
A Middle Ground Between Contract Worker and Employee - hvo
http://www.nytimes.com/2015/12/11/business/a-middle-ground-between-contract-worker-and-employee.html?ref=us
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roymurdock
Here's the original paper by Kreuger and Harris that this article is built
around:

[http://www.brookings.edu/research/papers/2015/12/09-moderniz...](http://www.brookings.edu/research/papers/2015/12/09-modernizing-
labor-laws-for-the-independent-worker-krueger-harris)

The authors propose a new employment category: Independent Worker. The authors
calculate that there are currently ~600,000 independent workers in the US
(0.4% of total employment).

 _In our proposal, independent workers — regardless of whether they work
through an online or offline intermediary — would qualify for many, although
not all, of the benefits and protections that employees receive, including the
freedom to organize and collectively bargain, civil rights protections, tax
withholding, and employer contributions for payroll taxes. Because it is
conceptually impossible to attribute their work hours to any single
intermediary, however, independent workers would not qualify for hours-based
benefits, including overtime or minimum wage requirements._

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spacecowboy_lon
The elephant in the room is "minimum wage requirements." here ie finding away
around paying minimum wage.

Ask Sports Direct in the UK how fiddling the minimum wage is working out for
them.

~~~
J-dawg
Sports Direct are a vile, abusive organisation. I'm not sure how the owner can
sleep at night knowing that his riches are the direct result of exploiting
desperate people.

This is the story that the parent comment is referring to:
[http://www.theguardian.com/business/2015/dec/09/how-
sports-d...](http://www.theguardian.com/business/2015/dec/09/how-sports-
direct-effectively-pays-below-minimum-wage-pay)

Their shares rose 4% after the Conservatives won the general election, because
the market didn't expect them to reform zero-hours contracts. (It seems the
market was correct).
[http://www.independent.co.uk/news/business/news/election-201...](http://www.independent.co.uk/news/business/news/election-2015-sports-
direct-share-price-up-4-per-cent-after-zero-hours-relief-on-conservative-
win-10235628.html)

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crdoconnor
>Alan B. Krueger, a former chief economist to President Obama, and Seth D.
Harris, a former deputy labor secretary, argued in a paper released this week
that many workers in the so-called online gig economy should have more rights
and protections than most do now. At the same time, they wrote, “forcing these
new forms of work into a traditional employment relationship could be an
existential threat to the emergence of online-intermediated work.”

It would be brutal to Uber's profitability, titanic valuation and possibly
even their existence, but online-intermediated work is here to stay.

Since their profitability is largely predicated on maintaining the current
upward transfer of wealth (from drivers who create the wealth to shareholders
who don't), they would, of course, prefer to keep treating their drivers as
independent contractors who can be kept precariously employed.

~~~
UK-AL
If it was transferring wealth from drivers to shareholders, they wouldn't do
the job.

They chose to do the job, so it is at least better than the alternative
options they could do.

~~~
cryoshon
The "wealth" that is getting transferred is a bit more abstract than money
going directly from the worker's pocket into the shareholder's. Instead, it
looks more like the worker's personal vehicle being worn down over time by
work done for the purposes of the company rather than personal purposes. The
worker's capital is depreciating more rapidly than during personal use, and
the profits generated by this erosion of asset are going to the shareholders,
not the worker. The worker receives pay for his labor, but receives nothing
for the gradual depreciation of his capital that results from the terms of the
gig labor.

~~~
UK-AL
I'm fairly sure money received from doing business with uber is meant to
account for both depreciation and salary. If you pay money to a company you
don't pay separately for labour and deprecation of assets. You pay a single
price, it's up the company how to split it.

If the company doesn't set aside the money for depreciation and renewal of
assets , they will soon realise and stop doing that activity if its
unprofitable.

