Uber will charge significantly more per trip as new Seattle law goes into effect(seattletimes.com)
seattletimes.com
Uber will charge significantly more per trip as new Seattle law goes into effect
https://www.seattletimes.com/seattle-news/transportation/embargoed-uber-raising-its-prices-starting-jan-1/
335 comments
This is not an excuse for one cohort of poverty to subjugate the other by way of Silicon Valley. If public transportation is not reliable, make it reliable. If people aren't paid enough, improve wage and labor requirements. Many countries provide for their workers' transportation without Uber, so why can't we?
For example:
> But if you're on the lower income scale and you need Uber to help you get between your second and third job (because you can't afford a car and public transit is unreliable) or you need it to get to a doctor's appointment, this kind of change is a big deal.
If this is the problem we're solving for (getting you between multiple distant jobs that you desperately need to make ends meet), and have determined that Uber is the only or best solution, we have already failed. The solution to poverty is not serfdom.
For example:
> But if you're on the lower income scale and you need Uber to help you get between your second and third job (because you can't afford a car and public transit is unreliable) or you need it to get to a doctor's appointment, this kind of change is a big deal.
If this is the problem we're solving for (getting you between multiple distant jobs that you desperately need to make ends meet), and have determined that Uber is the only or best solution, we have already failed. The solution to poverty is not serfdom.
If society decides that everyone should have minimum standard of living despite their skill level or net contributions, then it should be society as a whole that bares that burden, not just the enterprises that employ low/no skill labor or their consumers.
A minimum wage is nothing more than a tool in our arsenal to fight poverty. I (and many economists) argue that it is one of our worst tools. A negative income tax is much better. It won't distort labor markets or risk driving up unemployment. And it's fairer in that the burden is shared collectively rather than just by some industries. Goldman Sachs doesn't get hurt by a minimum wage, but small business owners, such as those running a convenience store, do.
A minimum wage is nothing more than a tool in our arsenal to fight poverty. I (and many economists) argue that it is one of our worst tools. A negative income tax is much better. It won't distort labor markets or risk driving up unemployment. And it's fairer in that the burden is shared collectively rather than just by some industries. Goldman Sachs doesn't get hurt by a minimum wage, but small business owners, such as those running a convenience store, do.
> And it's fairer in that the burden is shared collectively rather than just by some industries.
This is where we disagree.
Companies that employ workers below subsistence wages are actually being indirectly subsidized collectively by every single taxpayer.
Those underpaid employees are the ones who then go on to collect public benefits to make up the difference between survival and their take-home pay, and those benefits come out of our tax dollars.
Allowing employers to pay below subsistence wages is corporate welfare.
All this bill does is tip the scales back to where they need to be: if you as a business are not paying a living wage to your employees, you're effectively forcing the taxpayer to pay the part of the salary you're not interested in paying.
This is also the interest the state has in the matter, as not doing so negatively impacts the state.
No more mooching.
> Goldman Sachs doesn't get hurt by a minimum wage, but small business owners, such as those running a convenience store, do.
And I'm sorry but those businesses wouldn't exist without the government passively subsidizing them by providing benefits to the workers they're stiffing.
If these are the kinds of businesses we want more of, it should be via an explicit, active subsidy program. If not, they will have to go out of business or find a way to make the economics work. That's capitalism.
This is where we disagree.
Companies that employ workers below subsistence wages are actually being indirectly subsidized collectively by every single taxpayer.
Those underpaid employees are the ones who then go on to collect public benefits to make up the difference between survival and their take-home pay, and those benefits come out of our tax dollars.
Allowing employers to pay below subsistence wages is corporate welfare.
All this bill does is tip the scales back to where they need to be: if you as a business are not paying a living wage to your employees, you're effectively forcing the taxpayer to pay the part of the salary you're not interested in paying.
This is also the interest the state has in the matter, as not doing so negatively impacts the state.
No more mooching.
> Goldman Sachs doesn't get hurt by a minimum wage, but small business owners, such as those running a convenience store, do.
And I'm sorry but those businesses wouldn't exist without the government passively subsidizing them by providing benefits to the workers they're stiffing.
If these are the kinds of businesses we want more of, it should be via an explicit, active subsidy program. If not, they will have to go out of business or find a way to make the economics work. That's capitalism.
> Companies that employ workers below subsistence wages are actually being indirectly subsidized collectively by every single taxpayer.
This is a very common and very wrong interpretation. Taxpayers aren't subsidizing the company. Taxpayers are subsidizing themselves. In a competitive market (which all low wages jobs are in) the employer will simply pass on those savings to the consumer. Uber passes them on to riders, Walmart passes them on to shoppers, etc. There is no subsidy to the corporation. The subsidy is to society at large, which is exactly appropriate for tax money to fund.
Uber isn't going to experience margin compression in Seattle as a result of this. All they're going to do is raise their prices. The equilibrium effect of that is two-fold:
1. Fewer rides
2. More cost to Uber's customers
Uber will make less money, but only as a result of the loss of volume. They will not be making more or less money per ride. There will just be fewer rides. That's it.
This is a very common and very wrong interpretation. Taxpayers aren't subsidizing the company. Taxpayers are subsidizing themselves. In a competitive market (which all low wages jobs are in) the employer will simply pass on those savings to the consumer. Uber passes them on to riders, Walmart passes them on to shoppers, etc. There is no subsidy to the corporation. The subsidy is to society at large, which is exactly appropriate for tax money to fund.
Uber isn't going to experience margin compression in Seattle as a result of this. All they're going to do is raise their prices. The equilibrium effect of that is two-fold:
1. Fewer rides
2. More cost to Uber's customers
Uber will make less money, but only as a result of the loss of volume. They will not be making more or less money per ride. There will just be fewer rides. That's it.
While true so long as this is only happening in Seattle, if this kind of legislation were to spread Uber would definitely start seeing margin compression.
Uber's cost per ride is exactly zero. So they WILL make more per ride. Of course, there will be fewer rides, as more people will choose car or public transportation. They will probably lose overall.
What is there always this assumption in wage law debates that employers have unilateral ability to “just raise their prices” and “pass costs on to the consumer”? There are plenty of other possibilities. It is also possible that the company will suffer reduced profits. Indeed, if the marketplace truly is competitive, the employer takes the price the marketplace offers. The employer can’t simply arbitrarily set prices any more than a corn farmer can show up at the grain elevator and demand a price for his corn. Economists like to talk about the invisible hand of the free market setting prices, but somehow when the minimum wage is being debated many economists toss the invisible hand into the trash heap and start saying that businesses can set whatever price they want and for some reason the market will simply bear it.
I’m not saying minimum wage laws are a good idea, but economists have no credibility when they won’t even allow for the possibility that wage laws might reduce corporate profits rather than leading to increased prices.
I’m not saying minimum wage laws are a good idea, but economists have no credibility when they won’t even allow for the possibility that wage laws might reduce corporate profits rather than leading to increased prices.
Companies which employ large numbers of unqualified/minimum wage workers are usually in industries which are highly competitive. Walmart’s profit margin is less than 3%, most fast food restaurant franchisees probably don’t have margins much above 5% and Uber is yet to have any profits... So there isn’t much room for them there. They either can increase their prices or increase their worker productivity by hiring less people and investing more into increasing efficiency/automation. Both of which would not be beneficial to consumers and unqualified workers in the short term.
And this is not something that hasn't been tried in practice yet. Just look at European countries like the Netherlands, Belgium, Germany, France, Spain etc. They have significantly higher minimum wages (relatively to their GDP or median household income) than the US and consumer goods and services are in general much more expensive (relatively) there than in the US.
And this is not something that hasn't been tried in practice yet. Just look at European countries like the Netherlands, Belgium, Germany, France, Spain etc. They have significantly higher minimum wages (relatively to their GDP or median household income) than the US and consumer goods and services are in general much more expensive (relatively) there than in the US.
> Most fast food restaurant franchisees probably don’t have margins much above 5%
If we follow your train of thought, we shouldn't see employers paying minimum wage with higher margins because those higher margins would have transpired to lower prices for consumers.
McDonalds corporate profit margin is 20%! People might say, "Well most margin comes from franchise fees and McDonalds doesn't directly own most restaurants or own that cost base" - but while some franchisees earn 12%+ profit, they don't even have a mechanism where they are even ALLOWED to reduce prices so how exactly are higher profits supposed to get passed back as lower prices?
The reality is that if a companies goal is to profit-maximise, "cost plus margin" is not a particularly effective strategy. From an economics perspective, you would work out what your demand curve is, plot that against your cost base to produce a profit figure for each point on the demand curve, and pick where maximises profit. In reality this will be less of a formal process, but this is the microeconomic theory.
If we follow your train of thought, we shouldn't see employers paying minimum wage with higher margins because those higher margins would have transpired to lower prices for consumers.
McDonalds corporate profit margin is 20%! People might say, "Well most margin comes from franchise fees and McDonalds doesn't directly own most restaurants or own that cost base" - but while some franchisees earn 12%+ profit, they don't even have a mechanism where they are even ALLOWED to reduce prices so how exactly are higher profits supposed to get passed back as lower prices?
The reality is that if a companies goal is to profit-maximise, "cost plus margin" is not a particularly effective strategy. From an economics perspective, you would work out what your demand curve is, plot that against your cost base to produce a profit figure for each point on the demand curve, and pick where maximises profit. In reality this will be less of a formal process, but this is the microeconomic theory.
I've seen claims that McDonald's makes more on owning prime real estate than on selling food for pennies.
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The economist you're responding to specified a competitive market, which is practically definitionally a market where there are no profits to reduce. Remember, since they're an economist they almost certainly meant "economic profit", not the "accounting profit" that everyone is generally familiar with from balance sheets, earnings reports, and playing lemonade tycoon.
I mean the article literally says Uber is raising prices so...
> This is a very common and very wrong interpretation.
Do you have anything to back up this wrong claim? It very much seems like this is a matter of perspective.
> Taxpayers aren't subsidizing the company. Taxpayers are subsidizing themselves.
Again this seems like perspective. The taxpayers as a group may be subsidizing themselves but the individual making enough to support themselves would be subsidizing others. So from their perspective they are paying for a company’s unwillingness or inability to pay a living wage.
Do you have anything to back up this wrong claim? It very much seems like this is a matter of perspective.
> Taxpayers aren't subsidizing the company. Taxpayers are subsidizing themselves.
Again this seems like perspective. The taxpayers as a group may be subsidizing themselves but the individual making enough to support themselves would be subsidizing others. So from their perspective they are paying for a company’s unwillingness or inability to pay a living wage.
> Do you have anything to back up this wrong claim? It very much seems like this is a matter of perspective.
It's pretty straightforward economics, and the rest of my comment explains it, I think.
> Again this seems like perspective. The taxpayers as a group may be subsidizing themselves but the individual making enough to support themselves would be subsidizing others. So from their perspective they are paying for a company’s unwillingness or inability to pay a living wage.
The question is: where does the economic benefit of the subsidy flow? And the answer to that is primarily back to consumers, not to companies. It flows to companies primarily in the sense that it allows some companies to exist that wouldn't otherwise exist. But it's not clear exactly how making them not exist would benefit anyone.
It's pretty straightforward economics, and the rest of my comment explains it, I think.
> Again this seems like perspective. The taxpayers as a group may be subsidizing themselves but the individual making enough to support themselves would be subsidizing others. So from their perspective they are paying for a company’s unwillingness or inability to pay a living wage.
The question is: where does the economic benefit of the subsidy flow? And the answer to that is primarily back to consumers, not to companies. It flows to companies primarily in the sense that it allows some companies to exist that wouldn't otherwise exist. But it's not clear exactly how making them not exist would benefit anyone.
But then this overrides a central theme to capitalism . If a business cannot turn a profit including all of its costs then it should not exist. Forcing its continued existence must be accompanied by some collective good in order to be fair to all tax payers, otherwise it just ends up being an unfair cost. For example, why should tax payers not using a hobby store subsidize hobby store employees? It removes efficiency.
Right, but arbitrarily declaring that a specific wage level is the true one does not make something a cost to the business. We, collectively, decide that people should not make less than X. That does not make each person's labor worth X in a free market, and it does not make X the 'true' cost of paying a person. If we, as a society, decide that people should make at least X, then we, as a society, should subsidize wages below X until it is X.
The gap between the free market value of someone's labor and a 'living wage' is not an externality. It is not a secret cost that businesses are shirking. It is a social obligation that we made up because we want our citizens to have a certain standard of living, and that's fine, but we should all pay that together.
Companies should pay people what their labor is worth, and we should all make up the difference together, if that's what we believe is right.
The gap between the free market value of someone's labor and a 'living wage' is not an externality. It is not a secret cost that businesses are shirking. It is a social obligation that we made up because we want our citizens to have a certain standard of living, and that's fine, but we should all pay that together.
Companies should pay people what their labor is worth, and we should all make up the difference together, if that's what we believe is right.
But when you start forcing wages it’s no longer a free market. Further, we only collectively decide wages by deciding what we will or won’t pay for something. And finally, you cannot escape value. If you arbitrarily say someone’s labor is worth some value, then other labor that is more valuable is still worth more. EX: Burger flipper vs Pharmacist.
> Those underpaid employees are the ones who then go on to collect public benefits to make up the difference between survival and their take-home pay, and those benefits come out of our tax dollars.
If those workers were capable of earning enough money to no longer be eligible for public benefits, they would choose to take those jobs instead. But they aren’t, so they don’t. If they didn’t have the option of working low-wage jobs and supplementing that income with public assistance, they would be unemployed and completely dependent on public assistance. In other words, it is low-wage employers who subsidize the taxpayer, not the other way around.
If those workers were capable of earning enough money to no longer be eligible for public benefits, they would choose to take those jobs instead. But they aren’t, so they don’t. If they didn’t have the option of working low-wage jobs and supplementing that income with public assistance, they would be unemployed and completely dependent on public assistance. In other words, it is low-wage employers who subsidize the taxpayer, not the other way around.
> If those workers were capable of earning enough money to no longer be eligible for public benefits, they would choose to take those jobs instead. But they aren’t, so they don’t.
The jobs available on the market aren't continuously and uniformly distributed on the pay axis between $0 to ${whatever corporate CEOs take home}. Most people can't marginally improve their pay by marginally improving their capabilities.
> If they didn’t have the option of working low-wage jobs and supplementing that income with public assistance, they would be unemployed and completely dependent on public assistance.
Not if they had an option of working higher-wage jobs. The market pushes salaries down as much as it's allowed. Apply some upward pressure, and the market just may find it in its heart to pay more for the same job.
The jobs available on the market aren't continuously and uniformly distributed on the pay axis between $0 to ${whatever corporate CEOs take home}. Most people can't marginally improve their pay by marginally improving their capabilities.
> If they didn’t have the option of working low-wage jobs and supplementing that income with public assistance, they would be unemployed and completely dependent on public assistance.
Not if they had an option of working higher-wage jobs. The market pushes salaries down as much as it's allowed. Apply some upward pressure, and the market just may find it in its heart to pay more for the same job.
> If those workers were capable of earning enough money to no longer be eligible for public benefits, they would choose to take those jobs instead.
It seems weird to me to accept it quasi as a law of nature that large parts of the population get paid below subsistence level for their work, often doing physically or emotionally hard labor, while others earn big in bullshit-rich environments.
I get that we need some sort of market for effective allocation of resources. But seeing how rich western societies are as a whole, while still giving many of their members trouble with feeding themselves, housing and (in some countries) getting adequate medical care, makes me wonder how far we've really come with finding a good way to distribute wealth adequately.
Saying that "the market forces" don't allow people to make enough money to get by seems like such a cop-out to me. Yes, public benefits are a way of redistributing wealth for a better outcome, but let's not forget that the market is a human creation and we can influence how it operates in multiple ways.
If public benefits subsidize cheap labor in exchange for cheaper consumer prices, that is (as has been pointed out) a way of shifting some of the price off the product to be paid via taxes, externalizing some of the cost to the general public, incurring a human cost on the people who provide the labor, while allowing private investors to take a share of the transfer as their profit. I don't know if that's the most effective way of distributing resources here, but let's not forget that we might not only want to optimize for money making potential here, but also for harder to price things like the pursuit of happiness.
It seems weird to me to accept it quasi as a law of nature that large parts of the population get paid below subsistence level for their work, often doing physically or emotionally hard labor, while others earn big in bullshit-rich environments.
I get that we need some sort of market for effective allocation of resources. But seeing how rich western societies are as a whole, while still giving many of their members trouble with feeding themselves, housing and (in some countries) getting adequate medical care, makes me wonder how far we've really come with finding a good way to distribute wealth adequately.
Saying that "the market forces" don't allow people to make enough money to get by seems like such a cop-out to me. Yes, public benefits are a way of redistributing wealth for a better outcome, but let's not forget that the market is a human creation and we can influence how it operates in multiple ways.
If public benefits subsidize cheap labor in exchange for cheaper consumer prices, that is (as has been pointed out) a way of shifting some of the price off the product to be paid via taxes, externalizing some of the cost to the general public, incurring a human cost on the people who provide the labor, while allowing private investors to take a share of the transfer as their profit. I don't know if that's the most effective way of distributing resources here, but let's not forget that we might not only want to optimize for money making potential here, but also for harder to price things like the pursuit of happiness.
> It seems weird to me to accept it quasi as a law of nature that large parts of the population get paid below subsistence level for their work, often doing physically or emotionally hard labor, while others earn big in bullshit-rich environments.
Earning “below subsistence level” for physically and emotionally hard work is how over 99% of human lives have gone throughout history. It’s somewhat miraculous how many people in developed countries don’t live that way anymore.
Earning “below subsistence level” for physically and emotionally hard work is how over 99% of human lives have gone throughout history. It’s somewhat miraculous how many people in developed countries don’t live that way anymore.
> It’s somewhat miraculous how many people in developed countries don’t live that way anymore.
Instead of invoking the supernatural, I'd prefer to call it quite fortunate that human ingenuity has allowed us to exploit vast energy sources in order to raise the general level of well-being among a portion of humanity, while also finding ways to share wealth and power in (unfortunately not exclusively) more peaceful ways.
The cop-out I was talking about is precisely this kind of hiding behind proclaimed laws of nature and miracles, when there's clearly choice and agency involved. Comparing the situation of laborers, but also the stratification of western societies, in the Victorian era with today I think shows that we can not only increase the size of the pie, but also influence how to distribute it more fairly.
I think that seeing how much "miracle" there is to go around, it's worthwhile considering how to enable more people to take part in it, by finding ways to spread the miracle whip around a tad more evenly.
Instead of invoking the supernatural, I'd prefer to call it quite fortunate that human ingenuity has allowed us to exploit vast energy sources in order to raise the general level of well-being among a portion of humanity, while also finding ways to share wealth and power in (unfortunately not exclusively) more peaceful ways.
The cop-out I was talking about is precisely this kind of hiding behind proclaimed laws of nature and miracles, when there's clearly choice and agency involved. Comparing the situation of laborers, but also the stratification of western societies, in the Victorian era with today I think shows that we can not only increase the size of the pie, but also influence how to distribute it more fairly.
I think that seeing how much "miracle" there is to go around, it's worthwhile considering how to enable more people to take part in it, by finding ways to spread the miracle whip around a tad more evenly.
Which is exactly the reason we have these public assistance programs, so I don’t see the problem.
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Yeah most of human existence was crap and crap out of necessity. The necessity doesn’t exist anymore so it’s a specious argument. Accepting any less than a basic reasonable existence now that it’s possible is selling yourself short and your countrymen short.
