So, if Lyft driver who was "gigging" for them for years gets sick and he is out of work, what kind of help would he get ? None, at least in US.
He can buy health insurance, pension, group income protection, everything you mentioned.
I know poor people can't do that, and that's the issue, but why can't a well-paid truck driver do it?
The entire industry, small and large fleets, use owner operators as perverse cost savings. In some cases, you lease the truck from the large fleet, they charge you for gas and maintenance, insurance, etc; deducted straight from your check. You integrate with their comms / cpu systems, their tracking systems, etc. all for a price. You go where they tell you and when.
It's an industry that's almost impossible to run profitably as an owner operator, because those folks are skinned. But, people are in love with the idea of owning their own business - it's kinda like an MLM that way.
Now, I founded a trucking company that had as many as 15 trucks that ran over the road, both owner operators and company owned vehicles. At my size, there were very few economies of scale and we ran at a break even, at best - closing after a few years. We paid teams .40 cents a mile, all miles, backing out the per diem and paying SS / payroll taxes on the balance - an ridiculously high workmen's comp (first year was 24%, went down to 16.5% later).
I could go into more detail, but you get the point.
Obviously you are seeing a very different picture, and yours actually comes from experience.
The owner of the truck's pay varies based on how they acquired their shipments, direct to shipper or via a broker. Their is a huge spot shipment market for small companies, which fluxuates wildly, at times. Ultimately, the rates vary greatly.
Now, you can drive for a big outfit and make upwards of 70-80k gross, depending on experience, specialization, endorsements, etc.
Sounds more complicated than it is... once the duty period begins, any stops (fuel, breaks, meals, etc) do NOT stop the clock.
This is why most long-haul operations use pairs of drivers... one will sleep in the bunk while the other drives.
Long haul teams can drive as much as 300+k miles per year. This typically consumes 50 weeks of being in the truck at least 6 days a week, simplifying at little.
How does that square with the low net compensation of the drivers?
Is there perhaps a secondary mechanism, other than the (asserted) labor supply shortage, that depresses the wages?
People refuse to pay more for this and if you've invested so much for truck, car insurance, etc...
It doesn't make sense because we keep getting fed a simplistic view of "supply vs demand." That is a general trend, but not a rule.
If you know you have to work to keep your means of survival, you don't negotiate. We've seen salaries/bonuses/rates slowly go up, but there's always some other sucker who has to be able to pay their bills. Even if this means stuff getting to their destination later than usual.
A lot of truck businesses are owner operated, they simply don't have the means to say "no."
Unless there's a significant over-supply of the sellers. In which case the buyer can wait out any given seller, and get better deal from the next seller that comes around.
>If you know you have to work to keep your means of survival, you don't negotiate.
The very same concern goes for the buyers. They are just as well under the pressure of contractual deadlines and bills to pay.
I am sorry, but your post strikes me as example of "magical thinking" - "there must be something special about the owner-operated transport businesses". Yet nobody has provided any serious arguments towards that.
Just for the sake of contrast - you could imagine brain surgeons in the very same predicament. Suppose there were plenty of brain surgeons on the market - their prices (wages) would be very low, sometimes even below the costs incurred. No matter how pressed a patient would be for a life-saving operation, if there were multiple surgeons fiercely competing for this work, the price would be low.
The only reasons the brain surgeons are earning well is that the demand for service is higher than the supply - and there's little to no alternatives to a life-saving surgery.
You may balk at the example of highly skilled specialist surgeon, but it's true story of the eastern block [i.e., communist] countries, where supply of doctors was high, and the demand - which was only the state-funded healthcare - was fixed. The surgeons earned rather low wages, and many supported themselves with bribes for access and expedited treatment.
Please don't tell us there's been "driver shortage for 10+ years". It's just fantasy.
 from the layman's POV "demand" for surgeries was high and nearly insatiable, but from the economics POV, demand with willingness to pay was fixed by the centralized healthcare planners.
Can you expand on what you mean by "supply side economics breaking down"?