Stop treating uber drivers like children.

~~~
dasil003
Depreciation not deprecation.

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jobu
There are a couple great bits in that article, but this is one I've seen as a
trend:

 _" Under an employment model, by contrast, the company has a much more
reliable and knowledgeable workforce, one that can be held to a specific
standard of quality and a more consistent schedule."_

Home Depot learned a similar lesson in the 2000's -
[http://archive.fortune.com/2008/09/18/magazines/fortune/fort...](http://archive.fortune.com/2008/09/18/magazines/fortune/fortune500/reingold_homedepot500.fortune/index.htm)

Employee morale is critical in service-oriented jobs.

~~~
Retric
Companies often learn the same lesion over and over. Reliable workers are more
in demand so they can more easily find higher paying work for someone else.

If you cut pay or increase workload things can look ok for just long enough
that all your good people leave.

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jacquesm
Middle ground as in: you (the contract worker) have none of the benefits of an
employee and all of the downsides of an independent contractor and the company
has all the benefits of having employees but none of the downsides.

That's nicely spread, 50/50.

~~~
godzillabrennus
They also have the benefits of being a contractor. No worry about working for
multiple companies at the same time. You own your creative work that you get
paid to build unless you sign it away with a contract.

~~~
mrfusion
And set your own schedule right?

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fraserharris
At the heart of the divide between contractor and employee is America's
idiotic healthcare bargain between Democrats and Republicans: employers
provide private healthcare and the public system is only for the destitute and
old. Obamacare is an attempt to solve this by adding more work for individuals
transitioning between jobs. A rational healthcare system would not be so
dependent on your employment status.

~~~
patrickmay
Health insurance being tied to employment is a result of government wage and
price controls during World War II. A simple improvement would be to provide
the same tax breaks associated with paying for health insurance to individuals
rather than companies.

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alex_m
There's no market need for these absurd legal employment classifications. Let
people contract with other, and stop creating elaborate arbitrary
categorizations as a means of applying complex taxes and regulations.

~~~
untog
That's a lovely, idealistic premise. But one half of this negotiation has
considerably more power than the other, and many would argue the less powerful
side needs to have certain rights protected.

~~~
ryandvm
No, that's the beauty of dissolving these long term employment relationships.
You don't need protections from your abusive employer because you can very
easily find a better employer.

~~~
untog
So these changed employment relationships guarantee employment for every
citizen in the US? Interesting concept.

~~~
ryandvm
Nope. A fluid labor market means just means that contracts and labor have a
much easier time finding each other.

I'm not particularly interested in guaranteeing employment for anyone, let
alone everyone.

~~~
untog
_A fluid labor market means just means that contracts and labor have a much
easier time finding each other._

But why is that preferable for labor, compared to having a reliable job?
People have bills, mortgages, etc - a "fluid labor market" is not in their
favor.

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zkhalique
Here's the thing. If there is a marketplace where you set your own rates, you
can still be a contractor. That's one of the tests that marketplaces like Uber
failed.

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Spooky23
"Middle ground" here is going to be devastating to technology employees,
especially IT.

Welcome to the Service Request, piecework economy.

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mrfusion
What's the disadvantage of w2? Wouldn't the costs be about the same?

~~~
Retric
If you pay someone 10$/h as a w2 for even 5 hours a week, the government wants
you to contribute an extra 6.2% for social security and 1.45% for Medicare.
Plus a range of other benefits which don't show up on there paystub, but still
cost you money.

~~~
debacle
The costs, though, are actually about the same, because you're likely paying
that contract worker more than an actual employee would be making.

~~~
Retric
It depends on how you slice it. You can sometimes get away with paying
contract workers less than a w2 worker at minimum wage. Don't include
expenses, lot's of wait time is 'off the clock' even if they can't leave etc.

Many employees also don't realize just how many benefits they are giving up.
New Uber drivers for example often drastically overstate what there earning
are.

PS: I fell into this trap even as a w2. 52$/hour and zero benefits is
significantly worse than I initially thought.