Subsidizing low skill workers so that they are able to get work and acquire skills and experience is a good thing. Why must you say it with such a negative tone?
I agree 100%.
However, doing it through this weird reach-around where you have to make low-income earners a public charge (based on the immigration terminology) while subsidizing only the companies that pay so little as to require it - isn't IMO a rational approach. Have you seen how arduous Medicaid is? Food stamps? That's not a vocational training program, that's a punishment for being poor while having a system set up explicitly to make you poor. After all, this is not subsidizing the individuals, it's subsidizing the business.
It's a blunt instrument right now. Just paying minimum wage doesn't guarantee any sort of education or training. What corner store offers education and training programs?
The rational approach is to make companies pay a living wage as a baseline, and then if you want to encourage certain behaviors - like educational training, for instance - offer tax credits and rebates. Or, if you want to subsidize specific low value added businesses like corner stores, subsidize them directly.
Begin with a baseline of livability, and then, if the company wants to go above and beyond, reward them for doing so.
However, doing it through this weird reach-around where you have to make low-income earners a public charge (based on the immigration terminology) while subsidizing only the companies that pay so little as to require it - isn't IMO a rational approach. Have you seen how arduous Medicaid is? Food stamps? That's not a vocational training program, that's a punishment for being poor while having a system set up explicitly to make you poor. After all, this is not subsidizing the individuals, it's subsidizing the business.
It's a blunt instrument right now. Just paying minimum wage doesn't guarantee any sort of education or training. What corner store offers education and training programs?
The rational approach is to make companies pay a living wage as a baseline, and then if you want to encourage certain behaviors - like educational training, for instance - offer tax credits and rebates. Or, if you want to subsidize specific low value added businesses like corner stores, subsidize them directly.
Begin with a baseline of livability, and then, if the company wants to go above and beyond, reward them for doing so.
Corner stores don't need to be providing higher education to employees in order to be giving them skills. Basic jobs provide plenty of skills and lessons that cannot be learned while sitting at home, such as dealing with customers, time management, and basic problem solving in a work environment.
I think the better option is to guarantee a minimum wage through a subsidy, while abolishing all minimum wage laws. Like a negative income tax. So let's say you earn $12 stocking shelves, the government should subsidize $4 per hour to give you a total income of $16 per hour. If you make $15/hr, they subsidize $1. If you make $20, they subsidize zero.
In this way, the downsides of minimum wages are avoided (cutting back on hours, laying people off, raising prices, and pricing low skill people out of the workforce), while still allowing a decent income for anyone working full time.
You can tax the subsidy at a higher rate than your normal tax rate, so that businesses are still dealing with competitive market incentives and cannot pay a $1/hr leaving the remainder to the government, and so that employees are always incentivized to take the highest paying job.
If you run the numbers, providing every employee in america with a $16 minimum wage, working 40 hours per week, and assuming the average employee making less than $16 makes $12, would cost $500 billion per year. This is not an out of reach policy.
I think the better option is to guarantee a minimum wage through a subsidy, while abolishing all minimum wage laws. Like a negative income tax. So let's say you earn $12 stocking shelves, the government should subsidize $4 per hour to give you a total income of $16 per hour. If you make $15/hr, they subsidize $1. If you make $20, they subsidize zero.
In this way, the downsides of minimum wages are avoided (cutting back on hours, laying people off, raising prices, and pricing low skill people out of the workforce), while still allowing a decent income for anyone working full time.
You can tax the subsidy at a higher rate than your normal tax rate, so that businesses are still dealing with competitive market incentives and cannot pay a $1/hr leaving the remainder to the government, and so that employees are always incentivized to take the highest paying job.
If you run the numbers, providing every employee in america with a $16 minimum wage, working 40 hours per week, and assuming the average employee making less than $16 makes $12, would cost $500 billion per year. This is not an out of reach policy.
So if I set up a company and I'm paying my employees $4/hr, then the government need subsidizing $12/hr of my employees wage. This is completely broken, even more if the company is making tons of profit from paying their employees only $4/hr.
As I outlined in my comment, no one would take a $4 an hour job. They'd incur a higher tax liability than if they went to the guy across the street offering $10, or whatever he paid before the policy passed. Businesses would continue to compete for labor. It would continue to be to the employee's benefit to take the highest paying job.
What makes you think they wouldn’t take a $4/hr job. You know the federal minimum wage for tipped workers is less than that yeah?
The fact that they don’t is only because they can’t, because minimum wage law.
The fact that they don’t is only because they can’t, because minimum wage law.
No one pays minimum wage as it is. In my state it's $7.25 and no one pays that. They're all in the $11-$15 range. If your theory was correct, all entry level positions would be paying $7.25.
Nah, even a single one proves my case.
> the government should subsidize $4 per hour to give you a total income of $16 per hour. If you make $15/hr, they subsidize $1
Pretty bad example - where’s the incentive to work harder for the extra $3/hour when you get nothing?
And do you really mean to tax per hour rather than per year which is where we currently base income taxes on? Wouldn’t that continue to encourage 70, 80, 90 hour weeks which is really bad.
Pretty bad example - where’s the incentive to work harder for the extra $3/hour when you get nothing?
And do you really mean to tax per hour rather than per year which is where we currently base income taxes on? Wouldn’t that continue to encourage 70, 80, 90 hour weeks which is really bad.
"Pretty bad example - where’s the incentive to work harder for the extra $3/hour when you get nothing?"
I don't understand what you're asking here.
"And do you really mean to tax per hour rather than per year which is where we currently base income taxes on?"
You'd continue to be taxed the same way. But all the income from the subsidy would be taxed at a higher rate than the income the business paid.
In this way, you are always incentivized as the employee to take a higher paying job.
I don't understand what you're asking here.
"And do you really mean to tax per hour rather than per year which is where we currently base income taxes on?"
You'd continue to be taxed the same way. But all the income from the subsidy would be taxed at a higher rate than the income the business paid.
In this way, you are always incentivized as the employee to take a higher paying job.
Your example had the $12 job giving you $16, and the $15 job giving you $16
What’s the difference?
What stops you doing a deal where you (on paper) work 80 hours a week for $8 rather than 40 for $16, you’d cost the employer the same, but you would get twice the income ($1280 a week).
How do you even define when you’re working.
What’s the difference?
What stops you doing a deal where you (on paper) work 80 hours a week for $8 rather than 40 for $16, you’d cost the employer the same, but you would get twice the income ($1280 a week).
How do you even define when you’re working.
You'd make more money taking the $15 job than the $12 job. Your W-2 says how many hours you worked (and how much overtime, if any). The federal government has access to those W-2s, and can determine the subsidy amount using it.
Your example said
12 plus 4
15 plus 1
I’d expect it to be more like
12 plus 4
16 plus 3
20 plus 2
24 plus 1
A 20% marginal tax rate.
The hour thing seems massively corruptible
12 plus 4
15 plus 1
I’d expect it to be more like
12 plus 4
16 plus 3
20 plus 2
24 plus 1
A 20% marginal tax rate.
The hour thing seems massively corruptible
But they are not its a subsidy to the low wage employer why as a tax payer should I subsidise Starbucks baristas.
I agree with say subsidising training for Nurses, Paramedics etc
I agree with say subsidising training for Nurses, Paramedics etc
> Subsidizing low skill workers so that they are able to get work and acquire skills and experience is a good thing. Why must you say it with such a negative tone?
Let's say you and I are rich charitable types, and we each decide to spend $1000 helping a poor high school graduate get a good start in life. We narrow down our options for spending the money to three plans.
We could pay for them to go to school. If we want, we could insist they choose a cost-effective, good quality course and keep their grades up.
We could give them unconditional cash. That might be really efficient, as often the poor know what the poor need better than the rich do. And if they spend it all on partying or computer game lootboxes, so be it.
Or we could pay them to mow the mayor's lawn. The mayor thinks this is a great plan and that they're going to learn a lot.
Is the third option the cleverest use of our money? Or is that the the stupidest option, with the mayor taking us for fools?
Let's say you and I are rich charitable types, and we each decide to spend $1000 helping a poor high school graduate get a good start in life. We narrow down our options for spending the money to three plans.
We could pay for them to go to school. If we want, we could insist they choose a cost-effective, good quality course and keep their grades up.
We could give them unconditional cash. That might be really efficient, as often the poor know what the poor need better than the rich do. And if they spend it all on partying or computer game lootboxes, so be it.
Or we could pay them to mow the mayor's lawn. The mayor thinks this is a great plan and that they're going to learn a lot.
Is the third option the cleverest use of our money? Or is that the the stupidest option, with the mayor taking us for fools?
> Companies that employ workers below subsistence wages are actually being indirectly subsidized collectively by every single taxpayer.
I don’t see what leads you to this conclusion. It seems self-evident that people who get paid need less government-provided (ie taxpayer-provided) benefits.
I don’t see what leads you to this conclusion. It seems self-evident that people who get paid need less government-provided (ie taxpayer-provided) benefits.
Walmart's workers cost the public $6.2 billion (https://www.forbes.com/sites/clareoconnor/2014/04/15/report-...) in welfare.
Some of this is food stamps. Which Walmart bills the government for when food is bought from their stores using them.
Walmart moving into a small town and driving a bunch of small business's out doesn't make anything more efficient, it literally costs the taxpayer more, of which a bunch of that goes to Walmart's owners as revenue.
Some of this is food stamps. Which Walmart bills the government for when food is bought from their stores using them.
Walmart moving into a small town and driving a bunch of small business's out doesn't make anything more efficient, it literally costs the taxpayer more, of which a bunch of that goes to Walmart's owners as revenue.
Are you saying that if Walmart fired these workers the budget would increase by $6 bln? If not then it is just a highly misleading statistic bordering on intentional misinformation.
Essentially, over time. If you could also prevent other existing competitors from offering Wallmart-level pay or worse. In this scenario, the demand for groceries didn't disappear - just Wallmart did, and now there's all these ex-Wallmart people looking for a job. New grocery stores would form, and if they paid enough to get these people off welfare, that would be (per GP) $6B of money freed to be allocated elsewhere. Food prices could raise a little bit, though, and food variety could get reduced (but these are not necessarily bad in the balance).
I'm no economist so I may be missing something; let's talk through this bit by bit and maybe you can help me understand your plan better.
> If you could also prevent other existing competitors from Walmart-level pay or worse. In this scenario, the demand for groceries didn't disappear - just Walmart did, and now there's all these ex-Walmart people looking for a job.
You mention existing competitors would face the same regulation and control that Walmart would but the rest of your post reads like you only expect Walmart employees to be laid off. What makes you think that Smiths, Macey's, Kroger, Target, etc won't have to let workers go for the same reasons that Walmart workers would be let go? If you're instituting policies that result in Walmart cutting its workforce, those same policies will absolutely cause the same to happen in competing chains.
Okay, so you've managed to flood the labor market with workers from a dozen grocery chains- what next?
> New grocery stores would form
How and why do you think new grocery stores that don't even have the established presence or infrastructure other chains had already built will be able to thrive once these other chains have disappeared?
> And if they paid enough to get these people off welfare
Where is the money coming from that allows these new stores to pay their workers $6.2b more than before? By a) raising prices on groceries and b) hiring fewer workers.
So, to recap: a large part of the workforce has been laid off, prices have risen for everyone across the board, and because the new stores with the higher prices aren't hiring as many workers to compensate for the policies you've instituted, part of the workforce that was laid off in the first place will still be out of work! That's without even taking into consideration the effect this will have on the rest of the working class. Do you think the families who were on the cusp of needing welfare before the prices on groceries rose will magically have their food budgets increased? Of course not. Either they'll work more to increase their incomes, learn to live with less while keeping their grocery budgets static, or get the government to subsidize them which is the whole problem you wanted to fix in the first place.
If you're instituting a policy that causes massive lay-offs for multiple corporations while increasing the cost of living for everyone (including the people you just got laid off), you're not going to free up $6.2b to be used elsewhere- you're creating a situation where a) even more people will need to take advantage of government subsidies to make ends meet; wasn't this what you were trying to fix? b) families will, as they always have, learn to survive on less while spending the same as before. c) permanently add to the unemployment pool because the new stores are hiring fewer employees than were laid off by the new policies you instituted.
I don't like this solution. Am I wrong? I've never had any formal econ education so it's perfectly reasonable to believe I'm missing some key points here; this is just how it logically plays out in my mind.
> If you could also prevent other existing competitors from Walmart-level pay or worse. In this scenario, the demand for groceries didn't disappear - just Walmart did, and now there's all these ex-Walmart people looking for a job.
You mention existing competitors would face the same regulation and control that Walmart would but the rest of your post reads like you only expect Walmart employees to be laid off. What makes you think that Smiths, Macey's, Kroger, Target, etc won't have to let workers go for the same reasons that Walmart workers would be let go? If you're instituting policies that result in Walmart cutting its workforce, those same policies will absolutely cause the same to happen in competing chains.
Okay, so you've managed to flood the labor market with workers from a dozen grocery chains- what next?
> New grocery stores would form
How and why do you think new grocery stores that don't even have the established presence or infrastructure other chains had already built will be able to thrive once these other chains have disappeared?
> And if they paid enough to get these people off welfare
Where is the money coming from that allows these new stores to pay their workers $6.2b more than before? By a) raising prices on groceries and b) hiring fewer workers.
So, to recap: a large part of the workforce has been laid off, prices have risen for everyone across the board, and because the new stores with the higher prices aren't hiring as many workers to compensate for the policies you've instituted, part of the workforce that was laid off in the first place will still be out of work! That's without even taking into consideration the effect this will have on the rest of the working class. Do you think the families who were on the cusp of needing welfare before the prices on groceries rose will magically have their food budgets increased? Of course not. Either they'll work more to increase their incomes, learn to live with less while keeping their grocery budgets static, or get the government to subsidize them which is the whole problem you wanted to fix in the first place.
If you're instituting a policy that causes massive lay-offs for multiple corporations while increasing the cost of living for everyone (including the people you just got laid off), you're not going to free up $6.2b to be used elsewhere- you're creating a situation where a) even more people will need to take advantage of government subsidies to make ends meet; wasn't this what you were trying to fix? b) families will, as they always have, learn to survive on less while spending the same as before. c) permanently add to the unemployment pool because the new stores are hiring fewer employees than were laid off by the new policies you instituted.
I don't like this solution. Am I wrong? I've never had any formal econ education so it's perfectly reasonable to believe I'm missing some key points here; this is just how it logically plays out in my mind.
> If you're instituting policies that result in Walmart cutting its workforce, those same policies will absolutely cause the same to happen in competing chains.
Fair enough. I'm not from the US, I don't know the US retail market that well, beyond recognizing some brands. I assumed, by the tone of the comment thread I replied in, that Walmart is unique in being a big retailer on the wrong side of the size of wages - but in retrospect, that was a stupid assumption.
> How and why do you think new grocery stores that don't even have the established presence or infrastructure other chains had already built will be able to thrive once these other chains have disappeared?
I handwaved the risk of total societal collapse here :). But companies folding doesn't mean the infrastructure is gone; it can be reacquired and reused by new companies.
> part of the workforce that was laid off in the first place will still be out of work!
Fair enough. My assumption here was that the demand for grocery store workforce is driven by the demand for food, which would not change in this situation. But perhaps there's a surplus of workers.
> Do you think the families who were on the cusp of needing welfare before the prices on groceries rose will magically have their food budgets increased? Of course not.
A good point.
I agree with your analysis. Thanks for breaking down and simulating the consequences of my idea in larger context, and thanks for calling me on my bullshit. I'm not particularly proud of that comment.
That said, I'm still having trouble buying the idea that arbitrarily low wages are a good thing - I feel (though I'm not 100% convinced either) that these wages aren't determined solely by what makes sense for a given job category; there's a feedback loop pushing the wages down to however low they can get, and I suspect that there are optimizations left on the table, or cashed in as profits, that could be instead used to raise the wages while not meaningfully affecting the survivability of the company or the end prices for consumers.
Fair enough. I'm not from the US, I don't know the US retail market that well, beyond recognizing some brands. I assumed, by the tone of the comment thread I replied in, that Walmart is unique in being a big retailer on the wrong side of the size of wages - but in retrospect, that was a stupid assumption.
> How and why do you think new grocery stores that don't even have the established presence or infrastructure other chains had already built will be able to thrive once these other chains have disappeared?
I handwaved the risk of total societal collapse here :). But companies folding doesn't mean the infrastructure is gone; it can be reacquired and reused by new companies.
> part of the workforce that was laid off in the first place will still be out of work!
Fair enough. My assumption here was that the demand for grocery store workforce is driven by the demand for food, which would not change in this situation. But perhaps there's a surplus of workers.
> Do you think the families who were on the cusp of needing welfare before the prices on groceries rose will magically have their food budgets increased? Of course not.
A good point.
I agree with your analysis. Thanks for breaking down and simulating the consequences of my idea in larger context, and thanks for calling me on my bullshit. I'm not particularly proud of that comment.
That said, I'm still having trouble buying the idea that arbitrarily low wages are a good thing - I feel (though I'm not 100% convinced either) that these wages aren't determined solely by what makes sense for a given job category; there's a feedback loop pushing the wages down to however low they can get, and I suspect that there are optimizations left on the table, or cashed in as profits, that could be instead used to raise the wages while not meaningfully affecting the survivability of the company or the end prices for consumers.
That’s a lot of counterfactuals without any model and data to support such conclusions.
It makes sense to me. Where’s your supporting evidence that these statements are “counterfactual”?
By counterfactual I mean something that was not observed, thus it can only be speculated about.
Isnt this one of those chicken and egg problems? Isnt the very existence of the welfare the reason why they can pay such low wages in the first place?
Walmart would be employing these workers even without them receiving welfare. Have you ever lived in a developing country? If you have, you'd know how little people can subsist on and continue to work.
In fact, without welfare, and programs like SSDI - which when it started in the 1950s, accepted only 200,000 people as a result of strict eligibility requirements, and has since grown into a massive social welfare program with over 10 million beneficiaries - far more people would be applying for the jobs offered by Walmart.
In fact, without welfare, and programs like SSDI - which when it started in the 1950s, accepted only 200,000 people as a result of strict eligibility requirements, and has since grown into a massive social welfare program with over 10 million beneficiaries - far more people would be applying for the jobs offered by Walmart.
It seems this logic could just as easily be used assert that entitlement programs should be reduced to match minimum wage, just as well as raising minimum wage to reach parity with entitlement programs.
I'm not saying we should; but it seems like there's some other component that needs to be added to your logic, and a quick brainstorm by my non-economist brain doesn't seem to be able to fill it in.
I'm not saying we should; but it seems like there's some other component that needs to be added to your logic, and a quick brainstorm by my non-economist brain doesn't seem to be able to fill it in.
Sure you could do that, cause a bunch of people to be evicted, the homeless rate would go up, the crime rate would go up, you'd have problems with disease due to poor hygeine and hospital costs due to those homeless only turning up in emergency when it was an emergency due to EMTALA.
Then "something must be done" so you could spend a bunch of money building more jails, imprisoning and murdering a bunch of these people via law enforcement and the net result would be a society where somehow Americans decided that the most important thing to them was the profit margins of billionaires and Uber rather then being able to walk down the street without getting mugged or smelling human effluent.
The classic American thinking on welfare and labor relations: that surely there's no other possible reasons to do these things.
Then "something must be done" so you could spend a bunch of money building more jails, imprisoning and murdering a bunch of these people via law enforcement and the net result would be a society where somehow Americans decided that the most important thing to them was the profit margins of billionaires and Uber rather then being able to walk down the street without getting mugged or smelling human effluent.
The classic American thinking on welfare and labor relations: that surely there's no other possible reasons to do these things.
