money once they figured in gas expenses (which of course Crunchbutton did not pay.)
I don't think tipping is very common in Sweden. I live in Norway, just next door, and it would never occur to me to tip a courier. It's unusual to tip in restaurants here too.
It's not mandatory in the UK either. It's certainly pretty common in restaurants, as long as they don't already add a service charge, but it's unusual to tip in just about any other situation.
I don't know about now, but I cycled for UberEats when they first came to London last summer, and averaged £22 an hour due to the crazy incentives they were offering to steal marketshare from Deliveroo.
I see your point. In Sweden, I see they don't have a minimum wage, and that they use collective bargaining to make agreements. Since Uber Eats is new, I imagine they haven't established a union yet.
Firing someone for joining a union is against the law. In fact firing an employee after a grace period is difficult in Scandinavia unless they are clearly incompetent or criminal.
For that reason it might even be that Uber doesn't worry too much about high turnover because it means that most of their workers are sackable without having to give reasons or compensation.
They work around that by calling these employees 'freelancers'. Which is of course bullshit since there's a top-down relationship, but these employees don't have the means (resources/info/money) to combat this in a court of law.
The trick abused before was hiring people as interim, and then sacking them right before they had to be hired permanently by law. I know first hand even the government in The Netherlands did this in '00. However this still means these people need to get minimum wage (actually, more, since the employment agency also demands a cut). As you can see, the freelance trick is more lucrative.
Sounds like the Foodora people have their act together so if a scooter was a winning strategy they would be doing that. Maybe city driving regulations are a problem? A bike with an electric boost could be good though.
Yeah, but e-bikes have very limited range which would quickly become an issue on longer runs. The systems are awfully heavy to pedal unassisted; well at least my Bionx conversion was (have removed it since).
The Bosch system is crank driven, right? In hind sight I regret not going for something like that. The Bionx hub is ludicrously heavy, with short spokes prone to breakage, and required (at the time) its own crappy cassette.
I had to crack the 25 km/h speed limit restriction as going above it required an almost Herculean effort. It should have reverted to an assistance level that offset the weight / drag, but alas.. it just turned off.
What I like the most about this is the sensor system. I am pretty sure there is an actual torque sensor in there. This makes for a very smooth acceleration phase.
Along with a back wheel magnet sensor to keep the speed limit. Last year I made a homemade hack for this.. I used a microcontroller, an electromagnet and a magnetic sensor from a cheapo bike computer to forget every second impulse towards the Bosch system. It worked. The speed limit changed to 50 km/h.
Ended up not bothering to weather-proof it though. 25 km/h is enough most of the time anyway.
In Sweden, as in most of the EU, electric bicycles are required by law to reduce the assistance as the speed increases and to cut out entirely above 25 km/h. So an electric bike wouldn't be much help to a courier, who would mostly be going faster than 25 km/h. (A faster vehicle would come under the moped regulations and the rider would need a license and insurance.)
So it looks like those higher paying jobs are not actually available for a large part of the Uber Eats workforce? How would those people benefit from being forbidden from working (= minimum wage)?
> How would those people benefit from being forbidden from working
You are asking the wrong question. The real question is how can swedes prevent yet another unskilled job from being utterly annihilated by globalization in action?
Before Uber and undocumented migrants arriving in droves, those lines of unskilled work had better condition, quality of life. With the unfair competition of illegally employed undocumented migrants working for peanuts, it's only a matter of time before all other delivery companies shut their doors and bail. Then we'll end up with yet another job lost at the globalist hands. How much can we continue losing to globalisation? Everything, until the entire Western world has become as poor as the third world, save for the low % of SV entrepreneurs and VC?
Ideally, in a free society, laws are upheld by police enforcement. Thieves would therefore be unable to sell their products to a pawnshop, and the pawnshop would be unable to fence these products.
Of course, a society might fail with that goal but that doesn't make the goal invalid or non-existent.
I'm from Norway and the economy is quite regulated. We're still/therefore (take your pick) very successful [1].
Macro economy is complicated. It seems obvious to me the it's not as simple as "just let everyone run free". On the other hand regulation has it's disadvantages as well. Complicated.
Measuring "regulation" isn't straightforward, but based on the Heritage Foundation's criteria, Norway has a relatively light load. It's basically on par with the US.[1] Its a very free economy by international standards. Venezuela is near the bottom of the list, just above North Korea.
Economic regulation and the extent of the social safety net can be quite independent of each other.
Please don't post generic ideological arguments to HN or use it for ideological battle. Those discussions are painfully repetitive, degenerate into flamewars, and are at odds with the purpose of this site.
> Guess that's not my idea of freedom. Freedom to me is what I can actually do, not what the government won't stop me from doing.
Isn't that the good ol' BSD versus GPL discussion? Gun restriction versus gun liberty? The socialism versus libertarianism discussion? One's in favour of an enforceable mechanism (by law) which restricts the freedom of a person (or their behaviour) so that the freedom of all is ensured whereas the other one is some kind of "let the survival of the fittest" figure it out.
