Is the Sharing Economy Due for Extinction?(casetext.com)
casetext.com
Is the Sharing Economy Due for Extinction?
https://casetext.com/posts/is-the-sharing-economy-due-for-extinction
60 comments
At least in California self-employed individuals are eligible for disability http://www.edd.ca.gov/Disability/Self-Employed_Eligibility.h... and by extension family leave http://www.edd.ca.gov/Disability/FAQ_PFL_Eligibility.htm if they choose to participate.
California is always ahead of the game vs. the rest of the U.S...
It probably won't work long-term. What's great for the consumer is not so great for the person trying to make a living.
It just surprises me that so many people have no problem undermining the unions and essentially creating an economy with no benefits/regular pay.
It just surprises me that so many people have no problem undermining the unions and essentially creating an economy with no benefits/regular pay.
Really interesting article. One important newsworthy note from this article that I think has been missed in some of the broader coverage: Washio, Postmates, and Shyp have been sued by their contractors/employees, joining the same club as Uber, Lyft, and Homejoy. This is an industry-wide issue, not isolated to just a handful of companies, and has the potential to severely damage this budding industry, as the author notes.
Whenever I take an Uber or Lyft these days, I always ask what the drivers think about the issue, and the uniform response so far (obviously this is anecdotal and not at all scientific) is that they like the flexibility of being able to choose when to drive. For many, this is their second job they do on weekends, nights, or early mornings. They are worried that they'll lose this flexible source of income that are helping, for example, save for their children's college education or pay their way through night school.
I'm not saying that this represents the majority view, or that the legal issue should come out any differently, but I do worry that some of these workers, happily employed as contractors, will lose out on this opportunity.
Whenever I take an Uber or Lyft these days, I always ask what the drivers think about the issue, and the uniform response so far (obviously this is anecdotal and not at all scientific) is that they like the flexibility of being able to choose when to drive. For many, this is their second job they do on weekends, nights, or early mornings. They are worried that they'll lose this flexible source of income that are helping, for example, save for their children's college education or pay their way through night school.
I'm not saying that this represents the majority view, or that the legal issue should come out any differently, but I do worry that some of these workers, happily employed as contractors, will lose out on this opportunity.
One supposes what they'd really like is to be able to enjoy both flexible hours and typical benefits and worker protections. Unfortunately, we've set up our stupid system so that these are somehow exclusive.
The "stupid system" is set up this way for a reason: to prevent employers from majorly fucking over their employees (and avoid taxes) in order to maximize profits.
The reason a lot of Uber drivers don't mind being contractors is because they already have full-time jobs that provide health insurance. But ask drivers who drive during regular business hours (they will be more likely to not have any other job) and they will probably tell you that they would rather be employees.
The reason a lot of Uber drivers don't mind being contractors is because they already have full-time jobs that provide health insurance. But ask drivers who drive during regular business hours (they will be more likely to not have any other job) and they will probably tell you that they would rather be employees.
I think there's a stunning irony in the fact that America's privatized health system causes problems for disruptive companies like Uber.
Yeah, I hear you.
I guess one other way these things are exclusive is that they drive up costs for sharing economy companies. Some of these companies are pricing so low that they are barely making a profit as it is. If their costs are even higher, they will have to drive up prices, and at least part of their appeal immediately vanishes. At least a few of the companies will die if that happens.
I guess one other way these things are exclusive is that they drive up costs for sharing economy companies. Some of these companies are pricing so low that they are barely making a profit as it is. If their costs are even higher, they will have to drive up prices, and at least part of their appeal immediately vanishes. At least a few of the companies will die if that happens.
> At least a few of the companies will die if that happens.
I wish people would realize this is a morally neutral outcome. Like, oh no, another company down the drain. It's not like they're a limited resource. We should be willing to sacrifice a thousand companies if they can't succeed on the profit metric under the rules we've set.
"Sharing economy" type companies are a good idea. They'll succeed, or better ones will. They don't need coddling.
I wish people would realize this is a morally neutral outcome. Like, oh no, another company down the drain. It's not like they're a limited resource. We should be willing to sacrifice a thousand companies if they can't succeed on the profit metric under the rules we've set.
"Sharing economy" type companies are a good idea. They'll succeed, or better ones will. They don't need coddling.