> Companies that employ workers below subsistence wages are actually being indirectly subsidized collectively by every single taxpayer.
Companies that employ workers at any pay that reduces their public benefit entitlement are subsidizing every single taxpayer, not the other way around.
Companies that employ workers at any pay that reduces their public benefit entitlement are subsidizing every single taxpayer, not the other way around.
The workers are, out of their pockets, not the companies. The companies just enable it.
You’re not subsidizing minimum-wage companies. You’ve decided that workers should enjoy an arbitrarily high standard of living but are unwilling to shoulder the full costs of providing it (e.g. through taxes). Instead, you went to the ballot box and kicked those costs to corporations. The minimum-wage companies are subsidizing you.
A living wage for an individual with no children in King County, Washington is $16.09 per hour worked. If you pay less than that, the government via entitlement programs makes up the difference. That's corporate welfare, and this bill goes a long way to addressing that. [1]
If employers do not pay enough that their employees require the use of zero entitlement programs, they are mooching off the state in the amount of the entitlement programs their employees consume.
I'd be open to, instead of raising the minimum wage, having the state bill employers to recover the cost of entitlement programs they had to provide for their employees.
[1] https://livingwage.mit.edu/counties/53033
If employers do not pay enough that their employees require the use of zero entitlement programs, they are mooching off the state in the amount of the entitlement programs their employees consume.
I'd be open to, instead of raising the minimum wage, having the state bill employers to recover the cost of entitlement programs they had to provide for their employees.
[1] https://livingwage.mit.edu/counties/53033
> A living wage for an individual with no children in King County, Washington is $16.09 per hour worked. If you pay less than that, the government via entitlement programs makes up the difference.
That isn't how a NIT/UBI works. There is no making up the difference, everyone gets the same amount from the government in all cases.
Moreover, the frame you're using is that the employer owes the employee a living wage. It assumes that if the employer can't stay in business paying $16.09 then the employee will get the higher wage regardless. But if that alternative was available, why wouldn't they have taken the other, higher paying job to begin with? And if the alternative is instead unemployment, you are obviously doing no one any favors by prohibiting them from making some money rather than none.
Meanwhile it doesn't take into account the cost differences inherent in different forms of employment. If you work across the street from where you live, you have no commuting expense. If you work 60 miles away, at $.59/mile you have >$70/day in commuting expense, equivalent to $8.85/hour in wages. After taxes. And you lose two hours a day to sitting in traffic. It would be totally rational for someone to prefer the job across the street for $7.50/hour to the one 60 miles away for $16.09/hour, but your position is that they should be prohibited from taking that job even though it would be better for both them and society.
That isn't how a NIT/UBI works. There is no making up the difference, everyone gets the same amount from the government in all cases.
Moreover, the frame you're using is that the employer owes the employee a living wage. It assumes that if the employer can't stay in business paying $16.09 then the employee will get the higher wage regardless. But if that alternative was available, why wouldn't they have taken the other, higher paying job to begin with? And if the alternative is instead unemployment, you are obviously doing no one any favors by prohibiting them from making some money rather than none.
Meanwhile it doesn't take into account the cost differences inherent in different forms of employment. If you work across the street from where you live, you have no commuting expense. If you work 60 miles away, at $.59/mile you have >$70/day in commuting expense, equivalent to $8.85/hour in wages. After taxes. And you lose two hours a day to sitting in traffic. It would be totally rational for someone to prefer the job across the street for $7.50/hour to the one 60 miles away for $16.09/hour, but your position is that they should be prohibited from taking that job even though it would be better for both them and society.
Provided of course that I as the taxpayer have some input in the decision to have 9 children
There's plenty of fat in this budget. The hypothetical worker in your link might consider increasing his labor supply beyond eight hours a day. Maybe he could forego his biannual iPhone upgrade. He might even cut his consumption of high-dollar first world medical care.
Now, I understand you think these are all things that, as a matter of decency, our citizens should have. That's great! Then pay for it, and stop saddling everyone else with the costs of your morality.
Now, I understand you think these are all things that, as a matter of decency, our citizens should have. That's great! Then pay for it, and stop saddling everyone else with the costs of your morality.
Take it up with MIT, not me. I'm sure they'd love to hear your theories about how fridges aren't necessities in the winter :) I take it you're an expert in living wage calculation?
For what it's worth when I reviewed their methodology, as I suggest you do, I didn't see a line-item for "biannual iPhone upgrade." [1] And re: medical care, I'm sure you know someone making $12/hr can't afford to set foot in a hospital in America. For a single-income household of 2 parents and a child, the threshold for Medicaid eligibility is $15/hr.
As a taxpayer, I retort, stop saddling me with the bill for the employees time you're consuming but refusing to pay for. If their services are that important to you, I'm sure you can pay what it costs without forcing me to split it with you. As a fine upstanding participant in this nation's economy, I'm confident you'll find a way. Maybe forego that biannual iPhone upgrade ;)
[1] https://livingwage.mit.edu/resources/Living-Wage-Users-Guide...
For what it's worth when I reviewed their methodology, as I suggest you do, I didn't see a line-item for "biannual iPhone upgrade." [1] And re: medical care, I'm sure you know someone making $12/hr can't afford to set foot in a hospital in America. For a single-income household of 2 parents and a child, the threshold for Medicaid eligibility is $15/hr.
As a taxpayer, I retort, stop saddling me with the bill for the employees time you're consuming but refusing to pay for. If their services are that important to you, I'm sure you can pay what it costs without forcing me to split it with you. As a fine upstanding participant in this nation's economy, I'm confident you'll find a way. Maybe forego that biannual iPhone upgrade ;)
[1] https://livingwage.mit.edu/resources/Living-Wage-Users-Guide...
Sorry society doesn't get to declare an arbitrary "living wage" target for entitlement eligibility and then claim I'm mooching off society when I can't afford to pay their made-up number.
If society wants to mandate a $16.09/hr wage, then it will have to accept that jobs that are not worth $16.09/hr will disappear, and we'll have more people with no income at all to deal with.
If society wants to mandate a $16.09/hr wage, then it will have to accept that jobs that are not worth $16.09/hr will disappear, and we'll have more people with no income at all to deal with.
Let them dissappear then.
I am quite sure someone else will be willing to step up and get that work done.
Can't afford often means unwilling to pay, not unable to pay.
Where there is demand for that work, there is also strong incentive to make money getting that work done.
Someone will. And they will do it differently, take a lower margin, bundle it with other work to bring the value up, increase their pricing, etc...
I am quite sure someone else will be willing to step up and get that work done.
Can't afford often means unwilling to pay, not unable to pay.
Where there is demand for that work, there is also strong incentive to make money getting that work done.
Someone will. And they will do it differently, take a lower margin, bundle it with other work to bring the value up, increase their pricing, etc...
> Someone will.
Yup. Robots. Can’t wait.
Yup. Robots. Can’t wait.
We are no where close to automating most basic labors.
The hard truth is the investment is huge! And general automation, sufficient to replace basic labors on a meaningful scale is still in development.
May happen some day. It will be a long while though. Plenty long enough for this discussion to remain relevant.
Secondly, say we arrive at that point.
What changes?
People have costs to exist and be humans.
I put this in another comment: if we truly do not pay those costs, people die and or do not show up for work.
Lots of dead people is not helpful or desirable.
So what do we expect them to do?
The hard truth is the investment is huge! And general automation, sufficient to replace basic labors on a meaningful scale is still in development.
May happen some day. It will be a long while though. Plenty long enough for this discussion to remain relevant.
Secondly, say we arrive at that point.
What changes?
People have costs to exist and be humans.
I put this in another comment: if we truly do not pay those costs, people die and or do not show up for work.
Lots of dead people is not helpful or desirable.
So what do we expect them to do?
If a job can be automated, it is better for society to be automated rather than to pay someone for effectively breaking rocks in the hot sun.
The US is wealthy enough to provide everyone in it a basic standard of life (shelter, food, healthcare, entertainment, transport) as a right.
The US is wealthy enough to provide everyone in it a basic standard of life (shelter, food, healthcare, entertainment, transport) as a right.
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> arbitrarily high standard of living
The minimum wage is not much higher than the federal poverty level.
> you went to the ballot box and kicked those costs to corporations. The minimum-wage companies are subsidizing you.
Walmart and McDonald's are among the top employers of workers who receive government aid.
https://www.cnbc.com/2020/11/19/walmart-and-mcdonalds-among-...
The minimum wage is not much higher than the federal poverty level.
> you went to the ballot box and kicked those costs to corporations. The minimum-wage companies are subsidizing you.
Walmart and McDonald's are among the top employers of workers who receive government aid.
https://www.cnbc.com/2020/11/19/walmart-and-mcdonalds-among-...
That doesn't mean that Walmart and McDonald's are the cause of those people's need for government aid. They are earning minumum wage because they have no skills of any value coming in to the job, and the jobs don't require any.
It does mean that working for minimum wage is enough to require government assistance, and maybe we should rethink that minimum.
If you are not paying more then you are making more. It will comeback to the society as taxes.
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It would, if the money wasn't being sent away and laundered (did Panama Papers not teach us anything?) or if the taxes weren't "forgiven" like in the case of Amazon or even the $750 Trump taxes. Practice shows that it doesn't come back, no matter how well it sounds in theory.
> It will comeback to the society as taxes.
It should, but it doesn't.
Amazon is a classic example. Despite being the beneficiaries of many types of corporate welfare (including paying some full-time employees so poorly that they had to be on welfare), Amazon has paid $0 in tax a few times.
In fact, there is no meaningful relationship between Amazon's profits and taxes. Their profits go up, and sometimes their taxes actually go down[1].
1. https://www.washingtonpost.com/resizer/fWL3rv40cvsIPAqSvf1wz...
It should, but it doesn't.
Amazon is a classic example. Despite being the beneficiaries of many types of corporate welfare (including paying some full-time employees so poorly that they had to be on welfare), Amazon has paid $0 in tax a few times.
In fact, there is no meaningful relationship between Amazon's profits and taxes. Their profits go up, and sometimes their taxes actually go down[1].
1. https://www.washingtonpost.com/resizer/fWL3rv40cvsIPAqSvf1wz...
> Amazon has paid $0 in tax a few times.
This is a very misleading statement that I see thrown around a lot. Either it's done in bad faith, or it's ignorant of how corporate taxes work (and why).
If you don't earn a profit, there's nothing to tax. Amazon has been (to the credit of their extremely patient investors) funneling their revenue back into growing the company instead of giving it to investors and the government.
Amazon could jack up its prices, stop hiring, cut wages, lay off tens of thousands of workers, slash investments that grow the company, and they would realize a tidy profit. Now they are paying corporate taxes. I guess that would make populist politicians and pundits happy?
This is a very misleading statement that I see thrown around a lot. Either it's done in bad faith, or it's ignorant of how corporate taxes work (and why).
If you don't earn a profit, there's nothing to tax. Amazon has been (to the credit of their extremely patient investors) funneling their revenue back into growing the company instead of giving it to investors and the government.
Amazon could jack up its prices, stop hiring, cut wages, lay off tens of thousands of workers, slash investments that grow the company, and they would realize a tidy profit. Now they are paying corporate taxes. I guess that would make populist politicians and pundits happy?
> This is a very misleading statement that I see thrown around a lot. Either it's done in bad faith, or it's ignorant of how corporate taxes work (and why).
So when people disagree with you, they are either malicious or stupid? There's 0% chance that you're wrong, even though you're in the minority of everyone who looks at this and thinks, "Wow, Amazon should pay more in taxes"?
> If you don't earn a profit, there's nothing to tax. Amazon has been (to the credit of their extremely patient investors) funneling their revenue back into growing the company instead of giving it to investors and the government.
No, they haven't. They have been turning a profit. If you reinvest your money in your company, it doesn't show up in your income statement as profit.
The reason Amazon doesn't pay taxes is because of friendly tax law. Part of the proposal from the left in the US is to tax Amazon based on the numbers in their actual financial statements, instead of playing lots of games with depreciation, stock compensation, and carry-forward losses.
So your argument here is somewhat orthogonal to the actual discussion, which is how to tax corporations, not whether corporations are acting within the law. We already know that what they're doing is legal, we just don't want it to be legal anymore.
So when people disagree with you, they are either malicious or stupid? There's 0% chance that you're wrong, even though you're in the minority of everyone who looks at this and thinks, "Wow, Amazon should pay more in taxes"?
> If you don't earn a profit, there's nothing to tax. Amazon has been (to the credit of their extremely patient investors) funneling their revenue back into growing the company instead of giving it to investors and the government.
No, they haven't. They have been turning a profit. If you reinvest your money in your company, it doesn't show up in your income statement as profit.
The reason Amazon doesn't pay taxes is because of friendly tax law. Part of the proposal from the left in the US is to tax Amazon based on the numbers in their actual financial statements, instead of playing lots of games with depreciation, stock compensation, and carry-forward losses.
So your argument here is somewhat orthogonal to the actual discussion, which is how to tax corporations, not whether corporations are acting within the law. We already know that what they're doing is legal, we just don't want it to be legal anymore.
We know (in general) that Amazon makes no profit. However, there should still be a way to make Amazon pay for the value it gains from being based in a modern society.
Amazon is a legally fictitious straw man created as a mechanism for millions of shareholders to employ thousands of workers to deliver goods and services to paying customers. Every Amazon shareholder and employee who makes enough money through this arrangement pays income taxes, or perhaps capital gains taxes.
If you want to uphold the principle that Jeff Bezos should pay more taxes than Grandma, don’t tax Jeff Bezos and Grandma’s pension fund at the same rate. That’s what corporate taxes effectively do.
If you want to uphold the principle that Jeff Bezos should pay more taxes than Grandma, don’t tax Jeff Bezos and Grandma’s pension fund at the same rate. That’s what corporate taxes effectively do.
Thing is capital gains literally never have to be realized. You can borrow against your equity position on margin (currently 0.75% for large withdrawals) and pay off the interest with dividends.
Source: i do this.
Source: i do this.
That seems like a much fairer and easier loophole to fix than trying to tax unprofitable corporations to penalize them for reinvesting in themselves.
Good luck passing a wealth tax, but I'm all for it.
That value is taxed as capital gains when shareholders sell their shares.
This seems really basic in that society already has a way for Amazon to pay. And we’ve had it for decades.
It’s curious to hear statements like this that make me think there’s some problem to be solved.
Do you think capital gains should be higher? Do you want to shift the method of taxation from personal income taxes to somewhere else?
This seems really basic in that society already has a way for Amazon to pay. And we’ve had it for decades.
It’s curious to hear statements like this that make me think there’s some problem to be solved.
Do you think capital gains should be higher? Do you want to shift the method of taxation from personal income taxes to somewhere else?
I'm not a deep expert in these areas, but one current problem seems to be money slowing down -- what often happens is people buy Amazon stock and sit on it. Amazon makes more sales, their stock price goes up, those with Amazon stock get richer (which they can often leverage into things like loans, without ever selling the stock), and at no point is some of that money taken to help fund general government.
When the rules were set up this wasn't the intention, and there might have to be changes. To be fair to Amazon, their problems are not as serious as many other companies which make it look like they make zero profit in some countries by "paying" themselves in another.
When the rules were set up this wasn't the intention, and there might have to be changes. To be fair to Amazon, their problems are not as serious as many other companies which make it look like they make zero profit in some countries by "paying" themselves in another.
I’m not a tax expert either but I think the rules were set up exactly with the intention as you describe.
My understanding is that capital gains taxes are intended to grow capital with the goal of a larger payout in the future as capital is reinvested. It’s purposely not intended to be a real-time tax on gains because future taxes will be greater.
For example, if there’s $100 in profit today and it’s paid out as a dividend then that’s $15 in tax revenue. But if that $100 is invested in the company, it compounds at some rate (say 5% although this varies by company and Amazon is much more efficient) so in 10 years that $100 becomes $162 (1.05^10*100) and if cashed out then as dividend results in $24.3 in tax revenue.
Theoretically if you think the government can invest and get a return greater than within individual companies then capital gains doesn’t make sense, but that’s an argument for economists.
But wanted to share that the goal of capital gains is to maximize tax revenue through efficient incentives.
My understanding is that capital gains taxes are intended to grow capital with the goal of a larger payout in the future as capital is reinvested. It’s purposely not intended to be a real-time tax on gains because future taxes will be greater.
For example, if there’s $100 in profit today and it’s paid out as a dividend then that’s $15 in tax revenue. But if that $100 is invested in the company, it compounds at some rate (say 5% although this varies by company and Amazon is much more efficient) so in 10 years that $100 becomes $162 (1.05^10*100) and if cashed out then as dividend results in $24.3 in tax revenue.
Theoretically if you think the government can invest and get a return greater than within individual companies then capital gains doesn’t make sense, but that’s an argument for economists.
But wanted to share that the goal of capital gains is to maximize tax revenue through efficient incentives.
Exactly how much money the government needs, and how it uses, is I realise a massive issue going back thousands of years, but I feel the government at some level can "invest better", in that they pay for schools, police, roads, (in my case in the UK) a national health service, etc.
Of course, it might be they could spend more efficiently, but if all purchases move online, and online companies manage to avoid paying tax to most governments, these basic utilities are in trouble.
Of course, it might be they could spend more efficiently, but if all purchases move online, and online companies manage to avoid paying tax to most governments, these basic utilities are in trouble.
How about the value modern society gains from having Amazon in it?
I'm willing to bet Amazon gains a lot more value from society than society gains from Amazon.
Let’s bet then. I think society gains more because of secondary effects that multiply up and down the supply chain.
I think the difference is that the value for Amazon is focused on one company while the value for society is spread across 7 billion people.
I think the difference is that the value for Amazon is focused on one company while the value for society is spread across 7 billion people.
I think we might be using different definitions of words.
In my mind, without 'society', there would be no police, no hospitals, no public education, no roads. In my mind, these are all part of what we get by being in a society. Amazon is welcome to try to function in countries with no functioning government, but I suspect they would have limited success.
In my mind, without 'society', there would be no police, no hospitals, no public education, no roads. In my mind, these are all part of what we get by being in a society. Amazon is welcome to try to function in countries with no functioning government, but I suspect they would have limited success.
If it makes no profit, what value is it gaining?
There's value in the stock, but that's taxed as stockholders sell and realize the capital gains.
There's value in the stock, but that's taxed as stockholders sell and realize the capital gains.
No, their revenues go up not their profits.
I understand you have a link with the word "profits." WaPo is misusing the term. Profits are revenues after expenses and the numbers in that graph are not taking certain expenses into account. When the expenses are taken into account the profit drops to zero.
Specifically, one of the big expenses deducted before calculating tax was liquidation of employee stock options. And guess what? Instead of being taxed at the corporate income tax rate those options were taxed as individual income for the employees who exercised them -- an even higher rate!
In your example the gains were in fact taxed. The tax was just applied in a different place than where you're happening to look.
I understand you have a link with the word "profits." WaPo is misusing the term. Profits are revenues after expenses and the numbers in that graph are not taking certain expenses into account. When the expenses are taken into account the profit drops to zero.
Specifically, one of the big expenses deducted before calculating tax was liquidation of employee stock options. And guess what? Instead of being taxed at the corporate income tax rate those options were taxed as individual income for the employees who exercised them -- an even higher rate!
In your example the gains were in fact taxed. The tax was just applied in a different place than where you're happening to look.
Thank you for explaining profits to me. I'm glad you did so long after I went to business school, because your description of this situation is mostly wrong.
> WaPo is misusing the term. Profits are revenues after expenses and the numbers in that graph are not taking certain expenses into account.