Owning a truck is a lot of maintenance - insurance, parking costs, etc. A lot of owners also have to pay lease, loans, etc. They can't afford to negotiate for better rates.
Just because there isn't a lot of supply doesn't mean that rates go up!
If the people hiring these independent trucks can afford not to pay more, because they know someone else will take the lower rate, then there isn't a shortage. This could just about be the definition of whether or not there is a "shortage".
Here's some data.
I've been contracting for 4 years, and paying for my own insurance. Mediocre medical for a family of three:
Year 1 & 2: $970/mo.
Year 3: $1167/mo.
Year 4: $1410/mo.
$BIG_CLIENT just told me after 4 years, to fish or cut bait. I took a full-time position with them.
My cost for health insurance on the group plan? $560/mo. for the same family of three. The coverage? AMAZING by comparison.
Insurance options for self-employed people aren't the best, in my opinon. Costs are very high, coverage is crappy.
Is that the full cost, or is your employer also paying something?
Just like toilet paper, insurances are cheaper when bought in bulk.
Imagine the awesome coverage you'd get as a Lyft or Uber driver if you were actually employed by them.
Suppose two people, Alice and Bob, are both shopping for medical insurance in a country like the US where there is no safety net.
Alice is basically healthy, except she seems to always catch everything. She got flu twice last winter, crazy!
Bob is proud to have never taken a day off in eighteen years.
You show them the same price, Bob winces, and decides he'll risk it without insurance but Alice, conscious that she always seems to catch everything, pays anyway.
Six years later Alice gets really sick, turns out her immune system was shot but she didn't know it. Insurance company loses money on her. She was a bad investment. Bob's still fine, touch wood.
Group insurance is cheaper because you're insuring Bob, who wouldn't have bothered except he's part of the group, as well as Alice, who it turns out was a high risk.
This is one reason why countries with universal healthcare don't bankrupt themselves the way typical anti-healthcare models suggest they should. A group with everybody in it is relatively cheap _overall_ to cover because it has loads of healthy people in it, and they don't need much healthcare, not just all the sick people who have no choice but to get into any system they can to avoid dying.
"We must, indeed, all hang together, or most assuredly we shall all hang separately". Maybe Franklin never said that, if he didn't he should have.
Otherwise the minimum wage regulation is possible to circumvent with contractor arrangements.
 I have a broker's license I don't use anymore
And when those essentials are factored in, does he actually earn mire or less $$$?
Furthermore say you are able to deduct $100 from your taxable income that you would have paid $30 taxes on you have saved the $30 not the $100 a tax deduction is a reduction on the amount taxed not in most cases free money remitted to the taxpayer.
Most peoples expenses are heavily weighted towards, food medical, savings, living space. Whatever they can deduct will be a small portion of their overall expenses.
So in turn you don't see this increase in net pay discussed because
A) Its not an increase in pay its a tax deduction
B) Its a small benefit that is absolutely dwarfed by the additional tax burdens + medical expenses.
In short its not discussed because its imaginary.
Honestly, the same is probably true for most full-time and part-time employees in the US.
That seems naïve and inhumane. Compensation and benefits are understood to be separate things in the US at this time. From social security to health insurance, the costs of securing such things without an employer (an entity on the other side of the wealth gap, usually) are often untenable.
> Forcing Lyft to hire employees instead of contractors won't mean there will be more workers with a safety-net; it means there won't be any Lyft. That would be bad for both drivers and the people being driven.
The choice between untenably-expensive benefits as a contractor or untenably-unaffordable benefits as an unemployed person is no choice at all--especially for people with health problems/children/debt. Ignoring the people being driven (I'mma say that the benefit to the most needy customers of Lyft is negligible compared to the costs/benefits to the drivers in this scenario--otherwise we should have a different discussion about whether or not rides-for-hire should be a public utility), I think saying "you got paid your safety net in your insultingly-low wages last week" is deliberately obtuse and fails to engage with the issue at hand.