If a company and its potential customers are prevented from making a mutually beneficial exchange because of some rule, that's a cost. You can argue that the cost is outweighed by the benefits of the rule, but you can't just claim that the cost doesn't exist.
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Yes, labor regulations are a cost. Yes, that's because we're civilized people.
If you want a libertarian paradise where government doesn't interfere, move to Somalia.
If you want a libertarian paradise where government doesn't interfere, move to Somalia.
Homejoy is a red herring. They were out hustled by competitors and used this issue to save face/exit.
This _is_ a very new form of employment that is a mixture of two older forms. There's way too much momentum to kill it. New legislation will be enacted to cover this 3rd type of worker which will please no one except that it'll remove uncertainty so the businesses will support it.
This _is_ a very new form of employment that is a mixture of two older forms. There's way too much momentum to kill it. New legislation will be enacted to cover this 3rd type of worker which will please no one except that it'll remove uncertainty so the businesses will support it.
Perhaps going from independent contractor to proper employee can be an earned upgrade? Those who show consistent performance could become eligible for benefits like health coverage, auto repair co-payments (if Uber, for example), and a preferred listing for customers. This way people who are committed to making a living in the sharing economy can coexist with the real independents who only participate to make a little extra coin.
A company like Uber doesn't have the economy of scale to get a good rate for benefits. Each state is a different market, so being a top transportation network in California doesn't buy you negotiating power in New Jersey.
The rate won't differ much from what the driver will be quoted on an ACA exchange if he were to buy it himself (and might actually be worse, because individuals are eligible for subsidies, while companies aren't).
Then you have all sorts of issues of vacation time and coverage meanwhile. If the driver doesn't sign into the network for X amount of days, is he still eligible? Or automatically dropped from employee status and subsequent coverage?
The rate won't differ much from what the driver will be quoted on an ACA exchange if he were to buy it himself (and might actually be worse, because individuals are eligible for subsidies, while companies aren't).
Then you have all sorts of issues of vacation time and coverage meanwhile. If the driver doesn't sign into the network for X amount of days, is he still eligible? Or automatically dropped from employee status and subsequent coverage?
That's a good point. It would certainly require a rethinking of how a company like Uber considers drivers to be employees. Using Uber as an example, they would have to mandate working hours and other customer service standards. However in Uber's particular case, being a $40bn company and not being able to pay employees like employees is either a reflection of laziness, greed, shamefulness, or all of the above.
I agree - many folks like having flexibility. This could be an example of a subset of disgruntled workers and their lawyers killing the Golden Goose. Of course I still believe that the Ubers of the world need to follow labor laws.
If the Golden Goose is indeed slain, it will also be due to the sharing companies willfully ignoring legal issues to keep pushing growth, Uber being the prime example.
Asking for forgiveness, not permission works sometimes but eventually you do have to deal with the legalities.
Asking for forgiveness, not permission works sometimes but eventually you do have to deal with the legalities.
There was a bit of talk a few weeks ago around about creating a new classification, somewhere between W-2 and 1099, for people who aren't really contractors but aren't really full time employees either, but I can't find any of the articles.
I think the real solution might be to reduce the number of classifications, but I doubt it would be particularly popular.
From two to one? I know there are more, but almost everyone acting as an individual is in one of the two cases.
There will be a nice opportunity for a law firm to understand these rulings in every state to help service economy businesses scale quickly. With each state ruling, there will be different standards, and acceptable language in contractor agreements. As companies decide to scale quickly, they will need someone to tell them how to structure agreements in a way that doesn't invite lawsuits in each state.
The "sharing economy" is Uber and some wannabees.[1] Airbnb isn't employment, it's real estate rental. The other service companies are all tiny.
After a while, Uber is going to lose on the "independent contractor" thing. Uber will end up owning the cars and hiring drivers as employees, at least until the CMU crowd they hired makes automatic driving good enough. It will still be a profitable business.
[1] https://pando.com/2015/07/06/lets-face-it-uber-sharing-econo...
After a while, Uber is going to lose on the "independent contractor" thing. Uber will end up owning the cars and hiring drivers as employees, at least until the CMU crowd they hired makes automatic driving good enough. It will still be a profitable business.
[1] https://pando.com/2015/07/06/lets-face-it-uber-sharing-econo...
That link is paywalled.
I'm glad. The "Sharing Economy" does one thing and does it well:
It privatizes wealth while socializes risk.
