
Want a Steady Income? There’s an App for That - known
http://www.nytimes.com/2015/05/03/magazine/want-a-steady-income-theres-an-app-for-that.html?emc=edit_tnt_20150429&nlid=66702700&tntemail0=y&_r=0
======
grecy
> _Thinking about money gives her a jolt, “like you’re about to get into a car
> accident,” she later told me. There’s the $3,700 for massage-­school tuition
> that she still owes on her credit card; the $60 a month for drugs for her
> anxiety and bipolar disorder, which she might skimp on again_

Sentences like that make me sad about the reality of life for tens of millions
of working Americans.

I just visited Australia after 9 years in North America, and it's like a slap
in the face to realize there are no desperate people there. Almost everybody
has enough money for basic essentials, and nobody is crushed with student debt
or the fear of not being able to pay medical bills.

It really does feel like another planet when people earning "minimum wage" are
doing just fine, are extremely happy, and likely less stressed than the career
workers in North America, simply because they earn "enough to live
comfortably"

~~~
nilkn
The most horrifying thing is that not only do minimum wage jobs in the US
barely get you above poverty, but that many people struggle even to get one of
these jobs.

I'm willing to wager that many readers here have never looked for a minimum
wage job. If you haven't, you may not realize how much competition there can
be. It's really shocking. This is especially true in smaller towns, where
there are very few jobs that _aren 't_ minimum wage. I remember, years ago
when I was in high school, my dad was a local business owner in a small town
and was connected with all the other business owners. On several occasions, a
friend or family member needed a minimum wage job and literally couldn't get
one due to scarcity; my dad had to approach the owners of other businesses and
put in direct recommendations so someone could get on at, say, a Dairy Queen
or a car wash.

~~~
Xixi
If the job market is really that, a market, then it should not come as a
surprise. It's the imbalance between the number the people seeking a kind of
job and the number of jobs available that drives the salaries all the way down
to minimum wage. Hence the lowest paying of all jobs are the most fiercely
fought for.

Now of course there is another side to this equation: the remuneration is
capped by the (perceived) value derived from the work done.

~~~
crpatino
> Hence the lowest paying of all jobs are the most fiercely fought for.

That does not sound like a healthy economy to me.

Minimum wage is for employees with minimal skills. Almost always that should
mean entry level positions. You don't want to run a business where the bulk of
your workforce is barely qualified. You want a balance between the noobs, the
competent young ones, and the old dogs who know all the ropes.

So even if for a position that has an "imbalance between the number of job
seekers and the available positions", I would expect the average employee to
make somewhere between 2x and 4x the minimum wage. Otherwise, what you are
telling me is that an average high school kid can do the job equally well as a
person with 10+ years of experience.

~~~
Xixi
I am merely describing how I think the economy is running. Not how it should
be running. In fact I agree with you that it is not healthy at all.

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

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

------
aresant
Something that surprised me when I first started hiring employees was how hard
it was for people to manage their cash flow, especially at the more limited
levels.

We started with a once-a-month paycheck, which my co-founder and I were used
to and saved some payroll fees.

This subsequently blew up in our face within a few months as people would
spend heavy @ the front end of the month, wouldn't save for things like car
repairs / gas / etc, and were out at the end of the month funding living with
CCs.

So I applaud this effort for a start-up - I'm excited to see where they take
it.

~~~
sukilot
Monthly payroll is illegal in California, for this reason.

Credit cards half one-month grace period, so living on credit cards wouldn't
actually be a problem though. Spending more than income would be a problem.

~~~
pzxc
Every one of the 200,000 public employees working for the State of California
gets paid once a month, on the 1st.

------
ndomin
My understanding of this is you set up a monthly allowance with them and they
save your surplus for the months where you don't make as much.

This doesn't seem like solving a problem, rather they are creating an illusion
of solving a problem. Essentially they are parenting. Which some people might
need. But what a better solution might be is to teach people to create a
savings account and budget themselves. And not surprisingly there are plenty
of apps that do just that.

~~~
cortesoft
They also will provide interest free loans if the user hasn't yet built up
enough savings. So, in that sense, it is also a bit of an insurance program.

~~~
bduerst
Yeah, it seems strikingly similar to payday-advance lines of credit, except
with lower interest rates (I assume).

~~~
dragonwriter
The loans are interest free, but given that they have an undisclosed mechanism
of calculating your allowance ("Even Salary"), it should be fairly trivial for
them to assure that they are almost never going to be using anything other
than the customers own deferred income to pay it.

------
didgeoridoo
> _Even’s purpose is hardly to change the distribution of wealth in society.
> It is simply to redistribute one person’s own limited wealth across time.
> People in Silicon Valley may believe there’s an app for everything. That’s
> their hammer. But improving the lot of the poor will require other tools,
> including an old one the valley often wants to wish away: politics._

Sorry, did you read _your own article_? The whole idea is that by lightening
the load of uncertainty, SOME people will be able to pull themselves out of
poverty with nearly zero net spending increase. Are we to fault Even for not
trying to solve EVERYONE'S problem so neatly?

------
joshuapants
> Employers increasingly use cutting-­edge scheduling tools like Kronos to
> calculate the profit-­maximizing head count for every hour and adjust
> schedules accordingly, week to week or even day to day, sometimes with
> scarcely any notice.

Reminds me of this short story:
[http://marshallbrain.com/manna1.htm](http://marshallbrain.com/manna1.htm)

