I get why an electrician has their own tools. Why does an Uber driver need their own car?
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).
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?
see this post for example with programmers :
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?
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 .
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).
: 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)
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.
 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."
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.
Choose state and "delivery"
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.
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.
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.
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
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...
If you can't find work elsewhere, you'd rather work for pennies than for nothing.
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.
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.
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.
Not everyone is looking for a full-time job.
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?
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.
Which is it, and how can we improve?
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.
Because they are making the situation worse for everyone.
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.
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.
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?
Is my tax burden as a taxpayer going up or down?
That one we do know without a crystal ball - taxi medallion systems and hotels.
As this prohibits very low paying jobs (i.e. better than nothing) then it would be fair to offer unemployment benefits in return.
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.
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?
At the level of an economy, the burden is on you to show that minimum wage results in lower risk/higher opportunity for employees.
Just "imagining" there is a better way isn't a plan.
Whatever. If ppl in this thread wants to argue magical economics and down-vote anyone that disagrees, go ahead.
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".
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) , 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.
If they had offered flat 4.40$ rate probably noone would take the job.
Would people take the job if they were presented with a distribution of hourly rates among already employed workers?
Are you happy MLM jobs exist, or would you rather see them non-existent?
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.
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?
Spoiler: if you're driving for uber, or delivering for uber eats, you are not in the category of population that has:
a) any chance of starting a company
b) any chance of that company succeeding against a giant.
Because you don't have any money. Because Uber pays you like crap.
- 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.
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.
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.
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.
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.
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.
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.
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.
So it is better if they could work for $4.4 an hour, right?
I honestly don't understand why UberEats is a bad.
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.
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.
If it wasn't for minimum wages, companies would make deals to pay workers lower and lower and there would be nowhere to work for a decent salary.
You outlaw collusion to lower wages and let the market work.
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.
It's what sprung to mind when you mentioned organ sales, and it dives in a bit more to multiple sides of the issue.
Interesting read/listen for those of you haven't yet.
Yes, it's a bit of a complicated issue---but it's not just "obviously a bad idea and no one ever should ever even contemplate it".
EDIT: See http://slatestarcodex.com/2013/08/25/fake-consensualism/ for some more background.
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.
'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!
"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."
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.
In many countries the "minimun wage" you like so much is less than $4.4/hour. Why do you think it is this way?
Minimum wage isn't a matter of having a certain amount of money. It's being able to live with dignity.
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.
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.
Uber is consensual.
Low wage + no benefits + pay employers share of the taxes + no room to complain
> “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.
Uber is now revising the incentives system:
Disclaimer: I work for one of the companies handling the salary administration.
Might be a contributing factor.
Uber deserves the bad rep they are getting.
Great write up by the journalist; I'm jealous of all the riding KMs. :)
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.
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.
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.
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.
Lots of respected economists are on both sides of this issue, whether you want to be honest about that or not.
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?
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.
I mean, do people not get how little money this is?
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.
Regardless, there are two possible outcomes from minimum wage:
Your cited articles support the former; others think it will be the latter. In either case, I doubt the market manipulation helps overall.
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.)
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 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.
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?
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!
The government reports 20.000 people are 'missing' but that does not include those that never registered.
The legal status of the terrorist that was caught highlighted the fact that there is next to no control, but nothing seems to be done.
All those people need to work in some way or another.
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.
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.
They'd be laughed out of town.
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.
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.
This is also why internet access is important. Almost as important as having clothes, food/water, and a roof above your head.
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.
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.
Disclaimer: I am working on a solution for the 'underbanked'
Only a massive supply of labour via immigration makes it possible to pay people $4/hr and have any takers.
I have never tried those services since I live downtown and I don't really need home delivery.
Is it a lack of alternatives? A "better than nothing" situation? Does anyone have insights?
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.
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?
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
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.
If you're just talking about customers who eventually benefit from people being paid low salaries, it's not really a good point of comparison.
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.
What you are arguing for is a welfare state.
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  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.
Yes, Germany has a minimum wage now. It's fairly recent. Hence my careful wording that Germany "had" a tradition, not "has" a tradition.
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.
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.
You're surely not interested in protecting the somewhat-poor at the expense of the poverty-stricken.
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?
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*?
It's more efficient and humane than basically telling them they're worthless and they should just stay unemployed.
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.
Employees don't get paid the full value they generate, so that's not a reasonable way to interpret minimum wage.
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.
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).
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.
If this is the case, you'd think employers would have an incentive to raise wages on their own without requiring a law.
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 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.
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.
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.
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.