And the risk to the employee is always covered up or misdirected. With Uber, the big cost is insurance. However they count on people not to know. There's also the issue that Uber sets your price for you, and none that you can negotiate. Better yet, with less than 5 approval means you are "given" even a lower rate.
With Fiverr eLance and oDesk, at least I can set my prices and negotiate with potential clients. Yes, I pay the host company a cut, but that's well stated and fair.
It privatizes wealth while socializes risk.
And the risk to the employee is always covered up or misdirected. With Uber, the big cost is insurance. However they count on people not to know. There's also the issue that Uber sets your price for you, and none that you can negotiate. Better yet, with less than 5 approval means you are "given" even a lower rate.
With Fiverr eLance and oDesk, at least I can set my prices and negotiate with potential clients. Yes, I pay the host company a cut, but that's well stated and fair.
Negotiating with clients on freelance sites is more involved than requesting a ride on Uber, so I don't think that comparison fits.
Correct. Freelance sites' negotiation shows that there is due consideration and discussion, along with a meeting of the minds.
oDesk isn't selling you out to X company and saying if you don't, they're going to lower your rates. They simply provide the portal in which to make the deal.
Uber relies on skirting regulation, as well as misdirecting their employees of what the risks truly are. If I'm hurt on the job, workmans comp takes care of it. What if I'm hit while running an uber run? What if a customer sues for getting hit while in the car? What if it's illegal to run as a cab in my state without a chauffeurs license?
Uber counts on you not knowing the logical and legal landscape, as well as skirts employee protections.
All to make a buck.
oDesk isn't selling you out to X company and saying if you don't, they're going to lower your rates. They simply provide the portal in which to make the deal.
Uber relies on skirting regulation, as well as misdirecting their employees of what the risks truly are. If I'm hurt on the job, workmans comp takes care of it. What if I'm hit while running an uber run? What if a customer sues for getting hit while in the car? What if it's illegal to run as a cab in my state without a chauffeurs license?
Uber counts on you not knowing the logical and legal landscape, as well as skirts employee protections.
All to make a buck.
> All to make a buck.
Really?
> Correct. Freelance sites' negotiation shows that there is due consideration and discussion, along with a meeting of the minds.
Yes, so what? That's the nature of freelance marketplaces. So those types of businesses don't even belong in a discussion about Uber. They involve different business transactions. I'm not signing NDAs with my passengers.
> They simply provide the portal in which to make the deal.
These sites aren't just invisible portals with no QA or control over who uses them. There are ratings and I'm sure there are consequences to putting out crappy work or scamming people. I remember signing up with eLance and I had to go through an interview process to get the verified badge. I mean it sounds like your idea of a freelance site is an open chat room where anything goes. How is that adding value?
Really?
> Correct. Freelance sites' negotiation shows that there is due consideration and discussion, along with a meeting of the minds.
Yes, so what? That's the nature of freelance marketplaces. So those types of businesses don't even belong in a discussion about Uber. They involve different business transactions. I'm not signing NDAs with my passengers.
> They simply provide the portal in which to make the deal.
These sites aren't just invisible portals with no QA or control over who uses them. There are ratings and I'm sure there are consequences to putting out crappy work or scamming people. I remember signing up with eLance and I had to go through an interview process to get the verified badge. I mean it sounds like your idea of a freelance site is an open chat room where anything goes. How is that adding value?
> Yes, so what? That's the nature of freelance marketplaces. So those types of businesses don't even belong in a discussion about Uber. They involve different business transactions.
I find it somewhat humorous that you don't realize that this is the entire point. "Contractors" are supposed to have these freedoms, however Uber workers do not. The differences exactly like these are why their workers are being force-reclassified to "employees".
I find it somewhat humorous that you don't realize that this is the entire point. "Contractors" are supposed to have these freedoms, however Uber workers do not. The differences exactly like these are why their workers are being force-reclassified to "employees".
Do the workers get a say in how they're classified? If we really care about the workers, then maybe they should have a choice in what they want. Instead it's "force-reclassified" because authoritarians and lawyers know best.
Ah. A libertarian.
Being an employee is strictly better because you are protected many ways. You get workers comp for on the job injuries, overtime law, OSHA compliance, unemployment compensation, along with not paying the employers' tax yourself.