"Profit" is not a defined term. It's shorthand for something else, usually gross profit, operating profit, or net income.
For 2018, AMZN had gross profit of $93B, operating profit of $12B, and net income of $11.6B. The WaPo numbers in the graph use one of the latter two figures, so the graph is absolutely correct. It is NOT revenue in the graph, and their profits have absolutely gone up.
Do you honestly think an edited and widely read paper like WaPo is going to make an incredibly basic accounting mistake in their business section?
> In your example the gains were in fact taxed.
No, they weren't. Most of Amazon's shares are not held by employees. Taxing employees is not solving the core issue that everyone is upset about, which is that Amazon (taken either as an entity or as its owners, most of whom are not employees) is paying close to 0% taxes. Period. That's it.
No one is arguing whether the activity surrounding Amazon generates tax revenue. That's outside the scope of the argument.
> WaPo is misusing the term. Profits are revenues after expenses and the numbers in that graph are not taking certain expenses into account.
"Profit" is not a defined term. It's shorthand for something else, usually gross profit, operating profit, or net income.
For 2018, AMZN had gross profit of $93B, operating profit of $12B, and net income of $11.6B. The WaPo numbers in the graph use one of the latter two figures, so the graph is absolutely correct. It is NOT revenue in the graph, and their profits have absolutely gone up.
Do you honestly think an edited and widely read paper like WaPo is going to make an incredibly basic accounting mistake in their business section?
> In your example the gains were in fact taxed.
No, they weren't. Most of Amazon's shares are not held by employees. Taxing employees is not solving the core issue that everyone is upset about, which is that Amazon (taken either as an entity or as its owners, most of whom are not employees) is paying close to 0% taxes. Period. That's it.
No one is arguing whether the activity surrounding Amazon generates tax revenue. That's outside the scope of the argument.
> "Profit" is not a defined term. It's shorthand for something else, usually gross profit, operating profit, or net income.
And in this case, we are discussing profit as is relevant to the tax code. There is no need to be adversarial considering you've just said you agree with me.
> No, they weren't.
Yes, they were.
> Most of Amazon's shares are not held by employees.
This is irrelevant as capital gains are necessarily taxed.
> which is that Amazon (taken either as an entity or as its owners, most of whom are not employees) is paying close to 0% taxes. Period. That's it.
And this is just wrong.
> That's outside the scope of the argument.
It appears it would be most accurate to say that your argument hinges on a particular narrow definition of terms and scope of analysis.
I don't think we need to discuss this further. Your point has been made, such that it is.
And in this case, we are discussing profit as is relevant to the tax code. There is no need to be adversarial considering you've just said you agree with me.
> No, they weren't.
Yes, they were.
> Most of Amazon's shares are not held by employees.
This is irrelevant as capital gains are necessarily taxed.
> which is that Amazon (taken either as an entity or as its owners, most of whom are not employees) is paying close to 0% taxes. Period. That's it.
And this is just wrong.
> That's outside the scope of the argument.
It appears it would be most accurate to say that your argument hinges on a particular narrow definition of terms and scope of analysis.
I don't think we need to discuss this further. Your point has been made, such that it is.
Fun fact, everyone I hear speaking out about Amazon taxes and worker conditions, has Amazon Prime membership.
If taxpayer dollars subsidize Amazon, and Amazon then offers things that are very valuable to those same taxpayers, they shouldn't feel guilty about buying them. Those artificially low prices are because of their tax dollars, after all.
That's an excuse, and very weak one. Tax subsidy is a minuscule part of the cost savings.
Private America shouldn’t be responsible for providing a livable wage. The government should be. Just tax private corporations enough to pay for it.
Some taxes are more expensive than others because they dampen more economic activity. Corporate income taxes are one of the worst.
To illustrate by example, if you were to directly tax investment activity $1 per trade, you'd kill almost exactly $1 of GDP. Nothing would be gained. Land value taxes and VATs, it turns out, are some of the best because they're inexpensive and largely non-distortionary, and personal income taxes are somewhere in between.
To illustrate by example, if you were to directly tax investment activity $1 per trade, you'd kill almost exactly $1 of GDP. Nothing would be gained. Land value taxes and VATs, it turns out, are some of the best because they're inexpensive and largely non-distortionary, and personal income taxes are somewhere in between.
>If society decides that everyone should have minimum standard of living despite their skill level or net contributions
There is a fallacy here where you assumed society operates in a certain manner but provided no evidence to support that. The idea that people's standards of living is a directly a function of their skill level and not deeply influenced by other uncontrollable factors is a very contested and argued point of view. On the contrary, it's clear to see that despite individual productivity sky rocketing over the last 40 years, wages have remained stagnant.
Even the framing of your question is odd - who is the "society as a whole" that bares that burden, when most people who make up society are working class? Rephrased you could have simply stated that the majority working poor shouldn't cause undue burden on the aristocrats.
Lastly, I'll add that the state is already burdened in one way or another. Having a large amount of uninsured people due to corporations off loading their social contract creates a public policy problem. The state can't have people dying in the street or spreading disease because the vast majority of them are underinsured - and to solve these problems the state then increases taxes on everyone just so a corporation or two and get away with the bare minimum.
There is a fallacy here where you assumed society operates in a certain manner but provided no evidence to support that. The idea that people's standards of living is a directly a function of their skill level and not deeply influenced by other uncontrollable factors is a very contested and argued point of view. On the contrary, it's clear to see that despite individual productivity sky rocketing over the last 40 years, wages have remained stagnant.
Even the framing of your question is odd - who is the "society as a whole" that bares that burden, when most people who make up society are working class? Rephrased you could have simply stated that the majority working poor shouldn't cause undue burden on the aristocrats.
Lastly, I'll add that the state is already burdened in one way or another. Having a large amount of uninsured people due to corporations off loading their social contract creates a public policy problem. The state can't have people dying in the street or spreading disease because the vast majority of them are underinsured - and to solve these problems the state then increases taxes on everyone just so a corporation or two and get away with the bare minimum.
Minimum wage by ruins a lot of poor young people ability to gain skills. And everytime its raise poor people especially poor young boys with no skills take the brunt of the pain.
> Minimum wage by ruins a lot of poor young people ability to gain skills.
There are some jobs that don't get done because of minimum wage, but the claim you make is much stronger and really demands some evidence.
> And everytime its raise poor people especially poor young boys with no skills take the brunt of the pain.
So you are saying that the long stretches where real minimum wage erodes are good things for “poor young boys”? Because I don't think there are any measures of the welfare of that group that support either that necessary corollary or your specific claim.
There are some jobs that don't get done because of minimum wage, but the claim you make is much stronger and really demands some evidence.
> And everytime its raise poor people especially poor young boys with no skills take the brunt of the pain.
So you are saying that the long stretches where real minimum wage erodes are good things for “poor young boys”? Because I don't think there are any measures of the welfare of that group that support either that necessary corollary or your specific claim.
All of this was familiar to me except the sex effect. Why are males disproportionately impacted?
One argument I've heard is that women tend to do better at men at picking up 'soft skills,' i.e. interacting with other people, while men tend to be better at physical labor. New low-skill jobs tend to focus on soft skills, while jobs requiring physical labor are disappearing. It's unclear how much of this shift is driven by the minimum wage, but certianly it incentivizes automation/outsourcing/illegal labor, which tend to disproportionately affect physical jobs. This leaves poor, uneducated men pretty vulnerable.
I don't have any sources on hand, but there was a nice feature in the Economist about this a year or two ago.
I don't have any sources on hand, but there was a nice feature in the Economist about this a year or two ago.
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I heard its cause 1 boys do worse in school because they more disagreeable so learning on the job becomes more important. And 2 men do 80% of the trade jobs which on the job training or being comfortable in job environment before hand is a lot more important. But yeh boys unemployement jumps when minimum wage is increase typically. And increases criminal behavior based on some studies.
https://www.aei.org/wp-content/uploads/2016/05/teenjobless.p...
https://www.aei.org/wp-content/uploads/2016/05/teenjobless.p...
No, 16 year olds need wages too! We have the most student loan debt ever; and the highest tuition ever; but somehow 1990s wages are good for people saving for college? (Or if not college, life)
What job pays minimum wage and teaches a skill and isn't exempt via an education exemption?
There are skills that all jobs teach - showing up to work on time, being reliable, etc.
If the school did not taught you that, why would the job do?
Because sooner or later everyone realizes that - with the exception of people aiming for education grants or university eduction - school is an artificial, self-contained environment and things that happen there have little consequence. When you stop caring whether you get C or E on anything, the school loses its power to teach you punctuality and reliability.
Punctuality does not really make difference between C and E.
In my experience, people who were not at time in school, were not at time in their jobs. And either they found a job where it did not matter or were in constant trouble because of it or got fired.
Generally, they did not acquired puntuality nor precision. The lack of either was result of general attitude toward everything around and it did not magically changed after school.
In my experience, people who were not at time in school, were not at time in their jobs. And either they found a job where it did not matter or were in constant trouble because of it or got fired.
Generally, they did not acquired puntuality nor precision. The lack of either was result of general attitude toward everything around and it did not magically changed after school.
Well, normally the forcing function for school, if school itself doesn't work, is parents.
But if your family sucks... School won't save you :-(
But if your family sucks... School won't save you :-(
Indeed. And unfortunately, quite a lot of families are dysfunctional, for various complicated reasons. When parents offload parenting to schools, while schools expect kids to be parented at home... kids parent themselves.
Cause school does incentive some people because there no short term benefits especially if you make Cs and just dont have the skills to become a white collar worker. This goes especially for disagreeable young people.
A very obvious example is the restaurant industry. 90% of managers started out in an entry level position. 80% of owners started out in an entry level position. Pricing people out of the labor market doesn't help them.
https://restaurant.org/research/restaurant-statistics/restau...
https://restaurant.org/research/restaurant-statistics/restau...
Like being prompt, being professional, taking responsibility, talking to customers, etc. The things you learn at you first job running papers or owning a lemonade stands. Will you learn to trade stocks, no. But those things are valuable.
>A minimum wage is nothing more than a tool in our arsenal to fight poverty. I (and many economists) argue that it is one of our worst tools.
For companies who prefer to pay their workers as little as they can get away with, it is the tool of choice for those who recognize the meaning of 'wage-slavery'. Theories and promises about 'much better' tools haven't solved the problem. Raises do. A bird in the hand.
For companies who prefer to pay their workers as little as they can get away with, it is the tool of choice for those who recognize the meaning of 'wage-slavery'. Theories and promises about 'much better' tools haven't solved the problem. Raises do. A bird in the hand.
> to pay their workers as little as they can get away with
Which is natural, when you employ people with almost no marketable skills.
The solution is not raising minimum wage. The solution is more competion for Uber HR so they have to pay more because people have better alternatives. Maybe deregulating labor market so there are more jobs would be a solution.
Which is natural, when you employ people with almost no marketable skills.
The solution is not raising minimum wage. The solution is more competion for Uber HR so they have to pay more because people have better alternatives. Maybe deregulating labor market so there are more jobs would be a solution.
Seems to me those skills are quite marketable. There is consistent demand for basic labor.
Those doing the labor need to make enough to exist and show up for work.
If they do not get enough to make it and show up for work, then they don't make it and don't show up for work.
People have costs. Existing and showing up for work has a cost.
If we truly do not pay those costs, people die and dead people do not show up for work.
Clearly, dead people not showing up for work helps no one, so we need to make sure they get enough to make it and show up, right?
If we decide government has this responsibility, fine! Seriously.
But that too has a cost. Literally everything does cost something, and the cost for that is not shaming the fuck out of people who do not make enough to make it and show up for work. And that happens constantly!
Those minimum wage peeps are worthless! Lazy! Dumb! Free loaders! Queens! And on and on it goes.
Pretty hard to say all of those things when a ton of jobs do not pay enough to make it and show up for work.
What do we expect them to do?
Work more?
Well, life breaks down into thirds. One to sleep, one to work, one to be a person and do all the human things humans do, laugh, live, grow, build, do, etc..
When so many jobs do not pay enough to make it and show up for work, people run out of thirds to work, and they have to sleep, and working all the time does not exactly allow for personal growth does it?
Nope and we all know that too.
I sure wish we would just settle on one or the other and quit trying to blame and shame millions of people who do basic labors that are necessary and that save a lot more of us a ton of time that we use to do our work and be humans and all that good stuff.
If we are gonna say government does it, and minimum wage is super low, fine. Government needs to do that, and we need to pay appropriate taxes and get on with life and let everyone play their role with some dignity and compassion.
Or?
We say corporations need to fully fund their labor. In that scenario, we need to pay them appropriately for their goods, services and insure robust competition so margins don't get out of hand. Taxes will be lower, making room for all that to happen.
And again, everyone gets on with life, playing their roles with dignity and respect.
Which is it?
The current "blame them" scenario is completely unacceptable. And it is unacceptable because we need those basic labors, someone will be doing them and that needs to be recognized as the value in our lives it truly is and not frowned upon as some how bad, because it just isn't.
So which is it?
This is the national discussion on all this we ought to have.
Those doing the labor need to make enough to exist and show up for work.
If they do not get enough to make it and show up for work, then they don't make it and don't show up for work.
People have costs. Existing and showing up for work has a cost.
If we truly do not pay those costs, people die and dead people do not show up for work.
Clearly, dead people not showing up for work helps no one, so we need to make sure they get enough to make it and show up, right?
If we decide government has this responsibility, fine! Seriously.
But that too has a cost. Literally everything does cost something, and the cost for that is not shaming the fuck out of people who do not make enough to make it and show up for work. And that happens constantly!
Those minimum wage peeps are worthless! Lazy! Dumb! Free loaders! Queens! And on and on it goes.
Pretty hard to say all of those things when a ton of jobs do not pay enough to make it and show up for work.
What do we expect them to do?
Work more?
Well, life breaks down into thirds. One to sleep, one to work, one to be a person and do all the human things humans do, laugh, live, grow, build, do, etc..
When so many jobs do not pay enough to make it and show up for work, people run out of thirds to work, and they have to sleep, and working all the time does not exactly allow for personal growth does it?
Nope and we all know that too.
I sure wish we would just settle on one or the other and quit trying to blame and shame millions of people who do basic labors that are necessary and that save a lot more of us a ton of time that we use to do our work and be humans and all that good stuff.
If we are gonna say government does it, and minimum wage is super low, fine. Government needs to do that, and we need to pay appropriate taxes and get on with life and let everyone play their role with some dignity and compassion.
Or?
We say corporations need to fully fund their labor. In that scenario, we need to pay them appropriately for their goods, services and insure robust competition so margins don't get out of hand. Taxes will be lower, making room for all that to happen.
And again, everyone gets on with life, playing their roles with dignity and respect.
Which is it?
The current "blame them" scenario is completely unacceptable. And it is unacceptable because we need those basic labors, someone will be doing them and that needs to be recognized as the value in our lives it truly is and not frowned upon as some how bad, because it just isn't.
So which is it?
This is the national discussion on all this we ought to have.
>, then it should be society as a whole that bares that burden, not just the enterprises that employ low/no skill labor or their consumers.
society as a whole already does that, as do other employers, who generally do cover healthcare, invest in the training of their workforce and so on, it's Uber and other 'gig economy' companies which by means of legal arbitrage are the exception.
And while it's fair to talk about the trade-offs between small, family scale businesses and minimum wage, last time I checked Uber did not exactly fall into that category.
society as a whole already does that, as do other employers, who generally do cover healthcare, invest in the training of their workforce and so on, it's Uber and other 'gig economy' companies which by means of legal arbitrage are the exception.
And while it's fair to talk about the trade-offs between small, family scale businesses and minimum wage, last time I checked Uber did not exactly fall into that category.
Why are employers covering healthcare at all? This also shouldn’t be the purview of private companies.
WWII-era wage controls meant to combat inflation. Employers sidestepped them by offering other benefits to attract employees. Health insurance was a big one. It became entrenched and we're still stuck with it today.
With economic policy, I sometimes wonder if artificial floors tend to cause less strange distortions than artificial ceilings, because there's usually already a floor: zero. We just raise it a bit.
I feel like it's easier to anticipate the side effects of raising a minimum wage than it is for an earnings cap.
I feel like it's easier to anticipate the side effects of raising a minimum wage than it is for an earnings cap.
> Goldman Sachs doesn't get hurt by a minimum wage, but small business owners, such as those running a convenience store, do.
Goldman Sachs is a red herring in this argument. The ones hurt most are the very poor who never have a chance to own such a business to begin with. And a business model that relies on cheap labor is not one that should be ethically allowed to exist in modern society IMO. Also as the sibling comment points out, all of society loses when business underpays it's employees and they are forced to permanently rely on transfer payments to make ends meet.
A minimum wage is the best way to use market mechanisms to eliminate poverty via an improved alignment of incentives. Businesses invest in additional capital to make labor more productive due to it's increased inherent cost. More productive labor can in turn charge higher rates. Which translates into higher total demand, which begets more investment and growth.
There are also ancillary benefits as well, many anti-immigration supporters (inaccurately) point to stagnating wages as a negative result of present immigration policy. A boost in minimum wages would take that rhetorical sleight-of-hand away from them.
Goldman Sachs is a red herring in this argument. The ones hurt most are the very poor who never have a chance to own such a business to begin with. And a business model that relies on cheap labor is not one that should be ethically allowed to exist in modern society IMO. Also as the sibling comment points out, all of society loses when business underpays it's employees and they are forced to permanently rely on transfer payments to make ends meet.
A minimum wage is the best way to use market mechanisms to eliminate poverty via an improved alignment of incentives. Businesses invest in additional capital to make labor more productive due to it's increased inherent cost. More productive labor can in turn charge higher rates. Which translates into higher total demand, which begets more investment and growth.
There are also ancillary benefits as well, many anti-immigration supporters (inaccurately) point to stagnating wages as a negative result of present immigration policy. A boost in minimum wages would take that rhetorical sleight-of-hand away from them.
Cool, as soon as we have meaningful negative income tax I will be willing to reevaluate my perspective on minimum wage.
> A minimum wage is nothing more than a tool in our arsenal to fight poverty.
This is quite wrong: minimum wages do not "fight poverty". The only effect that minimum wage laws have is to render low-paying job illegal. Minimum wage stops potential employers from creating low wage jobs. That's all they do. If unemployment rate is low enough then society doesn't notice, but if unemployment rate is high then people just work ilegally.
This is quite wrong: minimum wages do not "fight poverty". The only effect that minimum wage laws have is to render low-paying job illegal. Minimum wage stops potential employers from creating low wage jobs. That's all they do. If unemployment rate is low enough then society doesn't notice, but if unemployment rate is high then people just work ilegally.
> not just the enterprises that employ low/no skill labor or their consumers.
Why would any company ever employ anyone in the close-to-minimum-wage bracket? Amazon gets flack for employment, and Google gets none. Only one of those two has made room for any significant number of close-to-minimum-wage workers.
This is a massively perverse incentive that prioritises how rich people feel about themselves over how people without much actually live. IMHO, that's about as close to a working definition of evil as I can muster.
Semi-related: this is also why basic income will never work. Basic income will be seen, inevitably, as subsidising rich companies, which will lead to it being killed off.
Why would any company ever employ anyone in the close-to-minimum-wage bracket? Amazon gets flack for employment, and Google gets none. Only one of those two has made room for any significant number of close-to-minimum-wage workers.
This is a massively perverse incentive that prioritises how rich people feel about themselves over how people without much actually live. IMHO, that's about as close to a working definition of evil as I can muster.
Semi-related: this is also why basic income will never work. Basic income will be seen, inevitably, as subsidising rich companies, which will lead to it being killed off.