~~~
Tossrock
I find the idea that Kronos is 'cutting-edge' pretty amusing. Last time I had
to interact with it, it was still an in-browser java applet with a user
experience about on par with sticking your hand in a blender.

~~~
bandrami
Yeah, their JIT stuff is like 30 years old at this point...

------
suprgeek
From their FAQ:

Is Even a lender? No, Even is not a lender and Even does not provide loans.

yet the Article claims that: "....On bad weeks, when users fall short, they
still get their salary, thanks to past surpluses or to interest-­free credit
from Even."

Interest-free Credit == Loan right? What am I missing

~~~
thaumasiotes
There's a legal difference between "loan", the legal transaction, and "loan",
the economic transaction.

My sister had an internship once at a South American company that bought
receivables. In that country (probably Brazil), loans were illegal. A
receivable is a promise of payment in the future according to some schedule.
So this company would buy receivables at less than full value from companies
(or individuals, I guess) who wanted the money immediately. Obviously, that's
a loan (technically, it also assigns responsibility for collecting payment to
the owner of the receivable). But despite being like a loan in all other ways,
it has the key difference of not being illegal.

I suspect something similar is going on here.

~~~
idoh
What your sister did is called factoring:
[http://en.wikipedia.org/wiki/Factoring_(finance)](http://en.wikipedia.org/wiki/Factoring_\(finance\))

It is a thing in the US as well. Retailers and construction companies do it. I
was looking into it for apps e.g. advance money against IAPs or ad revenue. It
doesn't look like there is demand for it.

~~~
thaumasiotes
Here are some relevant selections from wikipedia:

> Factoring is not the same as invoice discounting

> Factoring is the _sale_ of receivables, whereas invoice discounting is a
> _borrowing_ that involves the use of the accounts receivable assets as
> collateral for the loan

> However, in some other markets, such as the UK, invoice discounting is
> considered to be a form of factoring

> Invoice Discounting is sometimes referred to as Discreet Factoring as it is
> essentially the same product as Factoring

(That last quote is from the page on invoice discounting)

None of that indicates to me that there's any difference at all, other than
(possibly, but not necessarily) the name, between selling your accounts or
borrowing against them. They're both loans, identically structured. There's no
demand for this euphemistic product in new US markets because we already have
finance.

Oh, another quote from the factoring page:

> in other industries, however, such as textiles or apparel, for example,
> financially sound companies factor their accounts simply because this is the
> historic method of financing

~~~
IkmoIkmo
> None of that indicates to me that there's any difference at all

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

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

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

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

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

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

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

------
alex_young
This seems like just as bad as payday loans to me.

In 2013, there were 45.3 million people in the US under the poverty line. [1]

The article cited a figure of $3.4B / yr for payments to the payday loan
sharks.

This startup charges $3 / week and only services cash flow positive customers.
A little math presuming we cover the poor as a group with this 'service':

In [1]: 4530000 _3_ 52 Out[1]: 706680000

That's $706 million / year, or about a fifth of the total amount the sharks
charge.

But we shouldn't stop there. The sharks are still necessary, since this
company is only covering the predictable expenses, not the extraordinary but
common visits to the emergency room, or to get a car fixed, or any number of
less predictable expenses.

We still need the loan shark. And this guy is taking 20%.

[1]
[http://www.census.gov/library/publications/2014/demo/p60-249...](http://www.census.gov/library/publications/2014/demo/p60-249.html)

------
hurin
I like how someone struggling to make it on an unpredictable $700-90 a week
turns into an advertisement for an app.

~~~
sukilot
It's actually the reverse.
[http://paulgraham.com/submarine.html](http://paulgraham.com/submarine.html)

------
yodsanklai
> Jacobs, in her habitual bright pink lipstick and matching headband, was
> explaining all this via Skype, from her “little box of a house” in Simi
> Valley, to Jane Leibrock, 33, who had the more muted look of the fortunate
> and was sitting in the Oakland headquarters of Even, the start-­up where she
> works. Leibrock — an alumna of Yale; a onetime Beijing resident and Mandarin
> speaker; a street-­fashion blogger; a tweeter of first-­world problems (“My
> personal hell would be having my earbuds pulled out over and over throughout
> eternity”) — used to study the user experience of privacy settings for
> Facebook. Now she is a researcher for Even, which proposes, for a fee, to
> help solve the problem of income volatility.

I'm off topic, but am I the only one to find NY times articles to be abusively
long? is it a trend in this type of US publications?

While I find the topic interesting and I would like to know more, the article
is just too long, repetitive and boring.

~~~
username223
"Abusively long?" You should try the _New Yorker_! No, seriously, you should;
it would give you a chance to appreciate long-form journalism.