The gig economy is the starting of stratifying out undesirable people to a less-than-minimum-wage employee. And this is disgusting and wrong. We as a citizenry deserve better.
Being an employee is strictly better because you are protected many ways. You get workers comp for on the job injuries, overtime law, OSHA compliance, unemployment compensation, along with not paying the employers' tax yourself.
The gig economy is the starting of stratifying out undesirable people to a less-than-minimum-wage employee. And this is disgusting and wrong. We as a citizenry deserve better.
But that's the distinction between contractor and employee, right? A contractor "contracts" for work, i.e. they negotiate the terms and prices individually. An employee is "employed" - their employer tells them what to do and gives them money in return. That's why two of the main tests in contractor-classification lawsuits are "Can the contractor set prices?" and "How much control does the employer have over how the work is done?"
Don't think that's correct.
Lead-generation services like ThumbTack, RedBeacon or any "home warranty" outfits solicit professonals such as electricians and plumbers at their own pre-determined prices, yet at no point an independent electrician is confused with a RedBeacon employee.
If someone posts a Craigslist ad asking for two movers with a truck and mentions a specific budget, they're not automatically entered into a W-2 relationship.
Lead-generation services like ThumbTack, RedBeacon or any "home warranty" outfits solicit professonals such as electricians and plumbers at their own pre-determined prices, yet at no point an independent electrician is confused with a RedBeacon employee.
If someone posts a Craigslist ad asking for two movers with a truck and mentions a specific budget, they're not automatically entered into a W-2 relationship.
The contractors on Thumbtack (at least) set their own prices. I've used them a couple times and they always come back with a range of bids, sometimes differing by up to 2.5x.
Ditto Craigslist; you may mention your budget, but the movers will quote you a price, and there may be some negotiating back and forth until you find a price that's mutually acceptable.
IIUC, Uber gives drivers a set rate per fare, and it's take-it-or-leave-it.
(And no, they're not "automatically entered" into a W-2 relationship - it's not as cut and dried as that. But "ability to set prices" and "ability to control how the work is done" are 2 of ~5 criteria used to determine whether a contractor is really an employee, and they are two of the most important criteria.)
Ditto Craigslist; you may mention your budget, but the movers will quote you a price, and there may be some negotiating back and forth until you find a price that's mutually acceptable.
IIUC, Uber gives drivers a set rate per fare, and it's take-it-or-leave-it.
(And no, they're not "automatically entered" into a W-2 relationship - it's not as cut and dried as that. But "ability to set prices" and "ability to control how the work is done" are 2 of ~5 criteria used to determine whether a contractor is really an employee, and they are two of the most important criteria.)
Some might counter-quote, but the default behavior is to ignore the listings where the bid seems too low.
By the same token an Uber driver can choose to "chase the surge" and only tune in during high-demand time in a high-demand area.
By the same token an Uber driver can choose to "chase the surge" and only tune in during high-demand time in a high-demand area.
And offering only during surge pricing at a set rate is somehow equal to setting out a shingle with your desired price?
Right.
Right.
I don't know, gov rules and regs are unclear and create this type of divisiveness, winners & losers, etc. I would only ask, do the Uber drivers get a choice? What if I value my flexible work schedule over setting my own price. Maybe I'm fine with the price Uber sets and I don't want to worry about it, but I do value being able to work certain hours so I can visit my grandmother at a certain time. If I'm an employee, I don't get the luxury anymore.
You actually do at a wide variety of places - every job I've ever had had no problem letting me duck out in the middle of the day to do errands, visit my grandmother, celebrate my anniversary with my girlfriend, etc.
Anyway, this is a pretty interesting case historically, legally, and economically. The reason we have labor laws is because way back in the 1800s, the pendulum swung the other way. Early merchants paid their suppliers by piece-work, and negotiated each shipment individually. During the industrial revolution, corporations found it more economical to dictate exactly how employees performed their jobs, with set hours and assembly-line processes, and gradually this contracting turned to employment, under terrible terms (because workers had no bargaining power for their newly-unskilled jobs). Over time, we got the organized labor movement, which managed to say that "If you're going to dictate how we do our jobs, what's in it for us? You might as well provide us with security and decent wages," which is how we got employee benefits.