Nobody is forcing me. But when Uber undercuts competitors by a large margin using inhumane practices, the competitors tend to vanish over time. In the end, guess who is your only choice.
Hey, I am no fan of uber practices either, they usually are on a grey legal area. But if people do not realize this it is not good for them why the state should help them out. This is not a complex financial product or a dangerous chemical that
most people do not understand. This is Uber pays A, fooodora pays B. If B > A which company are you going to stay with ?
I'll put it the other way around if Uber does not attract enough bikers who is going to deliver their food ? It is basic supply and demand. Is there is a market but no suppliers, prices go up. If there is plenty of suppliers (bikers), prices go down. If the middleman (uber) is too greedy and screws the buyer or the supplier they are going to go with another middleman.
I was thinking about Singapore, which pays as little as 2.50 SGD/h at McDonald's, yet has a thriving food scene. (And, yes, they have plenty of regulations eg about food safety. But no minimum wage.)
In any case, perhaps a faulty analogy. But your claim "[...] when Uber undercuts competitors by a large margin using inhumane practices, the competitors tend to vanish over time. In the end, guess who is your only choice." doesn't hold up at all.
Whoa there, grandpa. Don't box me in. I can't be weighed down with health insurance much less a stable income that I can plan around. Pfft, next thing you know I'll be able to retire when I'm old.
I am highly educated and in demand. Still, all employers I encounter require signing arbitration agreements. I can't just go somewhere since everyone around here does it. Now transfer this dynamic to a much weaker worker.
as somebody who is entirely financially secure due to my family-ties and level of education, which, statistically speaking, is also due to my family, I could not agree more with this hand-waving, compassion-free, no skin-in-the-game observation from the top of the ivory tower.
When the entire argument is based on social status, commenter's own status has to be known. It is everything but incivility. Said commenter has this information publicly shown in his bio. If you prevent that from being known, while still allowing the user to comment, you are making the whole discussion absolutely pointless.
You took an already contentious thread in an inflammatory direction—which is trolling, whether you meant it to be or not—and then went flat-out uncivil. We ban accounts that do this, so please don't do it again.
Regardless of how wrong someone else is or how bad their comments, if you can't post thoughtfully, please don't post until you can.
Nice refutation. Also, are you aware that minimum wages laws were originally designed to prevent low skilled blacks from competing on price with whites, right? Even to this day, minimum wage keeps minorities out of jobs. But if it makes you feel better at night that at least no one is payed $4 an hour, even if that means staying at home with $0 an hour.
When you have no skills, you need to compete on price, that's just a fact of life. Preventing people from competing on price will keep them poor and unemployed. When this is done on purpose to racial minorities, it's called racism.
> When you have no skills, you need to compete on price [..]
Since you like funky logic and straw man arguments I'll just point out that even people or business with skills have to compete on price therefore the rest of your rambling is moot.
(And I have been living my whole life in Western continental Europe so I don't see what the US segregation has to do with me being a racist because I support minimal wage)
If your Muslim brothers (and I am the racist one) are unskilled, not matter their price, they won't be able to compete for jobs. Because at some points the job has to be done. And that has nothing to do with racism.
Now explain to me how you went from minimal wages promoting racism to minimal wages promoting religion-based hatred ?
If you believe they don't have job because of minimal wages then maybe you ought to advice them to seek asylum in countries without minimal wages laws instead of trying to change them ?
The sad thing is you'd rather have everyone burning than considering the possibility that strike breaking and workforce dumping hurt everyone in the long term.
When an employer chooses a white man over a black/brown/fuschia man even though the wage it's the same then it's not the law that is racist. It's the employer.
> When an employer chooses a white man over a black/brown/fuschia man even though the wage it's the same then it's not the law that is racist. It's the employer.
Yes, but where there is no minimum wage, the racist employer has to pay a price for being racist because people of color are selling cheaper labor than white people, so if racist employer wants to hire white people only he will have to pay a higher price. With minimum wage laws, racist employers don't pay a price for being racist because whites get the same minimum wage, this is why it encourages racism. Milton explains it best https://youtu.be/hsIpQ7YguGE?t=20
Your points are only meaningful if you think the goal of life is to have a job. When you realize others have different goals, then you'll be getting somewhere. Are you aware that penicillin was discovered by accident therefore it must not work... that's the argument you're making; it doesn't matter why something started if it turned out to be valuable in the end.
My point is that if living (and surviving) requires resources and gathering these resources requires working, then preventing people from working will only make their lives worse.
> Are you aware that penicillin was discovered by accident therefore it must not work
I've read that three times and it still doesn't make sense to me. Most scientific breakthrough happen while working on something else yeah. What does that have to do with the minimum wage topic?
And my point is resources are the goal, not work; there are other ways of obtaining a minimum living wage that don't require working yourself to the bone for less than a livable wage. We have safety nets for a reason.