What work is there at Google that can be done by a person with no particular skills?
Almost anybody can move a box from a conveyor belt to a loading dock, or unload boxes from a truck.
Almost anybody can move a box from a conveyor belt to a loading dock, or unload boxes from a truck.
That hardly matters. Amazon provides hundreds of thousands of new jobs and they get crucified for it. Same with any other large company with a huge number of workers.
It's just a bad incentive structure because nobody wants these workers due to the terrible PR. Amazon is trying it's hardest to automate everyone out of a job.
It's just a bad incentive structure because nobody wants these workers due to the terrible PR. Amazon is trying it's hardest to automate everyone out of a job.
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We already have a negative income tax. It’s the Earned Income Tax Credit. The issues are that it isn’t distributed through out the year and it’s not high enough.
The EITC is not a liberal or conservative issue. Every President Republican and Democratic since 1980 has supported it. I don’t know if Trump has said anything one way or the other.
The EITC is not a liberal or conservative issue. Every President Republican and Democratic since 1980 has supported it. I don’t know if Trump has said anything one way or the other.
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By your logic, the problem is not that people are willingly signing up to drive for Uber, but that the government has failed to foster an economic environment in which "poverty" is an option that plenty of drivers will willingly choose.
There is already a minimum wage that people can go out and try to find a job for, but mysteriously, there have always been plenty of Uber drivers! Is it perhaps that by creating a minimum wage law, there are fewer jobs available? Or maybe they just like the convenience of working for Uber, even if they aren't guaranteed to make minimum wage after expenses. Or would you go so far as to suggest that these people are too stupid to know they are being voluntarily oppressed, but because you know what's best for them, you would help legislate them out of a job? (Make no mistake: higher prices will result in fewer Uber rides.)
The real minimum wage is zero. Just add a UBI and get rid of all the other market distorting AOC-economics. The resounding success of the gig-economy (in terms of labor supply specifically) is a side effect of a minimum wage that is too high, crowding people out of full time jobs. In the meantime, adding these minimum wage laws to Uber will just result in more people making nothing and fewer people having convenient transport.
There is already a minimum wage that people can go out and try to find a job for, but mysteriously, there have always been plenty of Uber drivers! Is it perhaps that by creating a minimum wage law, there are fewer jobs available? Or maybe they just like the convenience of working for Uber, even if they aren't guaranteed to make minimum wage after expenses. Or would you go so far as to suggest that these people are too stupid to know they are being voluntarily oppressed, but because you know what's best for them, you would help legislate them out of a job? (Make no mistake: higher prices will result in fewer Uber rides.)
The real minimum wage is zero. Just add a UBI and get rid of all the other market distorting AOC-economics. The resounding success of the gig-economy (in terms of labor supply specifically) is a side effect of a minimum wage that is too high, crowding people out of full time jobs. In the meantime, adding these minimum wage laws to Uber will just result in more people making nothing and fewer people having convenient transport.
> If public transportation is not reliable, make it reliable.
Because people who don't use it don't want to pay for it. There is a lot of opposition to public transport that doesn't pay for itself. There is also the horrible feedback loop of "only poor people take public transportation" stigma, making it more difficult to break even.
Because people who don't use it don't want to pay for it. There is a lot of opposition to public transport that doesn't pay for itself. There is also the horrible feedback loop of "only poor people take public transportation" stigma, making it more difficult to break even.
> There is also the horrible feedback loop of "only poor people take public transportation" stigma, making it more difficult to break even.
At least in LA, the problem isn't "poor people ride public transportation." It's straight up "I don't feel safe." I tried using the Metro and didn't buy a car for nearly a year after I moved here, but there were incidents I experienced that made me abandon it. It had nothing to do with poor people.
"A survey of riders showed that women feel less safe than men during all stages of their transit trips — especially at night. For example, just 13% of women surveyed said they felt safe waiting for a train or bus after dark, compared to 30% of men." [1]
When 87% of women and 70% of men don't feel safe on public transportation that's a real problem and it's no surprise that people abandon it as soon as the possibly can.
[1] https://laist.com/2019/10/03/los-angeles-la-metro-women-publ...
At least in LA, the problem isn't "poor people ride public transportation." It's straight up "I don't feel safe." I tried using the Metro and didn't buy a car for nearly a year after I moved here, but there were incidents I experienced that made me abandon it. It had nothing to do with poor people.
"A survey of riders showed that women feel less safe than men during all stages of their transit trips — especially at night. For example, just 13% of women surveyed said they felt safe waiting for a train or bus after dark, compared to 30% of men." [1]
When 87% of women and 70% of men don't feel safe on public transportation that's a real problem and it's no surprise that people abandon it as soon as the possibly can.
[1] https://laist.com/2019/10/03/los-angeles-la-metro-women-publ...
It is worth being more precise than "there is a lot of opposition". That opposition corresponds to a political ideology that public entities like mass transportation and USPS [1] should break even to begin with.
It's not a requirement that these public services break even. In fact, (controversially) it's the opposite. [2]
[1] https://about.usps.com/newsroom/national-releases/2019/1114-... [2] https://en.wikipedia.org/wiki/Deficit_spending
It's not a requirement that these public services break even. In fact, (controversially) it's the opposite. [2]
[1] https://about.usps.com/newsroom/national-releases/2019/1114-... [2] https://en.wikipedia.org/wiki/Deficit_spending
> If public transportation is not reliable, make it reliable.
If government spending is inefficient and Americans don't feel well represented by their elected officials, then fix it. Oh wait... it isn't that easy...
If government spending is inefficient and Americans don't feel well represented by their elected officials, then fix it. Oh wait... it isn't that easy...
> This is not an excuse for one cohort of poverty to subjugate the other by way of Silicon Valley. If public transportation is not reliable, make it reliable. If people aren't paid enough, improve wage and labor requirements. Many countries provide for their workers' transportation without Uber, so why can't we?
Offering someone money for doing something is not 'subjugation'.
Offering someone money for doing something is not 'subjugation'.
Suppose that the following are true:
- Someone is not able to make enough money to have a reasonable quality of life despite contributing to society.
- Society's rules do not provide an alternative (for example, because natural resources and land have already been claimed or because someone doesn't have access to capital).
It would not make sense for someone to willingly go along with a system that does not allow them to live a decent life. Therefore they must be going along with the system due to some form of coercion.
A situation where someone is forced via threat to go along with a system that does not meet their needs is subjugation.
- Someone is not able to make enough money to have a reasonable quality of life despite contributing to society.
- Society's rules do not provide an alternative (for example, because natural resources and land have already been claimed or because someone doesn't have access to capital).
It would not make sense for someone to willingly go along with a system that does not allow them to live a decent life. Therefore they must be going along with the system due to some form of coercion.
A situation where someone is forced via threat to go along with a system that does not meet their needs is subjugation.
Ya, I know that argument. But it's not an accurate description of the world in which we actually live. There's tons of places, even in developed countries like the US where its extremely cheap to buy fertile land that you could live off of if you were so inclined. People choose not to do this because they like to live in urban megacities. They like to live with all the comforts and benefits that the system has provided them with. They want all the benefits of capitalism without the costs.
Most people don't have the training or resources to setup or run a profitable farm. In addition, in many cases the land is highly remote; in which case someone living on it isn't really part of society anymore.
The first hunter gatherers didn't have those resources either. They didn't even have wikipedia. If you're motivated, you can figure it out.
It is, if the alternative for that person is to starve, and the very existence of that offer at scale perpetuates this situation.
It’s not our responsibility to make up for your lack of income. Poverty sucks, but punishing the masses so you can feel good about “fair share” creates resentment and abandon.
Im poor. Can i skip on regulations that require me to have car that does not polute insane amounts, or for example insurance? By your idea, yes. Because im poor and just let me use anything i can to get by. Now we have multimilion company that says, "we are servicing the poor, so we shoul be allowed to skip on these expenses too" do you see where this is going?
In fact, we're talking about the company that did skip on insurance without even saying it, or asking for permission. It's Uber - one of the more sociopathic companies in recent history (all well documented). Not some charity.
It is society's responsibility to make up for its member's lack of income. That's what society is: people coming together in order to provide for the mutual good.
We dont have public transporation cause we are half as dense and it would be a huge money pit. We know other countries do this to and its ruins they local budgets like spain.
The solution for this problem is also not forcing businesses and people into idea that in the real world makes little of no since.
Cause with this 25% hike many of those driver will lose their jobs when less people take uber. I know since uber pools been taken away I personally hardly ever uber unless its 100% necessary.
The solution for this problem is also not forcing businesses and people into idea that in the real world makes little of no since.
Cause with this 25% hike many of those driver will lose their jobs when less people take uber. I know since uber pools been taken away I personally hardly ever uber unless its 100% necessary.
people shouldn’t be working multiple jobs out of necessity, you’re optimizing for the wrong problem
Lower income folks don't take uber though.
People in poverty don't use ride sharing services.
http://news.gallup.com/poll/237965/snapshot-uses-ride-sharin....
http://news.gallup.com/poll/237965/snapshot-uses-ride-sharin....
Maybe "poverty" isn't the right word or metric, but according to that poll, 25% of people who make under $24k/year use ridesharing and 48% of people who make under $60k/year use ridesharing.
Granted, $50-60k annual salary might be middle-class in some parts of the country, but it's pretty clear that a huge fraction of the lower-income population in the United States do use ridesharing.
Granted, $50-60k annual salary might be middle-class in some parts of the country, but it's pretty clear that a huge fraction of the lower-income population in the United States do use ridesharing.
> Granted, $50-60k annual salary might be middle-class in some parts of the country
Median individual income is around $35K, median household income is a but above $60K. $50-$60K isn't typical of middle class in any sane class schema, but it's definitely above middle income for an individual, and nearly at it for a household, not “lower income”.
Median individual income is around $35K, median household income is a but above $60K. $50-$60K isn't typical of middle class in any sane class schema, but it's definitely above middle income for an individual, and nearly at it for a household, not “lower income”.
Uber can be cheaper than owning a car if you only need a car occasionally. If you're using it daily, it almost certainly is more expensive.
Depends on cost of parking. Parking can be outrageously expensive downtown in many cities, to the point it is cheaper to take Uber in.
They don't need a 3rd job under Seattle minimum wage law.
Yeah, you sound like a shill if you’re claiming that a significant portion of the Uber customer base uses Uber to get between their second and third jobs. That’s gotta be .01% of Uber rides.
> But if you're on the lower income scale and you need Uber to help you get between your second and third job (because you can't afford a car and public transit is unreliable) or you need it to get to a doctor's appointment, this kind of change is a big deal.
Sure but this is a prisoner's dilemma situation.
This price increase allows drivers to earn a living wage which in turn decreases the number of people at the lower end of today's income scale. Fewer people will have the problems you're describing in the first place.
Do this over and over, and ultimately, nobody's left at the bottom.
On the other hand, if you reject all attempts to bring people out of poverty because there's currently people in poverty, well, you're never going to achieve a single thing.
This increase in wages also yields an increase in tax revenue, which can be spent to improve things like public transit, further ameliorating the situation moving forward.
Keep in mind this is a 25% increase in what many view as a luxury good, but the minimum wage is going up by... 25%. So, for everyone at the bottom, it's a net zero change. On the other hand their buying power in other areas of their lives actually goes up. So who is being hurt? I guess the folks in the donut hole?
Sure but this is a prisoner's dilemma situation.
This price increase allows drivers to earn a living wage which in turn decreases the number of people at the lower end of today's income scale. Fewer people will have the problems you're describing in the first place.
Do this over and over, and ultimately, nobody's left at the bottom.
On the other hand, if you reject all attempts to bring people out of poverty because there's currently people in poverty, well, you're never going to achieve a single thing.
This increase in wages also yields an increase in tax revenue, which can be spent to improve things like public transit, further ameliorating the situation moving forward.
Keep in mind this is a 25% increase in what many view as a luxury good, but the minimum wage is going up by... 25%. So, for everyone at the bottom, it's a net zero change. On the other hand their buying power in other areas of their lives actually goes up. So who is being hurt? I guess the folks in the donut hole?
> This price increase allows drivers to earn a living wage which in turn decreases the number of people at the lower end of today's income scale. Fewer people will have the problems you're describing in the first place.
>Do this over and over, and ultimately, nobody's left at the bottom.
You made huge unfounded leaps here. There’s no reason to believe a magic money tap will just pay for the increased costs. It’s just as likely to kill jobs.
There’s a reason setting minimum wage to $100k a year doesn’t work.
>Do this over and over, and ultimately, nobody's left at the bottom.
You made huge unfounded leaps here. There’s no reason to believe a magic money tap will just pay for the increased costs. It’s just as likely to kill jobs.
There’s a reason setting minimum wage to $100k a year doesn’t work.
There's no magic money here. Companies that don't pay subsistence wages leave employees to collect public benefits to make up the difference. The businesses are being indirectly subsidized by the taxpayer. All setting a minimum wage at a subsistence pay does is stop the companies from mooching off the taxpayer.
> It’s just as likely to kill jobs.
And that's fine, there's no reason that all jobs have to be done by humans. This is why wholesale reform needs to take place as well, including basic income. Not leaning into robotization of low-skilled jobs amounts to turning America into a renaissance faire as a make-work project.
> It’s just as likely to kill jobs.
And that's fine, there's no reason that all jobs have to be done by humans. This is why wholesale reform needs to take place as well, including basic income. Not leaning into robotization of low-skilled jobs amounts to turning America into a renaissance faire as a make-work project.
> The businesses are being subsidized by the taxpayer.
The other way around with means-tested welfare, since the taxpayers would pay more if the worker was not employed.
> All setting a minimum wage at a subsistence pay does is stop the companies from mooching off the taxpayer.
No, it stops the business, the customers it would have, the would-be employee, and the taxpayer from benefiting from the mutually-beneficial exchange that would otherwise take place.
To the extent there is an abuse prevented, it's that it is limiting the ability of employers to exploit the inherent power imbalance of capitalism to suppress wages for jobs with worth above the minimum wage to below it. But basic income provides a more robust solution to that problem without also prohibiting work at any wage.
The other way around with means-tested welfare, since the taxpayers would pay more if the worker was not employed.
> All setting a minimum wage at a subsistence pay does is stop the companies from mooching off the taxpayer.
No, it stops the business, the customers it would have, the would-be employee, and the taxpayer from benefiting from the mutually-beneficial exchange that would otherwise take place.
To the extent there is an abuse prevented, it's that it is limiting the ability of employers to exploit the inherent power imbalance of capitalism to suppress wages for jobs with worth above the minimum wage to below it. But basic income provides a more robust solution to that problem without also prohibiting work at any wage.
> You made huge unfounded leaps here. There’s no reason to believe a magic money tap will just pay for the increased costs. It’s just as likely to kill jobs.
People like you keep beating this drum in spite of the fact that every single initiative on that front has shown to be within the neutral or positive range for jobs within margin of error.
Yes, eventually a minimum wage will start to impact the job market--evidence is that we're a LONG way from that point.
Sadly at this point, "But think of the jobs" has been reduced to a shibboleth for "poor people (read: minorities) don't deserve to be helped." rather than a factual point deserving informed debate.
People like you keep beating this drum in spite of the fact that every single initiative on that front has shown to be within the neutral or positive range for jobs within margin of error.
Yes, eventually a minimum wage will start to impact the job market--evidence is that we're a LONG way from that point.
Sadly at this point, "But think of the jobs" has been reduced to a shibboleth for "poor people (read: minorities) don't deserve to be helped." rather than a factual point deserving informed debate.
You're not considering 2nd order effects. The increased buying power is eventually corrected. Those on a salaried position have less buying power too because of inflation. The whole economy is hurt by minimum wage increases, and the benefit they bring is temporary.
You make these negative claims about minimum wages with no evidence, while there is lots of high quality evidence that a minimum wage is positive or neutral.
There's plenty of evidence. This is pretty much Econ 101.
The minimum wage is basically a price control on the minimum cost of 1 unit of labour.
If you increase the minimum wage, you're not increasing the value of the economy (which is what leads to the pie growing), but you force employers to spend more on the same thing. The pie is the same size but more money is going to minimum wage workers.
The end result is inflation. People are not earning more, they are just getting a higher number every month.
That being said, I do ack my own bias here, and I get there's reasonable arguments from both directions, all I can say is that it's my gut feeling based on experience:
https://www.investopedia.com/ask/answers/052815/does-raising...
The minimum wage is basically a price control on the minimum cost of 1 unit of labour.
If you increase the minimum wage, you're not increasing the value of the economy (which is what leads to the pie growing), but you force employers to spend more on the same thing. The pie is the same size but more money is going to minimum wage workers.
The end result is inflation. People are not earning more, they are just getting a higher number every month.
That being said, I do ack my own bias here, and I get there's reasonable arguments from both directions, all I can say is that it's my gut feeling based on experience:
https://www.investopedia.com/ask/answers/052815/does-raising...
"There’s a reason setting minimum wage to $100k a year doesn’t work."
Do you have a source for that? Has anyone ever tried it?
Do you have a source for that? Has anyone ever tried it?
No one has tried it because it's a silly and naive idea. The rest of the economy would correct for the adjustment, leaving us in the same situation and causing a lot of pain for workers and businesses in the process.
If that's so (and I believe it is), then isn't this whole discussion a red herring?
The market correcting for disposable income is a problem. We'll never solve poverty if the market is just going to eat all the improvements we're making.
The market correcting for disposable income is a problem. We'll never solve poverty if the market is just going to eat all the improvements we're making.
I don't think it's always the case that the market will eat any attempted improvements - it's just that an attempt to raise the wage floor without any other changes isn't enough to prevent the market from adjusting to the new baseline.
There are tons of other ways to change the calculus. E.g. tax code, employment laws, separating health care from employment, etc. I'm no expert and I don't know what the 'right' answer is but I imagine it's some combination of thought-out policy changes that, when combined, apply an economic force to pull the wealth gap closer over time.
There are tons of other ways to change the calculus. E.g. tax code, employment laws, separating health care from employment, etc. I'm no expert and I don't know what the 'right' answer is but I imagine it's some combination of thought-out policy changes that, when combined, apply an economic force to pull the wealth gap closer over time.
> Sure but this is a prisoner's dilemma situation.
Who is choosing to defect rather than cooperate in this scenario?
> This price increase allows drivers to earn a living wage which in turn decreases the number of people at the lower end of today's income scale.
This is unclear. If we find there are 5x low-income people who benefits from Uber for every Uber driver, and the increased Uber costs reduce the real income of those poor people by 25% per month, then it's making poor people quite a bit poorer. Adjust those variables and you might get different outcomes. Or maybe the demand for Uber rides is quite elastic, in which case Uber drivers will lose income because so many fewer people are riding that it doesn't offset the price.
You'd have to actually measure and find out. But overcoming deadweight loss problems due to artificial price increases is quite hard. I'd put money on this making low-income people worse off.
> Do this over and over, and ultimately, nobody's left at the bottom.
Sorry, this is abominable economics. If you "do this over and over" you're just transferring money around between groups in an extremely inefficient and arbitrary way. Also there will always be a bottom, unless we had exact equality of outcomes, which is for various reasons impossible (variation in life expectancy, for example, has all sorts of strange effects).
But let's assume that this means the people at the bottom still have a very comfortable lifestyle, which I think we all agree would be a desirable goal. The only way to actually produce that outcome is to produce more goods with fewer resources. Simply increasing prices here and there does none of that - it may actually produce less with the same amount of resources. In short, additional technology is required. Simply resorting to distributional tricks will not get you there, even first order. (Second-order and beyond effects would probably result in catastrophic economic damage, since many people would have strong incentives to produce less and no additional technology would exist that increases productivity. Again, the goal should be for people to produce more in less time and/or using fewer inputs.)