Every regulation creates a dead-weight loss: that's the share of transactions that would have occurred in a free market, but which don't because either party now finds it too much of a hassle with the regulations. Uber and other sharing economy companies have stepped into the dead-weight loss created by labor laws: they fill the share of transactions that would have occurred if companies in these industries were not required to provide employee benefits. All well and good for Uber & its drivers, and not so good for competitors.
The problem comes down the road, where Uber etc. have outcompeted everyone else in the industry, and all the jobs are independent contractor ones with prices set by the app. Then you're pretty much forced to accept whatever bargain they provide - and without legal protections, it probably won't be a good one. So no, Uber drivers don't really get a choice. Hope they're happy with the one Uber provides.
(This is all just analysis, and I don't really have a personal position one way or another. I've generally found it a lot more fruitful to work on things lots of people want and not many people can do, because then you have negotiating leverage and can demand flexible hours regardless of what your employer wants. I think that many of the sharing-economy contractors are working against their own long-term interests, but I'm not one of them, so it doesn't personally affect me.)
Anyway, this is a pretty interesting case historically, legally, and economically. The reason we have labor laws is because way back in the 1800s, the pendulum swung the other way. Early merchants paid their suppliers by piece-work, and negotiated each shipment individually. During the industrial revolution, corporations found it more economical to dictate exactly how employees performed their jobs, with set hours and assembly-line processes, and gradually this contracting turned to employment, under terrible terms (because workers had no bargaining power for their newly-unskilled jobs). Over time, we got the organized labor movement, which managed to say that "If you're going to dictate how we do our jobs, what's in it for us? You might as well provide us with security and decent wages," which is how we got employee benefits.
Every regulation creates a dead-weight loss: that's the share of transactions that would have occurred in a free market, but which don't because either party now finds it too much of a hassle with the regulations. Uber and other sharing economy companies have stepped into the dead-weight loss created by labor laws: they fill the share of transactions that would have occurred if companies in these industries were not required to provide employee benefits. All well and good for Uber & its drivers, and not so good for competitors.
The problem comes down the road, where Uber etc. have outcompeted everyone else in the industry, and all the jobs are independent contractor ones with prices set by the app. Then you're pretty much forced to accept whatever bargain they provide - and without legal protections, it probably won't be a good one. So no, Uber drivers don't really get a choice. Hope they're happy with the one Uber provides.
(This is all just analysis, and I don't really have a personal position one way or another. I've generally found it a lot more fruitful to work on things lots of people want and not many people can do, because then you have negotiating leverage and can demand flexible hours regardless of what your employer wants. I think that many of the sharing-economy contractors are working against their own long-term interests, but I'm not one of them, so it doesn't personally affect me.)
> You actually do at a wide variety of places - every job I've ever had had no problem letting me duck out in the middle of the day to do errands, visit my grandmother, celebrate my anniversary with my girlfriend, etc.
You've been lucky then. I have that now, but previously, it was pretty rigid.
> The problem comes down the road, where Uber etc. have outcompeted everyone else in the industry, and all the jobs are independent contractor ones with prices set by the app.
I see what you're saying, and we don't want to repeat history. I just find it hard to believe with the agility of startups and ever-decreasing technological barriers that Uber won't have serious competition in the next few years.
Anyway, I appreciate the history of labor law and explanation of dead-weight loss.
You've been lucky then. I have that now, but previously, it was pretty rigid.
> The problem comes down the road, where Uber etc. have outcompeted everyone else in the industry, and all the jobs are independent contractor ones with prices set by the app.
I see what you're saying, and we don't want to repeat history. I just find it hard to believe with the agility of startups and ever-decreasing technological barriers that Uber won't have serious competition in the next few years.
Anyway, I appreciate the history of labor law and explanation of dead-weight loss.
Companies that use primarily contractors make regulators uncomfortable, and their general antipathy to such ad hoc arrangements is pretty well known. It's much easier to regulate and collect taxes from, and admittedly to protect, people who work for large companies the government can exert control over. So these challenges will keep coming as long as complainants can be found.
The fact that they can be found easily enough is also interesting, and I suspect that what is going on here, at least to some extent, is that the "early adopter" contractors who are more independent and seek fewer controls are soon augmented as the business grows by people who are attracted to the good things they hear about, but at the same time really aren't lone-wolf risk takers, and really don't want to provide for themselves.