It appears that lots of people choose to drive for Lyft knowing they won't get those benefits. Why ignore their choice? If they're choosing to do it and Lyft can't give them the same opportunity along with the benefits it's effectively saying they shouldn't have any opportunity for work until they have the perfect opportunity. I'm not convinced that it's better for someone to starve than to have the opportunity to drive for Lyft.
The people choosing to drive for Lyft do so over all other work opportunities. If there was something equally good that also provided health benefits, then Lyft wouldn't have any drivers as everyone would pick that better alternative. Given there's not a better alternative, why pick on Lyft? They're the most appealing opportunity for work for lots of people.
People can and do make bad choices, such as people who choose to forgo health insurance which then burden hospitals and tax payers in a way that affects everyone else.
The solution is to either force Lyft to play ball and not allow them to avoid things like minimum wage laws by calling their workers contractors, or to ensure that the government covers their healthcare.
Because we live in a democracy that has some minimal protections for workers(not as much as we should). We have minimum wage laws and child labor laws and worker safety protections.
Consent implies both parties are peers.
So? If lift fails a better business will come along that can treat employees well. Or someone will make a successful community run app (which gives 95% of fares to employees taking only overhead) will come along to replace uber/lyft since it would actually be treating them as contractors unlike uber/lyft
Honestly. This market is not a problem in European country where you get free health care. Why would uber/lyft make an exception for the US? If they can get away with it of course they will.
I'm assuming there's sarcasm in that statement. However...
> My father has been truck driver his entire life and for the last 20 years worked as a contractor, while driving his own truck and trailer, since it gives him more $$$ than average driver who works as employee.
One of the primary reasons one makes more as a contractor is because the company isn't paying for those safety nets (insurance, pension, etc). That extra money the contractor is making is supposed to be going towards those things. If said contractor is not using it to buy health insurance and contribute to retirement, then it's that contractor's fault.
Sure, that’s a good way to hyperbolically sum up a country or society, but it is very hyperbolic, and one could construct hyperbolic summations of other countries or societies too. Like “everyone deserves everything, regardless of their effort or contribution or ability.”
The truth is probably somewhere in the middle.
The US needs to address this issue, and now. However, as someone currently working in the field, I’m starting to think that the size of the country, and the sclerotic, poorly incentivized bureaucracy that controls health, will make it impossible to address until there’s a true crisis.
Your dad does have one social net: even 1099's must opt into SS and Medicare (paying both employer and employee shares, unfortunately), at least.
SE is equivalent to both employee and employer share, which is why you get to deduct half of it, equivalent to the employer share (which is not included as taxable income for other workers, either.)
Neither social security nor 401Ks are, in that you can often keep and almost always rollover (to a personal) 401K when departing.
Pensions were, but as I understand it, those basically don’t exist anymore.
We don’t want to remove the ability for a true contractor to work on spec, or for non-cash remuneration, when they can negotiate with a human counterparty. But if you’re being given orders by an inhuman system, you deserve at least some of the protections employees receive against inhumane employers.
Unfortunately, this wipes out e.g. U.S. based Mechanical Turkers, some of whom have health or other restrictions preventing them from getting minimum wage jobs. Haven’t figured out a solve for that yet. But hopefully the actual drafters of legislation would!
(Also, this really makes me want an IDE to crowdsource lawmaking, linting to make the legalese exact, with verified lawyers reviewing PRs. Give the crowd the same ability that lobbyists have to spoon-feed legislation to lawmakers.)
Why? If there were better options out there then Lyft wouldn't have any drivers. Lyft has over one million drivers, which means that for those people there weren't any better opportunities. Lyft isn't profitable even at that lower level without benefits or the extra protections you're arguing for, but still over a million people choose to drive for them. Why take away the best opportunity those people have? Why not put the blame on literally every other company out there, because they all failed these Lyft drivers, leaving Lyft as their best work opportunity.
"Are there no prisons?"
"Plenty of prisons..."
"And the Union workhouses." demanded Scrooge. "Are they still in operation?"
"Both very busy, sir..."
"Those who are badly off must go there."
"Many can't go there; and many would rather die."