Who is choosing to defect rather than cooperate in this scenario?
> This price increase allows drivers to earn a living wage which in turn decreases the number of people at the lower end of today's income scale.
This is unclear. If we find there are 5x low-income people who benefits from Uber for every Uber driver, and the increased Uber costs reduce the real income of those poor people by 25% per month, then it's making poor people quite a bit poorer. Adjust those variables and you might get different outcomes. Or maybe the demand for Uber rides is quite elastic, in which case Uber drivers will lose income because so many fewer people are riding that it doesn't offset the price.
You'd have to actually measure and find out. But overcoming deadweight loss problems due to artificial price increases is quite hard. I'd put money on this making low-income people worse off.
> Do this over and over, and ultimately, nobody's left at the bottom.
Sorry, this is abominable economics. If you "do this over and over" you're just transferring money around between groups in an extremely inefficient and arbitrary way. Also there will always be a bottom, unless we had exact equality of outcomes, which is for various reasons impossible (variation in life expectancy, for example, has all sorts of strange effects).
But let's assume that this means the people at the bottom still have a very comfortable lifestyle, which I think we all agree would be a desirable goal. The only way to actually produce that outcome is to produce more goods with fewer resources. Simply increasing prices here and there does none of that - it may actually produce less with the same amount of resources. In short, additional technology is required. Simply resorting to distributional tricks will not get you there, even first order. (Second-order and beyond effects would probably result in catastrophic economic damage, since many people would have strong incentives to produce less and no additional technology would exist that increases productivity. Again, the goal should be for people to produce more in less time and/or using fewer inputs.)
> Also there will always be a bottom, unless we had exact equality of outcomes, which is for various reasons impossible
You're taking the parent way too literally. If you look at the rest of the post, they mention "number of people at the lower end of today's income scale" (emphasis added), "people in poverty", and people "hav[ing] the problems you're describing" (not being able to afford a car). Their argument is clearly that nobody will be left at the point corresponding to today's bottom, not that there won't be any bottom.
You're taking the parent way too literally. If you look at the rest of the post, they mention "number of people at the lower end of today's income scale" (emphasis added), "people in poverty", and people "hav[ing] the problems you're describing" (not being able to afford a car). Their argument is clearly that nobody will be left at the point corresponding to today's bottom, not that there won't be any bottom.
This is why I added another qualification based on a looser interpretation, if you read my whole post. It's immediately after the quoted paragraph.
None of this changes the real value of an Uber ride, or whatever low-wage job you care to imagine. If it becomes more expensive because drivers are being paid an artificially higher wage, then either (some) people will stop using Uber, and (some of) those jobs will vanish, or there will be inflation up the line until the buying power of the new higher wages recalibrates with the real value of the work being performed.
> Do this over and over, and ultimately, nobody's left at the bottom.
You talk about an ‘income scale’ and moving people from the ‘bottom’ of it. What do you think happens if you take the bottom 10 people on the scale and move them up 10 places?
You talk about an ‘income scale’ and moving people from the ‘bottom’ of it. What do you think happens if you take the bottom 10 people on the scale and move them up 10 places?
The idea of someone with three jobs using Uber is ridiculous and wild.
He's public transit truly been destroyed like that in many American cities?
He's public transit truly been destroyed like that in many American cities?
The problem is that America has few cities, in the European sense. Many of the newly-grown cities are just endless suburbs around a small downtown.
In a dense city like NYC, public transportation is the obvious choice. In a semi-dense city like Seattle, public transportation is a viable choice. In a nebulous agglomeration like LA, public transportation is hard to rely on.
In a dense city like NYC, public transportation is the obvious choice. In a semi-dense city like Seattle, public transportation is a viable choice. In a nebulous agglomeration like LA, public transportation is hard to rely on.
People took 278 million trips on an LA Metro bus in 2019, which is more ridership than on any bus or rail system in the United States outside of NYC. We also have the most light rail ridership in the country. (but who cares about that?) Our public transit gets a really bad rap. It is certainly not as good as NYC or Chicago or, probably, Seattle, but maybe you could use Houston as an example in the future.
Thanks! I will :)
Good thing LA is nicer than I used to think.
Good thing LA is nicer than I used to think.
I probably will be very wrong, but some places in Europe are urbanised over vast areas (in a sense making "endless suburbs") and to my knowledge have descent public transportation, usually a combination of trains, metros, busses, tramways.
In places like London, to my limited knowledge public transport is the only valid choice for transportation, as car traffic is in constant jam, parking is impossible to find and costs a fortune.
Countries like Belgium and Netherlands are highly urbanised and from my experience it's the same story - you do not take a car to go to work (if you work in the city/downtown). People even have jobs that they have in different cities and they take express trains everyday.
I agree though that US's suburban and car-centric model, with endless cul-de-sacs is not designed to have public transport. To retrofit public transport into this - is a colossal task, though it's also an effort to change peoples minds, that not relying on a car is "an attack on freedom" and public transport is not only for poor people.
In places like London, to my limited knowledge public transport is the only valid choice for transportation, as car traffic is in constant jam, parking is impossible to find and costs a fortune.
Countries like Belgium and Netherlands are highly urbanised and from my experience it's the same story - you do not take a car to go to work (if you work in the city/downtown). People even have jobs that they have in different cities and they take express trains everyday.
I agree though that US's suburban and car-centric model, with endless cul-de-sacs is not designed to have public transport. To retrofit public transport into this - is a colossal task, though it's also an effort to change peoples minds, that not relying on a car is "an attack on freedom" and public transport is not only for poor people.
Destroyed? No. It has to exist to be destroyed.
I've lived in two places with busses. One is my current location in Norway, and I don't need a car to do my everyday stuff. The other was in Indiana. You couldn't always get home if you worked second shift and you couldn't get home from the bar: they also didn't run on sundays.
Slightly more common were taxis (but I've lived more than one place without this as well). The taxis were never reliable in the US: For example, my car broke. I called the cab company, who told me that it was impossible to order a car ahead of time and they couldn't give me a decent time to call - waiting time could be anywhere from 15 minutes to two hours. As you can imagine, it makes getting to work or to a doctor appointment difficult - especially if you are stuck outside before they opened.
City to city public transportation just doesn't exist most places.
I've lived in two places with busses. One is my current location in Norway, and I don't need a car to do my everyday stuff. The other was in Indiana. You couldn't always get home if you worked second shift and you couldn't get home from the bar: they also didn't run on sundays.
Slightly more common were taxis (but I've lived more than one place without this as well). The taxis were never reliable in the US: For example, my car broke. I called the cab company, who told me that it was impossible to order a car ahead of time and they couldn't give me a decent time to call - waiting time could be anywhere from 15 minutes to two hours. As you can imagine, it makes getting to work or to a doctor appointment difficult - especially if you are stuck outside before they opened.
City to city public transportation just doesn't exist most places.
I think convenience is a big factor. With Uber you can press a few buttons in the app, be swiftly picked up, taken to your destination, and continue on with minimal fuss. With public transit you must figure out the best route, wait for the next scheduled pick up, usually make multiple stops between your pickup and destination, and likely arrive much later than if you took an Uber.
[deleted]
A lot of public transport networks these days have apps, including navigation support.
> But if you're on the lower income scale and you need Uber to help you get between your second and third job (because you can't afford a car and public transit is unreliable) or you need it to get to a doctor's appointment, this kind of change is a big deal.
Well, in this line of thinking, you should just tell people to quit their third job and go drive an Uber, I hear they'll be paying more as a minimum wage...
There's no excuse to keep people in poverty because other people are poor.
Well, in this line of thinking, you should just tell people to quit their third job and go drive an Uber, I hear they'll be paying more as a minimum wage...
There's no excuse to keep people in poverty because other people are poor.
I guess you missed the part where the you don't have a car.
Uber provides financing for new cars, which I believe becomes a sort of entrapment as they then have to work long hours for uber to keep up with the car payments. You ever notice how so many uber drivers have brand new expensive cars?
It's been a while since I saw the terms for Uber leases, but I thought they were easy to end, amd no mileage limits. So, you shouldn't end up entraped; if it's not worth while, give the car back once you find a better job (which could be not having one, depending on the real costs and income)
If the terms are more onerous than I remember, maybe you can get stuck.
If the terms are more onerous than I remember, maybe you can get stuck.
[deleted]
Assuming that your narrative is factual, is it Uber's obligation to subsidize the government's infrastructure failings?
(Not the parent poster.) I believe this question needs to be answered first: is society obligated to subsidize Uber? I believe the answer is "no". Uber is not owed any profit. A life-sustaining income does not have to be in the form of food stamps. A law prescribing life-sustaining wages is a government's infrastructure.
They aren't obligated to subsidize Uber. However, they are within their right to set their own prices.
Uber doesn't owe society its existence or jobs either. If they shut down, who's paying the life-sustaining wages?
Didn't society exist before Uber? I'm not sure.
Also, did Uber build the roads, bridges, parking lots? Did it research the internet? I also heard GPS was researched in a secret Uber lab...
Also, did Uber build the roads, bridges, parking lots? Did it research the internet? I also heard GPS was researched in a secret Uber lab...
Public transportation options in Seattle (and greater metro area) are quite reliable.
The proposal that people struggling to get between their second and third jobs are doing so by regularly taking cabs is an absurdity.
I am sure the same arguments were made back then for burger prices, Walmart stuff and so on. The reality is that Seattle apparently has set a $16+ an hour being as the minimum hourly salary and that means no one should work for less. End of story. Working for Uber [or insert other corp here] and still needing to apply for food stamps, free healthcare and rent assistance costs taxpayers too.
> public transit is unreliable
I read the Power Broker [1] about Robert Moses' obsession of disallowing public transit in the public lands that under his control. That results miserable comutting for New Yorkers nowadays. Bob mastered the political system in a way that he can do obviously irrational things under public eyes, and without any fallout at the time, until the book was published much later after Bob actually has died.
I haven't researched extensively in US public transit, but I am inclined to believe that the public transit were handicapped intentionally through the market operators, in collaboration of the political apparatus.
I could not see any obvious evidence of this particular event being positive or negative. But, I am more sure that the political system in US is crippled to the point that it's not capable of producing long-term positive policy any more.
[1] https://www.amazon.com/Power-Broker-Robert-Moses-Fall/dp/039...
I read the Power Broker [1] about Robert Moses' obsession of disallowing public transit in the public lands that under his control. That results miserable comutting for New Yorkers nowadays. Bob mastered the political system in a way that he can do obviously irrational things under public eyes, and without any fallout at the time, until the book was published much later after Bob actually has died.
I haven't researched extensively in US public transit, but I am inclined to believe that the public transit were handicapped intentionally through the market operators, in collaboration of the political apparatus.
I could not see any obvious evidence of this particular event being positive or negative. But, I am more sure that the political system in US is crippled to the point that it's not capable of producing long-term positive policy any more.
[1] https://www.amazon.com/Power-Broker-Robert-Moses-Fall/dp/039...
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FWIW, I know a person in Seattle who just acquired a (used) car because of this. Not because they wanted to, it is expensive for them and they don’t have much money, but because the alternative no longer made financial sense. They had been using Uber/Lyft previously to live their life.
This is the most Silicon Valley response ever to the new law. Yeah, poor people are struggling with 3 jobs, but Uber is the problem. Maybe let’s address public transportation and the underlying reasons for 3 jobs instead of having a Silicon Valley VC darling try to squeeze more profits.
It is insane to Suggest people working 3 jobs are using Uber.
Bicycle transit is free and works great within 5-10 miles. That’s about the same distance I would use an Uber for. Can’t recommend it enough.
If you live in a place designed for it and with weather good enough for it.
Most jobs I've had did not have a secure place to store a bicycle while I was at work. Oh, and the roads: Some places, I couldn't take a direct route because bikes weren't allowed on those roads (I lived a couple miles outside of town). The country roads that were available to me took longer. Not to mention that I had to share the road with cars (laws) and the cars didn't have my safety in mind.
And then you get into hygiene and weather. Few places had somewhere I could dry off in the rain: I didn't know studded bike tires (for snow) existed until I moved to Norway. Few places really and truly accepted a sweaty employee showing up for work either - and again, no place to freshen up.
Sometimes I would be lucky to have room to store snow/rain shoes.
Most jobs I've had did not have a secure place to store a bicycle while I was at work. Oh, and the roads: Some places, I couldn't take a direct route because bikes weren't allowed on those roads (I lived a couple miles outside of town). The country roads that were available to me took longer. Not to mention that I had to share the road with cars (laws) and the cars didn't have my safety in mind.
And then you get into hygiene and weather. Few places had somewhere I could dry off in the rain: I didn't know studded bike tires (for snow) existed until I moved to Norway. Few places really and truly accepted a sweaty employee showing up for work either - and again, no place to freshen up.
Sometimes I would be lucky to have room to store snow/rain shoes.
> But if you're on the lower income scale and you need $<insert_expense> this kind of change is a big deal.
The problem is not in value-added services costing money. The problem is widespread poverty in the US, which bars the majority of its citizens from having a decent quality of life.
The problem is not in value-added services costing money. The problem is widespread poverty in the US, which bars the majority of its citizens from having a decent quality of life.
Price controls create dead weight loss. Price controls are great for politicians but don't actually do what they are supposed to do.
Doesn't matter whether it is rent control or minimum wage laws. Government set price controls distort markets negatively.
In this case, the total number of trips taken on Uber in Seattle is going to drop because a certain percentage of trips will now become uneconomical to those riders: they will cost too much to be worth it.
Two negative things will happen:
1. In aggregate drivers in Seattle will make less money due to fewer trips. Demand for Uber drops as the price increases. A simple thought experiment confirms this: lets say that Seattle demands a flat $25/tax per ride. A lot of potential riders will pass.
2. Some percentage of riders will forego the benefit of uber trips due to the higher cost. Whether it will be drunks leaving bars or whomever. Some people who would take Uber at a lower price will not take it at a higher price. Seattle may see an uptick in drunk driving as a result of this.
Governments love price control because they give the illusion of helping: uber drivers will earn more per hour. BUT - they may work fewer hours and there may be fewer Uber riders working.
In summary, this will reduce the total income of Uber drivers in Seattle. It will also reduce the number of Uber riders - some of whom are likely to become drunk drivers instead. This is bad public policy.
Doesn't matter whether it is rent control or minimum wage laws. Government set price controls distort markets negatively.
In this case, the total number of trips taken on Uber in Seattle is going to drop because a certain percentage of trips will now become uneconomical to those riders: they will cost too much to be worth it.
Two negative things will happen:
1. In aggregate drivers in Seattle will make less money due to fewer trips. Demand for Uber drops as the price increases. A simple thought experiment confirms this: lets say that Seattle demands a flat $25/tax per ride. A lot of potential riders will pass.
2. Some percentage of riders will forego the benefit of uber trips due to the higher cost. Whether it will be drunks leaving bars or whomever. Some people who would take Uber at a lower price will not take it at a higher price. Seattle may see an uptick in drunk driving as a result of this.
Governments love price control because they give the illusion of helping: uber drivers will earn more per hour. BUT - they may work fewer hours and there may be fewer Uber riders working.
In summary, this will reduce the total income of Uber drivers in Seattle. It will also reduce the number of Uber riders - some of whom are likely to become drunk drivers instead. This is bad public policy.
Why does so much of politics benefit the person passing the bill at a cost to everyone else. (on net). It's like a market failure, but for the political system.
I suspect because most people do not understand dynamic system and equilibrium. They do understand individual data points such as: my rent is too high or my wage is too low. Therefore it is easy to sell a remedy that claims to address this.
Unfortunately, when the dynamic system finds a new equilibrium, people are surprised. To this day, people don't seem to understand that rent control suppresses supply leading to higher overall rents.
Unfortunately, when the dynamic system finds a new equilibrium, people are surprised. To this day, people don't seem to understand that rent control suppresses supply leading to higher overall rents.
I think there's two reasons.
First is that the costs are hidden and complicated. We need a decent understanding of economics combined with an honest and deep analysis of the consequences of the specific policy to conceptualize why it's deleterious. Very few people will tick both boxes.
Second is that politicians want to be seen to be doing something. Even if leaving the market alone is the best of all options.
First is that the costs are hidden and complicated. We need a decent understanding of economics combined with an honest and deep analysis of the consequences of the specific policy to conceptualize why it's deleterious. Very few people will tick both boxes.
Second is that politicians want to be seen to be doing something. Even if leaving the market alone is the best of all options.
If your business cannot afford to pay a living wage, it does not have a viable business model. No amount of dressing it up or attempting to shift the blame will change that fact.
That the unions and local governments are attempting to ensure a business isn't extorting labor out of the population is a _good_ thing.
Yeah, it sucks that taxis aren't cheap and also pay drivers well. It also sucks that we don't have light rail going everywhere. In both cases the implementation is just not economical. Therefore we need a different solution that doesn't sacrifice people at the altar of convenience
That the unions and local governments are attempting to ensure a business isn't extorting labor out of the population is a _good_ thing.
Yeah, it sucks that taxis aren't cheap and also pay drivers well. It also sucks that we don't have light rail going everywhere. In both cases the implementation is just not economical. Therefore we need a different solution that doesn't sacrifice people at the altar of convenience
So if my skills do not justify whatever the value of a living wage is, I should be condemned to permanent unemployment?
In this respect, minimum wages are literally systemic racism. They were started as a way to keep lower skilled blacks out of the workforce. In the 1930s, blacks had a lower unemployment rate than whites, but since the minimum wage priced them out of the labor market, they haven't been able to keep up.
In this respect, minimum wages are literally systemic racism. They were started as a way to keep lower skilled blacks out of the workforce. In the 1930s, blacks had a lower unemployment rate than whites, but since the minimum wage priced them out of the labor market, they haven't been able to keep up.
Uber drivers are adults who are not being exploited by any one. They are free to choose any manner of employment available to them. That is the beauty of the free market.
Taxis are absolutely terrible monopolistic businesses with absolutely no regard for proper service. Uber and Lyft thrived because taxis are so disastrous.
Taxis are absolutely terrible monopolistic businesses with absolutely no regard for proper service. Uber and Lyft thrived because taxis are so disastrous.
> Uber and Lyft thrived because taxis are so disastrous.
Yes! Exactly! These businesses create value with convenient apps and better logistics.
They should rely on that value, and not the value that they can extract from labor.
(The rest of your comment is so far removed from my understanding of "exploitation" and "free to choose any manner of employment available to them" that there is no way for me to respond to it meaningfully.)
Yes! Exactly! These businesses create value with convenient apps and better logistics.
They should rely on that value, and not the value that they can extract from labor.
(The rest of your comment is so far removed from my understanding of "exploitation" and "free to choose any manner of employment available to them" that there is no way for me to respond to it meaningfully.)
> If your business cannot afford to pay what the government defines as a living wage, it does not have a viable business model.
Is that what you are really saying?
Because there is a difference between a government-defined living wage and the true economic value of any particular job.
Is that what you are really saying?
Because there is a difference between a government-defined living wage and the true economic value of any particular job.
The taxis in Seattle were vile before Uber. I know women who were literally extorted by taxi drivers. Nothing in my experience with Seattle taxis back then suggests that this is not plausible. Even when I literally had a taxi line outside my door, I avoided it at all costs as there were many bad experiences.
The “unions and local governments” tacitly backed a criminal enterprise in the taxis. No thanks.
The “unions and local governments” tacitly backed a criminal enterprise in the taxis. No thanks.