The fact that they can be found easily enough is also interesting, and I suspect that what is going on here, at least to some extent, is that the "early adopter" contractors who are more independent and seek fewer controls are soon augmented as the business grows by people who are attracted to the good things they hear about, but at the same time really aren't lone-wolf risk takers, and really don't want to provide for themselves.
We'd be fools to not use these productivity gains afforded by modern information technology. The technology and creativity behind it have outpaced our classifications of what a job is.
Uber and the like seem to be in a grey area - a middle ground. We'd be foolish to throw away the gains and opportunities that have been created but we also need to have a debate about what the "employees" role is in these types of positions, what is owed to them from the company and how society most benefits from these arrangements. We need to define a lot of things and determine how they should work in a civilized society.
I don't have the answers but I believe it is clear something fair on all sides needs to be considered.
Uber and the like seem to be in a grey area - a middle ground. We'd be foolish to throw away the gains and opportunities that have been created but we also need to have a debate about what the "employees" role is in these types of positions, what is owed to them from the company and how society most benefits from these arrangements. We need to define a lot of things and determine how they should work in a civilized society.
I don't have the answers but I believe it is clear something fair on all sides needs to be considered.
I don't think the sharing economy as a whole will go away.
Homejoy is a bit special in that they sell something that you really only need once, and that's if you know nobody who will recommend you a cleaner. (Why don't they pivot, for instance into a moving company? Pays good money for college kids if they happen to be free, cheap for people who need to move. Location services lets you identify people who are near the opportunity.)
But the idea of a service where both buyers and sellers can find each other on a casual basis is sound. It's just that we need to sort out what the terms are. Should full-time Uber drivers get different protections from part-timers? Needs a trip through the social/political grinder for an answer.
Homejoy is a bit special in that they sell something that you really only need once, and that's if you know nobody who will recommend you a cleaner. (Why don't they pivot, for instance into a moving company? Pays good money for college kids if they happen to be free, cheap for people who need to move. Location services lets you identify people who are near the opportunity.)
But the idea of a service where both buyers and sellers can find each other on a casual basis is sound. It's just that we need to sort out what the terms are. Should full-time Uber drivers get different protections from part-timers? Needs a trip through the social/political grinder for an answer.
I think you have this a bit backward. The cleaning business is at it's core, a recurring revenue business. Cleaning at regular intervals keeps the cost down (time) and builds back profit if the first cleaning was discounted. Moving on the other hand is something you don't need often and is harder forecast revenue. In either case the employee/contractor problems exists.
I assume what the GP is referring to is that nothing prevents a satisfied Homejoy customer from exchanging contact information with their cleaner (and, if they do like the cleaner, they would benefit from doing so rather than taking on future unknown cleaners).
I believe the point was if you like your cleaner, you could contract with them directly the next time. Of course, there's probably some protection from going through the service, so not entirely true.
Sure if you assume HomeJoy as a lead Gen model, loyalty on both sides could be a problem. HomeJoy generally positioned their service like that. However, I don't think that was the intent in the long term. If loyalty is a problem with a service business then your customer acquisition has a flaw (high discount) or you provide no additional value to the customer (quality control, customer service, insurance, backup cleaners).Certainly the loyalty problem exists with "traditional" services as well. The big franchises stay in business by first providing good service and second loyal workers. Those factors plus acquiring the right kind of customer provides the recurring revenue this type of business needs to survive.
> “The jury in this case will be handed a square peg and asked to choose between two round holes,” [U.S. District Judge Vince Chhabria] wrote. “The test the California courts have developed over the 20th Century for classifying workers isn’t very helpful in addressing this 21st Century problem.”
I know the author is an attorney and thus interested in the law as it currently exists rather than how it might be, but these articles about reclassifying contractors always seem to treat the issue like the laws are stone. The sharing economy is mutually appreciated by most of its contractors and most of its customers, it creates value for society, and the solution is that Congress and the California legislature need to revise these outdated 20th century labor laws to reflect current realities. We don't have to fit Uber into the classifications we currently have -- the law should change with the times. And they don't have to cave entirely to the demands of Uber et al -- there is a world in which state and federal laws are rewritten to recognize these contractor jobs while adding protections and job guarantees (like being able to charge your own price) without declaring all employees are FTE like someone with a desk job.