"If they would rather die," said Scrooge, "they had better do it, and decrease the surplus population."
Why is it a given that its going to be more common or shall I say allowed to become more common.
Crack would be more common if we didn't keep locking up dealers.
But it would relieve so many problems, from homelesness to our overly litigious society, that I'd vote for it with both hands.
There is nothing about the American health care system that has anything to do with the free market.
Before the ACA, if you had any type of pre-existing condition, you could not buy health insurance at any price.
I guess the roots of this "American" morale is those times when you arrive to the New World, you disembark the ship, and nobody owes you anything. You don't owe anyone anything either. If you don't like it, don't board the ship.
The times have changed. The morale, as it often happens, lags behind.
and of course, mentioning things like this then becomes "news", spawning articles like this:
Tesla's autopilot marketing is extremely poor.
Ride sharing is generally supply constrained (meaning there's plenty of demand but drivers are in limited supply). If they stopped paying driver bonuses to expand in new markets or maintain share of drivers in mature markets, then the number of drivers would likely start plateauing or declining (due to high turnover) -> prices would increase and/or rider wait times would increase -> rider demand would fall -> growth would stall.
In short, they're choosing growth over profitability because that's what investor want to see. As soon as they choose profitability (which they might have to after IPO), their growth will come to a halt and their share price will tank. Watch.
Maybe, but subsidizing new drivers might be key to having enough drivers to satisfy rider demand. They're a commodity with very little stickiness, if Lyft has a wait people will use something else.
All ride sharing companies have the same problem.
That has proven to be a much slower process than they probably expected.
Don’t they have to exist before we worry about commercial viability? You’re not the only one talking like FSDV’s are just minutes away, when the truth is that when you cut through the hype and wishful thinking, they’re an indeterminate period of time away. The conversation around this subject reads like people in the 30’s planning for the dawn of the fusion age.
The technology is not there yet, we don’t know when it willl be or if the avenues being explored now will lead there. Anyone who tries to tell you otherwise is trying to sell you something, like shares in a fundamentally unprofitable endeavor. I get it, self-driving cars would be very cool, and maybe we’ll even live to see them. Maybe not. It’s still a crazy company that can only profit if nonexistent technology emerges quickly! On the other hand I have some shares in my new space elevator to sell...
IMO, the stuff which has already been demonstrated is a bit too creepily good for comfort, even if we're talking about limited Tesla autopilot.
They already have the cheapest solution for having a driver and a car go around town, so sending drivers with their “autonomous” cars in good conditions is an impressive step, but insufficient for full autonomy and not enough to fix their business problems — they need to be able to send the cars in real life situations with no driver.
So 5 years of technology and 5 years of regulation before widespread adoption is a long time for Uber to have to be spending investor money before they spend investor money on autonomous car fleets in every major city. (Or are they going to lease cars from other people? — it may be then that the cost of leasing vehicles from others never comes low enough.)
The better hope for their investors seems to be the rumor they’re profitable in large, established cities and their costs are expansions and turf wars.
Also I cannot imagine Uber to be in any different situation.
I'm not going to pretend to understand the intricacies of Lyft and Uber and their experiments with food delivery, carpooling, and other endeavors. But scaling up does not solve the problem of paying your contractors more than they're making you - in fact it only scales up the problem.
Granted, I've thoroughly enjoyed my cheap rides subsidized by VCs for years. But it's just not a viable business, and I have never heard a convincing argument to the contrary. I feel as though few VCs are looking to create value so much as they're looking to get in early and cash out before the house of cards falls over.
If they had to worry about owning and maintaining all their cars, suddenly they're in a new and very capital-intensive line of business. I'd expect at least one of the established rental car chains- which have physical infrastructure like motor pools, mechanics and relationships with local auto shops, and logistics experience with all of the above- to eat Uber's lunch!
Every way I look at it, work on self-driving technology by rideshare companies is 100% smoke and mirrors to drive investment, and not a serious business plan.
Of course, that depends on a large barrier to entry, and I can't see how the barrier to entry on that market could be large. But well, VCs clearly disagree with me.