It's not a price control, it's a minimum wage. The developed world has decided that it's better for some jobs to not exist than to allow exploitative wages.
Minimum wage and rent control are both examples of price controls. This is Econ 101 terminology.
Australian minimum wage is about 15 USD per hour, which is a wage that can sustain people if they do not spend excessively. The economy is not tanking, the same type of jobs exist. Are you claiming that the Australian standard of living is generally horrible as a result of this? That it would otherwise be better for everyone if there were no minimum wage?
>Some percentage of riders will forego the benefit of uber trips due to the higher cost.
This is not necessarily true. What you're assuming is that the demand is highly elastic - that a small increase in price will drive a large drop in use. It's possible it is entirely the opposite, a small increase in price causes no practically no drop in use. This would result in higher total pay. Either way, this will likely be balanced by drivers stopping driving for uber, or more drivers starting to drive for Uber. Uber will have to account for this by shedding excess drivers.
In reality if it's true that Uber riders are highly sensitive to price, then uber's entire business model falls apart since the plan the entire time was to gain a monopoly and jack up prices. If it turns out that jacking up prices means a huge drop in ridership then the value of their busienss is actually way smaller than what they claim and they are likely unable to run a viable business while paying minimum wage.
This is not necessarily true. What you're assuming is that the demand is highly elastic - that a small increase in price will drive a large drop in use. It's possible it is entirely the opposite, a small increase in price causes no practically no drop in use. This would result in higher total pay. Either way, this will likely be balanced by drivers stopping driving for uber, or more drivers starting to drive for Uber. Uber will have to account for this by shedding excess drivers.
In reality if it's true that Uber riders are highly sensitive to price, then uber's entire business model falls apart since the plan the entire time was to gain a monopoly and jack up prices. If it turns out that jacking up prices means a huge drop in ridership then the value of their busienss is actually way smaller than what they claim and they are likely unable to run a viable business while paying minimum wage.
On the other hand, one could argue that disincentivizing yet another form of car travel will ultimately be better for the environment. Seattle has one of the fastest growing public transit networks and this could help it grow even more. Keeping Uber convenient will always encourage people to use it vs other options.
While true that price controls create dead weight loss, the failure of neo-liberal economic policy shows that dead weight loss isn’t always a bad thing and that economic efficiency at the expense of people can have terrible consequences.
Supporting domestic industry, when cheaper global alternatives exist is a form of dead weight loss, but it prevents your middle class from being hollowed out and keeps your society healthy. The same can be said for living wages.
Supporting domestic industry, when cheaper global alternatives exist is a form of dead weight loss, but it prevents your middle class from being hollowed out and keeps your society healthy. The same can be said for living wages.
This should be a great opportunity to test whether at this point we're all so conditioned to rely on these services, will we be willing to pay more? If the answer is yes this suggests that these services can start raising prices and start taking home more profit across the board
I'm going to say no. I am most people I know uber way less because uber pool is gone. I don't think making uberx way more expensive will do anything but drive people away from those services unless necessary.
I bike a lot more though which is good.
I bike a lot more though which is good.
Uber pool is temporarily suspended due to rona.
I am point it out as a case study on what happen when cheaper options are removed.
> This should be a great opportunity to test whether at this point we're all so conditioned to rely on these services, will we be willing to pay more?
Uber tested this out years ago when they first launched. In my city they offered ride passes that had a flat fare (of less than $5 per trip, within some threshold...I think it was within 20 miles). Then when they expanded they slowly raised the price of the flat fare before getting rid of it altogether.
In short, yes, we are generally conditioned to rely on these services.
Uber tested this out years ago when they first launched. In my city they offered ride passes that had a flat fare (of less than $5 per trip, within some threshold...I think it was within 20 miles). Then when they expanded they slowly raised the price of the flat fare before getting rid of it altogether.
In short, yes, we are generally conditioned to rely on these services.
Makes you wonder if this sort of strategy should be legal.
Uber wants you to make decisions like choosing to live in a home away from public transportation because you know you can use Uber instead of the train. Once you've made that decision, your ability to walk Uber out of your life goes out the door, and you pretty much have to accept any changes that they make to the pricing.
Uber wants you to make decisions like choosing to live in a home away from public transportation because you know you can use Uber instead of the train. Once you've made that decision, your ability to walk Uber out of your life goes out the door, and you pretty much have to accept any changes that they make to the pricing.
You could make that argument about anything. Are you wondering whether raising prices should be legal?
They shouldn't be operating below costs at any time. That is anticompetitive and disingenuous.
It's strategic, smart, and absolutely legal.
It's called dumping and depending on the specifics and jurisdiction, it can be illegal. It falls under the general umbrella of anti-competitive actions.
In that case, almost every VC backed startup would be illegal.
According to the ftc for predatory pricing to be illegal you need to use it to drive out the competitors and then gouge customers until you recoup your losses.
In the US anti-trust is absurdly focused on whether there is costs in the form of high prices passed onto the consumer.
In the US anti-trust is absurdly focused on whether there is costs in the form of high prices passed onto the consumer.
I'm fine with that.
You're basically saying that unprofitable companies shouldn't be allowed to legally exist.
It's so common on HN to see people argue law and policy and then generalize it to make an argument.
They didn't say unprofitable companies shouldn't exist, but there's certainly a case to be made that large companies swooping into a market, reducing their prices to squash competition and then raising prices is not good for consumers, and there's governments that make this practice illegal. Intent matters.
They didn't say unprofitable companies shouldn't exist, but there's certainly a case to be made that large companies swooping into a market, reducing their prices to squash competition and then raising prices is not good for consumers, and there's governments that make this practice illegal. Intent matters.
I'm sure they will, but I doubt it'll matter because the idea that their workers shouldn't be contractors has broad support everywhere. If this succeeds and demonstrates that they can in fact run in a city which implements a measure like this, I suspect it will quickly sweep across most regions in which they operate.
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It's not an ideal natural experiment because the cost of all ride sharing will rise simultaneously, so many of the substitutes (other brands) are equally more expensive. In other markets Uber couldn't raise their prices without having their market share decimated by Lyft, unless there's collusion.
Sorry, how does this work when drivers toggle between Uber & Lyft? Is that now officially disallowed? Literally every driver I've ever met contracts through both services, but obviously they can't both be paying the driver $30ish an hour at the same time. (With that being said- I'm definitely rooting for the driver who figures out how to hack the system and does exactly that....)
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As far as I can tell, the minimum applies only to time that the driver is carrying passengers. I may have misread things though.
Neither company is paying them a flat rate, driver pay is just increasing so that when working, the hourly wage will be at least $16 an hour.
This ends up being amortized in per-minute increments, so that for every 15 minutes you’re driving a passenger, you make $4.
Now, this doesn’t mean that if demand is low in an area or its 2am and no one is searching for a car that drivers still get paid for time they drive around without working. There have been legislation attempts to do that, but they’ve failed (notably in California and other places).
You aren’t paid by any of these services for the time you spend seeking out a passenger — which is the same way taxi cabs work. Work time begins and ends with the ride itself.
That’s actually one of the criticisms made against these types of requirements, because there is an argument to be made that if fares rise too much, that will suppress demand (and especially suppress demand in lower-income areas), leading to drivers spending more time driving in circles trying to catch rides, so that their net income is less than it was before. The related part of that argument is that it will lower driver availability in areas that are hard to get to, leading riders in those areas with fewer options, regardless of how much they are willing to spend, because drivers are choosing to stick to heavily trafficked areas.
So a driver can still use both services, but they can’t double-dip, because it isn’t possible to drive two passengers at once (I mean, I guess it is, but that activity would get a driver banned from both services).
This ends up being amortized in per-minute increments, so that for every 15 minutes you’re driving a passenger, you make $4.
Now, this doesn’t mean that if demand is low in an area or its 2am and no one is searching for a car that drivers still get paid for time they drive around without working. There have been legislation attempts to do that, but they’ve failed (notably in California and other places).
You aren’t paid by any of these services for the time you spend seeking out a passenger — which is the same way taxi cabs work. Work time begins and ends with the ride itself.
That’s actually one of the criticisms made against these types of requirements, because there is an argument to be made that if fares rise too much, that will suppress demand (and especially suppress demand in lower-income areas), leading to drivers spending more time driving in circles trying to catch rides, so that their net income is less than it was before. The related part of that argument is that it will lower driver availability in areas that are hard to get to, leading riders in those areas with fewer options, regardless of how much they are willing to spend, because drivers are choosing to stick to heavily trafficked areas.
So a driver can still use both services, but they can’t double-dip, because it isn’t possible to drive two passengers at once (I mean, I guess it is, but that activity would get a driver banned from both services).
Also, if the demand doesn't decrease and stays the same, even then the drivers will earn less. How? Because, there will be a rise in number of drivers, due to it being more profitable now. This will lead to more drivers sitting idle at any given time. Overall incomes will initially decrease and then slowly come back to current incomes as an equilibrium is reached. In the end we'll have more drivers, each earning the same as now. I don't think the goal of minimum wage can be achieved by raising prices.
From skimming the bill, they assume you’re at 50% utilization, so for every minute you have a passenger, you must get paid at least two minimum wage minutes. So it doesn’t matter which platform or if you’re idling.
Took a while for the article to get to the main point but the reason for the raise is because: "Under the new rules, drivers will earn a gross hourly pay of about $30.30 per hour, before expenses." I was very confused why rates were going up if the drivers made 23$ an hour on average now and the minimum wage was only 16$.
> Researchers from The New School and University of California, Berkeley, in a city-commissioned study, determined that drivers make about $9.73 per hour after expenses.
> However, Uber points to a study from Cornell University’s Industry Labor Relations School that found the median driver made about $23 an hour after expenses. That study uses a different definition of working time and makes different assumptions about driver expenses, among other differences.
> Under the new rules, drivers will earn a gross hourly pay of about $30.30 per hour, before expenses. The legislation will set new per-mile and per-minute rates for drivers while they’re carrying passengers, which are meant to be high enough to compensate for job-related expenses, time spent waiting for rides and time driving to pick up passengers.
The city found it to be just under $10, hence the 50% raise. Uber did their own math and found it to be $23. I haven't read either study but I don't trust Uber one bit with their calculation. Either way, they have to meet the standards of the law, not their own number they can define however they want.
> However, Uber points to a study from Cornell University’s Industry Labor Relations School that found the median driver made about $23 an hour after expenses. That study uses a different definition of working time and makes different assumptions about driver expenses, among other differences.
> Under the new rules, drivers will earn a gross hourly pay of about $30.30 per hour, before expenses. The legislation will set new per-mile and per-minute rates for drivers while they’re carrying passengers, which are meant to be high enough to compensate for job-related expenses, time spent waiting for rides and time driving to pick up passengers.
The city found it to be just under $10, hence the 50% raise. Uber did their own math and found it to be $23. I haven't read either study but I don't trust Uber one bit with their calculation. Either way, they have to meet the standards of the law, not their own number they can define however they want.
SCC Insight did a great analysis here: https://sccinsight.com/2020/07/21/the-war-heats-up-over-seat...
It's hard to summarize, but I pasted the closest to a summary below. The Parrott and Reich study is the one commissioned by the Seattle Office of Labor Standards and City Council:
> At this point, there’s no real point in groping through the wage, expense or hours calculations for either study; the underlying data in the Parrott and Reich study is garbage, and both studies skew their analysis and recommendations in the direction that favors the one who commissioned their study. Instead, we should be focused on the key policy questions, and forcing city officials to be transparent about who they are prioritizing in the policy decisions they are making in setting a minimum wage. Once the policy questions are answered, there is enough raw data in the Cornell report to calculate out the proper minimum wage.
> The key policy question, one that drives so many others, is whether the city should prioritize full-time drivers over part-time and casual drivers. As we’ve seen above, it affects almost everything: what expenses to include, how much the system needs to try to maximize paid hours for full-time drivers, the economic model for the companies. According to the Uber/Lyft data set that Cornell analyzed, only 15% of TNC drivers are full-time, but for them the job is their livelihood. Should they be prioritized over people driving as a second job to help make ends meet or deal with emergency expenses? Should the city try to increase the number of full-time TNC driver jobs? Should the city be picking winners and losers at all between full-time and part-time drivers?
It's hard to summarize, but I pasted the closest to a summary below. The Parrott and Reich study is the one commissioned by the Seattle Office of Labor Standards and City Council:
> At this point, there’s no real point in groping through the wage, expense or hours calculations for either study; the underlying data in the Parrott and Reich study is garbage, and both studies skew their analysis and recommendations in the direction that favors the one who commissioned their study. Instead, we should be focused on the key policy questions, and forcing city officials to be transparent about who they are prioritizing in the policy decisions they are making in setting a minimum wage. Once the policy questions are answered, there is enough raw data in the Cornell report to calculate out the proper minimum wage.
> The key policy question, one that drives so many others, is whether the city should prioritize full-time drivers over part-time and casual drivers. As we’ve seen above, it affects almost everything: what expenses to include, how much the system needs to try to maximize paid hours for full-time drivers, the economic model for the companies. According to the Uber/Lyft data set that Cornell analyzed, only 15% of TNC drivers are full-time, but for them the job is their livelihood. Should they be prioritized over people driving as a second job to help make ends meet or deal with emergency expenses? Should the city try to increase the number of full-time TNC driver jobs? Should the city be picking winners and losers at all between full-time and part-time drivers?
I skimmed the studies since the are linked in the main article. It does in fact seem like they bias towards which position they had as a prior, but I would still say that they are useful. Both provide approximate bounds. So we have a lower bound of $9/hr and an upper bound of $23/hr (now this doesn't mean that we should say it is $16/hr). But the things the studies did bring up a lot of questions. Both did nefarious things (lower wage study is including the vehicle cost as part of expenses and higher wage poorly tries to account for "lurkers" by only counting idle times that directly lead to a ride.)
For example, one of the big differences in the studies was how they accounted for "working." One did with app open and the other did idle time that directly led to rides. So if Uber and Lyft are required to pay for idle time, how are they going to handle people that pass on rides and just sit idle? Do you get banned from the platform if you pass on x amount of rides? I'd imagine whatever the policy (not stated in the article) is going to get harsher if they aren't paid by the ride and rather by a combination of hourly and ride. Since it is clearly difficult to actually determine hours working. Or maybe I'm over thinking it and the amount of people sitting idle is actually really low where it isn't a big deal. Does anyone know?
[0] Berkeley released this comparison which is kinda odd and biases towards the lower wage study. The odd things are like #4 how they say the high wage study is void because it includes tips and technically the state doesn't count tips as hourly wage, but if we're talking about take-home that's an important number. https://irle.berkeley.edu/files/2020/07/Comparison-of-two-Se...
For example, one of the big differences in the studies was how they accounted for "working." One did with app open and the other did idle time that directly led to rides. So if Uber and Lyft are required to pay for idle time, how are they going to handle people that pass on rides and just sit idle? Do you get banned from the platform if you pass on x amount of rides? I'd imagine whatever the policy (not stated in the article) is going to get harsher if they aren't paid by the ride and rather by a combination of hourly and ride. Since it is clearly difficult to actually determine hours working. Or maybe I'm over thinking it and the amount of people sitting idle is actually really low where it isn't a big deal. Does anyone know?
[0] Berkeley released this comparison which is kinda odd and biases towards the lower wage study. The odd things are like #4 how they say the high wage study is void because it includes tips and technically the state doesn't count tips as hourly wage, but if we're talking about take-home that's an important number. https://irle.berkeley.edu/files/2020/07/Comparison-of-two-Se...
> The key policy question, one that drives so many others, is whether the city should prioritize full-time drivers over part-time and casual drivers.
I wish EVERY policy decision was structured this way. Tell me the groups, tell me the trade offs, then say why you've chosen X perspective as paramount, and explain what policy helps most from that perspective, and the costs to other groups.
I am fully aware that is never going to happen, but it would be lovely if it did.
I wish EVERY policy decision was structured this way. Tell me the groups, tell me the trade offs, then say why you've chosen X perspective as paramount, and explain what policy helps most from that perspective, and the costs to other groups.
I am fully aware that is never going to happen, but it would be lovely if it did.
How do they account for the expected lower turnover due to the price increase when they estimate the post-policy gross hourly wage?
The big challenge here is when is someone "Working" and when are they idle. A big part of gig economy profits revolves around not paying drivers for idle time between gigs.
The flip side of this is a lot of drivers want flexibility in hours. It's a tricky problem because the gig companies don't set driver hours. As these laws take effect, it's likely flexibility in shifts will decrease.
The flip side of this is a lot of drivers want flexibility in hours. It's a tricky problem because the gig companies don't set driver hours. As these laws take effect, it's likely flexibility in shifts will decrease.
Seattle's policy avoids that complication by setting very high wage requirements for the actual trips with the expectation that idle time and expenses will pull down the "true" compensation. The requirements add up to about $29.90 over an hour of driving, which the city believes will get drivers to the $16.39 hourly minimum for traditional workers. (https://www.seattletimes.com/seattle-news/transportation/sea...)
I don't think that answers the question at hand. The question is about if the driver is actually working (waiting for a rider) or just sitting with their phone on. I don't think this is a trivially solvable thing. But I'd also imagine Uber/Lyft would be more aggressive in kicking idle people off the platform. But that will get complicated because "rides needed" is not a uniform or homogeneous distribution throughout the day, week, month, or year. I'd imagine someone driving as a 9 to 5er would be idle much more often than someone driving on the weekends and holidays. I'm fairly certain good actors will get kicked in an attempt to rid the platform of bad actors.
The Seattle rule doesn't require Uber to pay drivers while they wait for a trip to be assigned, only once they actually have one. (This might seem intuitively gameable by making drivers wait longer, but there's no reason for Uber to do that, since one way or another they have to pay out the statutory minimum for every ride.)
Does this rule prohibit Uber from simply paying minimum wage for the duration and not allowing the driver to decline rides? Seems this would be a way of demonstrating how shifty the experience could/would be for traditional employment in this realm, especially if Uber just takes the additional revenue from "surge" prices and doesn't pass that on to the driver.
That would put them instantly into regular employee territory, and that's ubers worst fear.
Exactly. That’s exactly what Uber and Lyft want to avoid.
Wait, but does that mean anything changes? One of the criticisms of the high paying study (linked in article) was that it only counted idle time that directly led to a ride and that was much higher than the minimum wage. But what you're saying is even that idle time wouldn't count.
This attempt to avoid the hard question will probably make the policy ineffective. The with-passenger rates are already high enough that drivers make well above minimum wage at 100% utilization. When the effective wage (with-passenger rate times utilization rate) is higher than the market wage, drivers enter the market, driving down the utilization rate until the effective wage equals the market wage. If the policy is only changing the with-passenger rate, the utilization rate will just drop until the effective wage equals the market wage.
The rule establishes regular reviews to adjust minimum fares accounting for utilization rates, so Uber will have to try and keep utilization high. (They're expected to impose driver caps the same as what they have in NYC.)
This is where it gets weird. If an Uber driver's idle time between calls is built into their pay, then a driver could use that time to work a second job. Essentially double-dipping.
I'm not against this. It just makes for weird comparisons.
I'm not against this. It just makes for weird comparisons.
It's not double dipping, because there is no compensation for idle time, and you can only take one passenger from one app at a time. So if Uber and Lyft both pay $30/hr for actual driving time, then go ahead and have both apps open. It will increase your paid hours per total hours spent, but it could never create a situation where both companies are paying you for the same exact time spent.
Sure, but that's no different than any other worker being able to work a second job while idle.