It has everything to do with the minimum wage topic, I took your argument and applied it to something else to show how absurd it was. It doesn't matter why minimum wages were originally created just as it doesn't matter how penicillin was discovered; they are both useful nonetheless.
> It doesn't matter why minimum wages were originally created
It does actually matter because minimum wages were created to prevent minorities from finding jobs and compete with whites, they still have the same effect today. That's why it still matters to understand why they were created, so you can understand the consequences they still have today. As a member of a minority myself (son of a Syrian immigrant), I find these racist minimum wage laws outrageous but maybe you're a privileged white unaffected by these laws and therefor cannot understand how bad it sucks to be unemployed and that most people would rather have a low paying job than stay home and do nothing which makes you feel useless and depressed and discourages you from finding a job.
> It does actually matter because minimum wages were created to prevent minorities from finding jobs and compete with whites, they still have the same effect today.
I've already refuted that poor line of reasoning, I'm not going to revisit it, it's simply bad logic.
You're too hung up in your "racial" narrative to objectively see anything here. Because we don't agree you're presuming I'm a privileged white; I'm a first generation minority as well who grew up poorer than you have probably ever been and I still don't agree with you. Minimum wage is not racist, not remotely, but it's clear you're unable to see that so go ahead, keep that delusion and see where it leads you. You've done little but fling irrational arguments, straw men, and deflect whenever a point is made that doesn't agree with your narrative, so there's no intelligent conversation to be had; you think anyone who doesn't agree with you is a racist.
And by the way, there is meaning to be found in life outside of having a job; if there's a problem here, is that's you've been conned into thinking work defines who you are. Humans can be happy without a job, humans don't need jobs, they need meaning and that can be found in many other ways.
> Population will grow exponentially until something bounds it.
That's only true if fertility rates stay above the replacement fertility rates. As nations become more developed, fertility rates tend to fall. In the EU-28 the fertility rate was 1.58
children per woman in 2015, well below the replacement rate of 2 [1]. India's fell from 5.9 in 1960 to 2.4 in 2015 [2].
> There's going to have to be competition for resources, and those who lose out will die. We may as well get used to that now.
Your Malthusian view is outdated. We can easily feed and shelter the current population (and projected peak population) for the foreseeable future.
As I believe humans are the #1 cause of climate change/ destruction and the eradication of other species, I think we could stand to lose about half the current human population until we can figure out a sustainable lifestyle.
Setting aside the obvious moral problems with "losing" half the current human population, letting the market decide is exactly the wrong thing to do here. It's not the bottom 50% (the once that would starve) that are the problem in terms of climate change, it's the top 50% (or 10%). The average CO2 emissions per capita in the US are 16 metric tons per year, versus 1.6 in India [1]. You would end up with 50% of the population, but still have 95% of the CO2 emissions.
You could accomplish much more by cutting the fossil fuel subsidies ($5.3 trillion in 2015 if you count the externalities [2]).
I was referring to your opinion and not your person but I have to say that to a complete stranger, you don't come of as that likable when you casually suggest genocide on a global scale as a means to solve the planet's resource crisis. Frankly, I'm tired of constantly reading this line of selfish thinking on HN.
To be fair, they are not advocating genocide. Rather, they are advocating mass starvation which is blind to race, creed or color. Truly an enlightened view!
Fair points, but note I'm not suggesting genocide. I'm just suggesting there's nothing at all you can do to stop people from dying when there aren't enough resources to support the population. It's an inevitability, and denying that helps nobody.
How about cruel and heartless? You are casually suggesting that we just let people die in the streets while companies exploit labor as much as possible.
As a reminder, if conditions get bad enough, that equilibrium you crave comes at the pointy end of pitchforks.
But... it doesn't just "happen" - our behaviours shape how this plays out. And if some of my behaviours can either hasten the death of these folks, or improve their lives in some way, I'd like to know about it, and potentially modify my behaviour.
That's fine. Donate to charities that help the poor and homeless. That's a noble cause.
You will not be able to keep everybody alive. The more people you keep alive, the more people there will be in the next generation who also need to be kept alive.
I think this argument is misleading because we're not guaranteed to find this "equilibrium" in a reasonable amount of time.
Think this of as a machine learning problem. The market is trying to get the global optimal point. I'm sure it exists, but the way we do this is pretty much by doing hill climbing, which may end up with a bad local maxima. And there are billions of parameters. You might sometimes want to try a different strategy even if it looks worse temporarily.
Did anyone catch the part where the journalist got the co-founder of Foodora (also his Foodora-boss) to impersonate him as an Uber courier? He mentioned it like it was the most normal thing. I wonder if there's a deeper relationship at play here. Don't get me wrong, I'm sure Uber is staying true to its "Do be evil" doctrine. But I wonder if there's a separate vested interest (e.g., support local businesses) operating behind the scenes.