I know the author is an attorney and thus interested in the law as it currently exists rather than how it might be, but these articles about reclassifying contractors always seem to treat the issue like the laws are stone. The sharing economy is mutually appreciated by most of its contractors and most of its customers, it creates value for society, and the solution is that Congress and the California legislature need to revise these outdated 20th century labor laws to reflect current realities. We don't have to fit Uber into the classifications we currently have -- the law should change with the times. And they don't have to cave entirely to the demands of Uber et al -- there is a world in which state and federal laws are rewritten to recognize these contractor jobs while adding protections and job guarantees (like being able to charge your own price) without declaring all employees are FTE like someone with a desk job.
> ... [T]hese articles about reclassifying contractors always seem to treat the issue like the laws are stone.
Once you're at the point of a jury, which is the context of your quoted segment, then the law is set in stone. Yes, I'm sure there are many politicians contemplating changes. But the bottom line is that until that happens, the current laws need to be treated as, well, law.
Once you're at the point of a jury, which is the context of your quoted segment, then the law is set in stone. Yes, I'm sure there are many politicians contemplating changes. But the bottom line is that until that happens, the current laws need to be treated as, well, law.
Totally agree, my comment was mostly about the attitude in these stories that sharing economy contractors must fit into one of these 20th century labor round holes. I just think government could fix this "problem" very quickly by updating labor laws to more accurately reflect work in the 21st Century (e.g. my Bangladeshi Lyft driver who's working full-time on an MBA and only wants to drive nights until he graduates, and is more interested in the income than benefits)
Really the value for the customers comes from being able to hail a cab from your phone (because we're talking Uber, here). I don't think there's really any major value intrinsic to the "sharing economy" that trickles out to the end user. Uber could just as easily be a big company with a fleet of cars, or a service that lets nice taxis connect with fares. It would probably all the same to customers.
The cost of supporting those fleet of cars along with drivers will make it non-profitable for a company like Uber to exist in anywhere except for high traffic zones. So the prices will go up, and it may not be as convenient. I am not sure if any research has been done in this direction, but I would be curious to know how many man-hours were saved due to using Uber, instead of waiting for cabs. The big fleet model makes sense if you are employed full time, and at that time you may as well be a cab driver, but for small places with lower number of vehicles and high demand times, the model just doesn't scale
Consider where we are on the technology curve. We're a few years into general purpose, networked computers being in everyone's pockets. We're a few years away from those computers being capable of coordinating interactions between their owners without middlemen using distributed consensus systems like Ethereum. Once that technology is mature, this concern about whether the workers are employees of the middleman will be moot.
Society desires the ability to offer and purchase services from individuals on demand. These workers work for other individuals. The fact that there are companies involved is a historical quirk that we shouldn't focus our policies on. We need policies that support individuals offering their services to other individuals, so employer-oriented policies are a distraction.
Society desires the ability to offer and purchase services from individuals on demand. These workers work for other individuals. The fact that there are companies involved is a historical quirk that we shouldn't focus our policies on. We need policies that support individuals offering their services to other individuals, so employer-oriented policies are a distraction.
Uh-huh. But there's no venture capital available for merely facilitating paying interactions between people, unless you plan to take a large cut.
Uber is currently grabbing about 30% of the revenue stream that passes through it, and experimenting with ever-higher cuts.
I would also point out that the modern corporation evolved to fill a demonstrated need, and there's no evidence that the need (ability to command and control large groups of people to work together to reach a goal) has dissipated.
Uber is currently grabbing about 30% of the revenue stream that passes through it, and experimenting with ever-higher cuts.
I would also point out that the modern corporation evolved to fill a demonstrated need, and there's no evidence that the need (ability to command and control large groups of people to work together to reach a goal) has dissipated.
Lots of things get created without venture capital. Giving the world back that 30% cut of every ride would be a pretty huge favor. Governments, benevolent donors, and open source developers are all in the business of doing people huge favors.
Who makes and maintains the technology, though? You're talking about replacing employers with some kind of system, but that system has to be created and maintained by somebody. It carries their values forward to how transactions occur. I don't see how employer-regulation is wholly different from regulating a system for managing these types of transactions. It just needs tweaking.
It has to be created by someone, but it runs without maintenance because anyone can run it. It also can't be regulated because anyone can run it. These are some of the benefits of a decentralized system.
Funding the creation of a such a system is an interesting problem that I think will be solved.
Funding the creation of a such a system is an interesting problem that I think will be solved.
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I think there is a real opportunity here that is being missed, unless I am missing something, especially for companies like Uber, Lyft or Homejoy. Things like AirBnB, maybe a bit less.
These kinds of companies encourage the "micropreneur" - the micro-sized entrepreneur. I personally really like this concept as it frees some of us from cubicle-land.
We should consider what are the "benefits" of full-time, W-2 salaried work vs "everything else" (1099, etc.)?
Benefits of W-2 work (for a good benefit package):
- presumed "stable", regular income at an agreed upon rate
- regularly scheduled work hours (usually)
- generally defined work role (position, title, responsibilities)
- paid vacation time - retirement plans, pensions, etc. (sometimes)
- health insurance
- life insurance
- dental insurance
- disability insurance
- different tax classification
Those benefits are very nice, but in an "at-will" employment state like California, they can go poof and disappear quickly. And they are expensive to pay for, for companies/organizations.
Here are a few points to consider:
- If people have their own individual health, life, disability and liability insurance, they can work as an individual with "benefits" independent of an organization.
- The benefits of "sharing economy" jobs have costs, but allow different lifestyles. Controlling work hours, sharing of personal assets in exchange for financial compensation on a micro-scale, feeling "self-employed", making a living with diverse pursuits.
- In my last job, the HR function was outsourced to a third party company (Trinet) that pooled risk for all of the benefits above across all the companies that outsourced HR to them. If it works for companies, why can't that work for individuals too (aside from the obvious $$ concerns)?
The Health Insurance Exchange (US, e.g. "Obamacare"), for as many problems as it has, tries to help address getting health insurance more affordably as an individual vs. getting it through a company by pooling risk across the population. I don't know of an insurance exchange for liability, disability, dental, etc. insurances to try to help drive prices down in those areas. Should there be one?
Cost sharing and enabling independent individuals, small business owners, micropreneurs, etc. is one way to defeat this weakness. Cheating to avoid cost does not work, but finding strong fundamental ways to innovate the system can lower cost. If enough people band together to enable this way of doing it, then they are the risk pool, and they can share costs. Somebody just needs to help put together this system for them.
These kinds of companies encourage the "micropreneur" - the micro-sized entrepreneur. I personally really like this concept as it frees some of us from cubicle-land.
We should consider what are the "benefits" of full-time, W-2 salaried work vs "everything else" (1099, etc.)?
Benefits of W-2 work (for a good benefit package):
- presumed "stable", regular income at an agreed upon rate
- regularly scheduled work hours (usually)
- generally defined work role (position, title, responsibilities)
- paid vacation time - retirement plans, pensions, etc. (sometimes)
- health insurance
- life insurance
- dental insurance
- disability insurance
- different tax classification
Those benefits are very nice, but in an "at-will" employment state like California, they can go poof and disappear quickly. And they are expensive to pay for, for companies/organizations.
Here are a few points to consider:
- If people have their own individual health, life, disability and liability insurance, they can work as an individual with "benefits" independent of an organization.
- The benefits of "sharing economy" jobs have costs, but allow different lifestyles. Controlling work hours, sharing of personal assets in exchange for financial compensation on a micro-scale, feeling "self-employed", making a living with diverse pursuits.
- In my last job, the HR function was outsourced to a third party company (Trinet) that pooled risk for all of the benefits above across all the companies that outsourced HR to them. If it works for companies, why can't that work for individuals too (aside from the obvious $$ concerns)?
The Health Insurance Exchange (US, e.g. "Obamacare"), for as many problems as it has, tries to help address getting health insurance more affordably as an individual vs. getting it through a company by pooling risk across the population. I don't know of an insurance exchange for liability, disability, dental, etc. insurances to try to help drive prices down in those areas. Should there be one?
Cost sharing and enabling independent individuals, small business owners, micropreneurs, etc. is one way to defeat this weakness. Cheating to avoid cost does not work, but finding strong fundamental ways to innovate the system can lower cost. If enough people band together to enable this way of doing it, then they are the risk pool, and they can share costs. Somebody just needs to help put together this system for them.
Can we call this what it is?
It's not the sharing economy. It's the sharecropper economy.
It's not the sharing economy. It's the sharecropper economy.
That's the real problem. The lack of a social safety net without being an Employee of BigCorp.