It's actually not. Every other business in the world has to manage their workforce such that they have employees to do the work when they need them. It's genuinely impressive that these companies have just gone "Well, we're just not going to manage our staffing" and rather than that being a complete showstopper, it's seen as some brilliant loophole. Call centre employees don't stop getting paid in between the calls they receive- but maybe they should. Maybe every employee should stop being paid whilst they're not physically serving a customer - shop empty? Don't get paid. AWS services running smoothly? Let's make those Site Reliability Engineers clock out.
It infuriates me that rideshare services have become the poster children for the "contractors or employees" debate because they're incredibly well-suited to being contractors. They genuinely get to work for competing services and pick their own hours. Uber and Lyft are the hammer used to smash people fighting for workers in industries where they're only contractors on paper. Where they aren't allowed to pick their hours or work for another employer in the same field. "Make everybody we can a contract worker" is a cancer eating the blue collar economy alive. Hair stylists, nail techs, estheticians, massage therapists, painters, plumber's assistants, etc are all suffering immensely. There are buildings with a set 8-4 schedule with hundreds of people in them of which only three managers count as employees.
I think part of the issue is that is difficult and possibly expensive to fight that fight on your own.
We need DAs and enforcement actions that favor workers.
We need the IRS to automatically flag people with a ton of contractor income from a single source and let them know that they may have been misclassified, and that they may not owe nearly as much in taxes if so. And then we need the IRS to publicly scare employers into erring on the side of calling workers employees.
I fought a misclassification with a former employer. I was able to get a ruling from the IRS, but the employer never really faced any real punishment, even though it was in writing that he was playing tax games.
I think what it comes down to is that almost no one knows how to dispute it or that they even can dispute. And many employers will immediately get rid of you if you try.
We need DAs and enforcement actions that favor workers.
We need the IRS to automatically flag people with a ton of contractor income from a single source and let them know that they may have been misclassified, and that they may not owe nearly as much in taxes if so. And then we need the IRS to publicly scare employers into erring on the side of calling workers employees.
I fought a misclassification with a former employer. I was able to get a ruling from the IRS, but the employer never really faced any real punishment, even though it was in writing that he was playing tax games.
I think what it comes down to is that almost no one knows how to dispute it or that they even can dispute. And many employers will immediately get rid of you if you try.
> and that they may not owe nearly as much in taxes if so.
I imagine many independent contractors would be paid less if they were employees.
I imagine many independent contractors would be paid less if they were employees.
Yes. It's infuriating how much difference a simple administrative matter can make.
I've heard stories from teachers who, working as contractors, make more than 2x the salary of equivalent employees. And they even get to choose their days off. Can we get some economical fairness, pretty soon please?
I've heard stories from teachers who, working as contractors, make more than 2x the salary of equivalent employees. And they even get to choose their days off. Can we get some economical fairness, pretty soon please?
Is it still 2x after benefits? I thought contractors have to get their own healthcare, retirement, no-pto, which take a good chunk of that bonus cash.
Choosing one's hours is a single dimension of autonomy. In many other aspects, rideshare companies control the work: declining rides can lower ratings or lead to being removed from the platform. As an outside observer, it largely appears the companies have control over which dimensions are flexible and which aren't, and they can change at anytime. The state covers unemployment when these drivers lose their work: yet W2 employees have to pay in for such benefits.
A more 'hands-off' approach would bolster ridesharing companies argument that a proper classification is contractor. But the picking and choosing has to stop for that to be the case.
A more 'hands-off' approach would bolster ridesharing companies argument that a proper classification is contractor. But the picking and choosing has to stop for that to be the case.
> They genuinely get to work for competing services and pick their own hours.
I don't know about other countries, but in my country, Uber (and other companies) offers drivers a bonus for completing X amount of rides in Y days. Except that completing X-1 rides, earns you a pittance, far below a livable wage, and X rides earns you just above.
Also, X is also quite a large number. I don't think it's possible to complete it without working for 8+ hours during peak traffic time. So, in effect, drivers are not free to choose their working hours, if they intend to make enough money to live on.
I don't know about other countries, but in my country, Uber (and other companies) offers drivers a bonus for completing X amount of rides in Y days. Except that completing X-1 rides, earns you a pittance, far below a livable wage, and X rides earns you just above.
Also, X is also quite a large number. I don't think it's possible to complete it without working for 8+ hours during peak traffic time. So, in effect, drivers are not free to choose their working hours, if they intend to make enough money to live on.
I agree with you on the cancer part. But speaking as somebody who has spent years as a contractor, I don't think Uber's drivers are "incredibly well-suited to being contractors".
For me, the essence of a good contractor relationship is a balance of power. It went best for me when I had multiple warm clients, giving me the ability to tell any one of them "no". This meant that they'd listen to me and bargain fairly. And if they didn't, well, I could walk and I'd be fine, especially since I was careful to keep a significant financial cushion.
Uber drivers face a tremendous power imbalance, and that was always the goal. Kalanick was aiming for a monopoly. He didn't quite get there, but given that they have 70% of the rideshare market and Lyft has the other 30%, it's close enough. With that sort of market failure, and given the eagerness of VCs to buy future market failure, there's no way I'd want to be a contractor in that market.
For me, the essence of a good contractor relationship is a balance of power. It went best for me when I had multiple warm clients, giving me the ability to tell any one of them "no". This meant that they'd listen to me and bargain fairly. And if they didn't, well, I could walk and I'd be fine, especially since I was careful to keep a significant financial cushion.
Uber drivers face a tremendous power imbalance, and that was always the goal. Kalanick was aiming for a monopoly. He didn't quite get there, but given that they have 70% of the rideshare market and Lyft has the other 30%, it's close enough. With that sort of market failure, and given the eagerness of VCs to buy future market failure, there's no way I'd want to be a contractor in that market.
Surely that's the same for an employee relationship though? If you have multiple employment offers in high paid industries, you are going to get them to bargain and negotiate quite well.
It's similar, but for contract work, you need that to be ongoing. Law and custom provide protections for employees that contractors don't get.
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Why do we need Uber in the first place? Where I live, there is an app that directly connects drivers to riders who pay cash, and nobody takes 30% fee fro mdriver's wages.
I never have cash on me and I'm not the only one. Thus that service would be useless for me and for everyone I know.
Where I'm from, it's the law that cabs should accept credit and debit, not only does it reduce tax fraud, but it also allow people like me to pay. Transaction fees are not that expensive, but believe me, companies that provide it to cabs drivers, does charge much more for it. Still it's less than 30%.
Again where I'm from, dispatcher does charge the drivers, and from what I read, it was not too far from 30% (which makes sense, they have to account for advertising, wage for dispatch by phone, and since Uber, for the development of a badly made app).
Where I'm from, it's the law that cabs should accept credit and debit, not only does it reduce tax fraud, but it also allow people like me to pay. Transaction fees are not that expensive, but believe me, companies that provide it to cabs drivers, does charge much more for it. Still it's less than 30%.
Again where I'm from, dispatcher does charge the drivers, and from what I read, it was not too far from 30% (which makes sense, they have to account for advertising, wage for dispatch by phone, and since Uber, for the development of a badly made app).
As a driver, collecting money sounds awkward, slow, risky for a dash, and certain to change the dynamic with the passenger.
As a passenger, cash is far less convenient, and paying at the end of a ride is awkward, slow, and certain to change the dynamic with the driver.
As a passenger, cash is far less convenient, and paying at the end of a ride is awkward, slow, and certain to change the dynamic with the driver.
I'm sure 99% percent of drivers will choose 30% more money vs "avoiding risky cash". And they have an option of direct money transfer through mobile phone too.
As a passenger, to me cash is far more convenient, as it preserves my privacy and nobody can overcharge me.
The bill is usually 20-30% lower than Uber.
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There’s a huge leap of faith (you could say naïveté) in this logic that imposing a floor on effective wages will actually benefit drivers.
The claim that corporations paying legal wages below a certain level are mooching off the state is an oversimplification. People are working for below a “living wage” and so the state provides lower or negative marginal tax rates to support them. It’s an unstated assumption that this is the corporations’ fault.
But we cannot presume from where these extra dollars are coming from, when the State legally forces corporations to pay more to these workers.
Maybe there ends up being less of the lowest value workers overall, costing the low-skill working population their jobs.
Maybe there ends up being a greater incentive and ROI to automate, shifting the cost/benefit analysis and driving greater investment to eliminate manual jobs.
Maybe the costs are passed on directly to the consumer, which directly reduces demand and therefore also reduces employment.
Maybe a greater share of corporate profits end up being spent on this labor.
Certainly it’s some mix of all of the above. You could put elasticity ratios on all of these effects and you can model how much of the added burden will fall on each.
The challenge is that of course the corporate profit numbers will move last of all. And that’s presuming that the margins currently in effect even allow for some slack.
What we saw here is that the Uber’s operating profit margins didn’t support the regulation, so prices had to move.
The fatal error is thinking that the State is somehow in a better position to set prices than the Corporation. A key piece of IP that Uber/Lyft have developed is their pricing algorithm. They know the supply curve for how much they can spend per driver to recruit, they know the demand curve for how much they can charge per ride. They price in real-time dynamically based on supply and demand. And they solve this equation systematically, to induce demand when they know they have excess drivers waiting for fares, and to induce supply when they have too many.
Their incentives are fully aligned (based on their commissions) to maximize total fare revenue.
My prediction is that this will drive down total fare revenue in Seattle and ultimate earnings per driver will be reduced although this will happen along with a reduction in fares per driver and the number of drivers. It’s possible the driver count will fall fast enough to maintain average earnings per driver, but I doubt it in this macroeconomic environment.
Ultimately if the goal is to force ride-share drivers to find alternate sources of revenue, I think this is a good solution. That’s not an invalid goal, but I think it’s the most reasonable expectation.
Going back to the original hypothesis, if you outlaw low paying wages, certainly there will be no low paying jobs. The question then becomes, what becomes of the low-skilled workers?
I have a theory, I’m not sure if it’s well supported in academia but it probably relates to a kind of Nash Equilibrium.
My theory is that people are generally pretty lazy, but that this is not by any stretch an insult. We search for shortcuts, low friction solutions, easy outs. We don’t strive for peak performance, we mostly look for good enough. The best we can hope for under such a hypothesis is this will force the hand of workers to avail themselves to higher paying jobs if they are able.
In the context of ride hailing, there is a large demographic where the push-button-get-job dynamic was extremely economically valuable. To the extent that they would accept technically “below-market pay” for the convenience of cramming in a fare between classes and dinner, or going out for a few hours at night to bank some cash.
But this is mainly a failure of properly accounting for the opportunity cost.
I’ve often felt that working is way more expensive than most people realize. Even aside from the high marginal tax rates when you stop getting free health insurance or food stamps.
Working a 40 hour week means you have to endure a flaky and expensive hiring process, you have to endure a flaky and stressful boss, you likely end up procuring food supplies at a higher cost than you might otherwise pay, and most of all you have to keep up your housing, hygiene, transportation, wardrobe, health, household, hobbies, and other engagements (e.g. education) all in a fashion that allows you to be reliably available during business hours in a geographic area that you can commute to which has an excess job available. All of that is actually extremely fucking expensive.
Uber lowers the marginal costs of employment very significantly. This is almost never properly factored into the analysis when people consider whether it’s a good idea to reduce the size of the on-demand economy.
So in the end, some of those ride-hailing workers will find ways to reduce their expenses, tighten their belts and forgoe the “cheap revenue”. Other workers will be forced to find more expensive revenue sources and be forced what we naively see as “upwards” but from an holistic perspective in a fully priced out economic model is almost surely a short-term loss to that individual.
An optimist would say it might lead to long-term gain, by pushing drivers out of a local maxima. I’d say that’s highly presumptuous.
The claim that corporations paying legal wages below a certain level are mooching off the state is an oversimplification. People are working for below a “living wage” and so the state provides lower or negative marginal tax rates to support them. It’s an unstated assumption that this is the corporations’ fault.
But we cannot presume from where these extra dollars are coming from, when the State legally forces corporations to pay more to these workers.
Maybe there ends up being less of the lowest value workers overall, costing the low-skill working population their jobs.
Maybe there ends up being a greater incentive and ROI to automate, shifting the cost/benefit analysis and driving greater investment to eliminate manual jobs.
Maybe the costs are passed on directly to the consumer, which directly reduces demand and therefore also reduces employment.
Maybe a greater share of corporate profits end up being spent on this labor.
Certainly it’s some mix of all of the above. You could put elasticity ratios on all of these effects and you can model how much of the added burden will fall on each.
The challenge is that of course the corporate profit numbers will move last of all. And that’s presuming that the margins currently in effect even allow for some slack.
What we saw here is that the Uber’s operating profit margins didn’t support the regulation, so prices had to move.
The fatal error is thinking that the State is somehow in a better position to set prices than the Corporation. A key piece of IP that Uber/Lyft have developed is their pricing algorithm. They know the supply curve for how much they can spend per driver to recruit, they know the demand curve for how much they can charge per ride. They price in real-time dynamically based on supply and demand. And they solve this equation systematically, to induce demand when they know they have excess drivers waiting for fares, and to induce supply when they have too many.
Their incentives are fully aligned (based on their commissions) to maximize total fare revenue.
My prediction is that this will drive down total fare revenue in Seattle and ultimate earnings per driver will be reduced although this will happen along with a reduction in fares per driver and the number of drivers. It’s possible the driver count will fall fast enough to maintain average earnings per driver, but I doubt it in this macroeconomic environment.
Ultimately if the goal is to force ride-share drivers to find alternate sources of revenue, I think this is a good solution. That’s not an invalid goal, but I think it’s the most reasonable expectation.
Going back to the original hypothesis, if you outlaw low paying wages, certainly there will be no low paying jobs. The question then becomes, what becomes of the low-skilled workers?
I have a theory, I’m not sure if it’s well supported in academia but it probably relates to a kind of Nash Equilibrium.
My theory is that people are generally pretty lazy, but that this is not by any stretch an insult. We search for shortcuts, low friction solutions, easy outs. We don’t strive for peak performance, we mostly look for good enough. The best we can hope for under such a hypothesis is this will force the hand of workers to avail themselves to higher paying jobs if they are able.
In the context of ride hailing, there is a large demographic where the push-button-get-job dynamic was extremely economically valuable. To the extent that they would accept technically “below-market pay” for the convenience of cramming in a fare between classes and dinner, or going out for a few hours at night to bank some cash.
But this is mainly a failure of properly accounting for the opportunity cost.
I’ve often felt that working is way more expensive than most people realize. Even aside from the high marginal tax rates when you stop getting free health insurance or food stamps.
Working a 40 hour week means you have to endure a flaky and expensive hiring process, you have to endure a flaky and stressful boss, you likely end up procuring food supplies at a higher cost than you might otherwise pay, and most of all you have to keep up your housing, hygiene, transportation, wardrobe, health, household, hobbies, and other engagements (e.g. education) all in a fashion that allows you to be reliably available during business hours in a geographic area that you can commute to which has an excess job available. All of that is actually extremely fucking expensive.
Uber lowers the marginal costs of employment very significantly. This is almost never properly factored into the analysis when people consider whether it’s a good idea to reduce the size of the on-demand economy.
So in the end, some of those ride-hailing workers will find ways to reduce their expenses, tighten their belts and forgoe the “cheap revenue”. Other workers will be forced to find more expensive revenue sources and be forced what we naively see as “upwards” but from an holistic perspective in a fully priced out economic model is almost surely a short-term loss to that individual.
An optimist would say it might lead to long-term gain, by pushing drivers out of a local maxima. I’d say that’s highly presumptuous.
i can't find the actual minimums, this[1] article suggests that the wait time is 0.56/min. I'm curious how this ends up comparing to taxis, since a taxi has a idle time of 0.50/min in seattle - it seems unreasonable to set minimums higher than taxis(but maybe it wont since i cant find the per-mile fee, and 25% over the current uber per-mile fee is about $1 less than a taxi)
[1] https://www.geekwire.com/2020/uber-raising-trip-prices-24-ne...
[1] https://www.geekwire.com/2020/uber-raising-trip-prices-24-ne...
For reasons too complicated to get into in a comment, the taxi industry has typically avoided most of these minimum-wage arguments because of the way those systems are designed. The taxi lobby is a lot more entrenched than the ride hail lobby (and for some bizarre reason, it isn’t criticized the same way, even though it is every bit as awful and exploitative — and more so in some areas - than ride share giants ) is my guess for one. Even our dysfunctional city council won’t want to take on the taxi lobby, not that Seattle has much of a taxi ecosystem anyway. Taking a taxi in Seattle is one of my last-resort options, and I moved here from New York City, and am not anti-taxi as a concept, the Seattle cabs add just terrible.
Of course, Uber and Lyft didn’t help themselves any by arguing vociferously for years that they weren’t anything like taxis, largely as a way to avoid having to pay drivers similar to medallion systems. Now, there were some good reasons for this, especially in markets like Portland, that used to have really restrictive pick-up policies for taxi cabs — and in areas like New York and Chicago, that have strict limits on how many medallions are issued and how many cabs can be on the road at once, but these companies can’t have it both ways. They can’t argue for years that they aren’t taxi companies and then complain if legislation means they have to pay more than taxi companies.
Of course, Uber and Lyft didn’t help themselves any by arguing vociferously for years that they weren’t anything like taxis, largely as a way to avoid having to pay drivers similar to medallion systems. Now, there were some good reasons for this, especially in markets like Portland, that used to have really restrictive pick-up policies for taxi cabs — and in areas like New York and Chicago, that have strict limits on how many medallions are issued and how many cabs can be on the road at once, but these companies can’t have it both ways. They can’t argue for years that they aren’t taxi companies and then complain if legislation means they have to pay more than taxi companies.
For sure on how exploitative it is. Just frustrating that so much focus is placed on ensuring minimum wage for these drivers but not those drivers. But if ride share minimums end up more expensive it seems kinda like proof that taxi drivers can’t be making minimum wage either, which especially sucks since government sets their exact prices
Oh, I hear you! But that’s part of the taxi medallion scam. They convince governments that the medallion owners drive their own cabs (ha!) and everyone just pretends that the exploitative rental scheme for drivers doesn’t exist. Like I said, it’s always struck me as odd that so many people that I agree with ideologically are insanely loud about how evil/corrupt Uber and Lyft are (and they are!), but say nothing about the taxi ecosystem, which is, I will argue, worse for drivers and passengers.
I’ve spoken to enough Uber drivers who used to be cab drivers to know that the alternative isn’t any better. That isn’t to say those people like Uber — but it’s not any worse than the taxi industry. It’s almost like we have to face the reality that essential jobs in our society, like drivers, are often poorly paid and exploited. And that it is systemic. But people don’t want to do that.
I’ve spoken to enough Uber drivers who used to be cab drivers to know that the alternative isn’t any better. That isn’t to say those people like Uber — but it’s not any worse than the taxi industry. It’s almost like we have to face the reality that essential jobs in our society, like drivers, are often poorly paid and exploited. And that it is systemic. But people don’t want to do that.
The law is based on minimum wage, not a minimum price for wait time. Uber sets that price.
https://seattle.legistar.com/View.ashx?M=F&ID=8811142&GUID=E...
https://seattle.legistar.com/View.ashx?M=F&ID=8807285&GUID=6...
I think think this is the actual bill. So it is minimum pricing on time and miles backed into by hourly wages after utilization.
So 1.33/mile, but I think the time is total time not idle time like taxis, if so assuming an average of 30 mph add another dollar which puts it right at taxi pricing, and probably doesn’t include ubers fee.
https://seattle.legistar.com/View.ashx?M=F&ID=8807285&GUID=6...
I think think this is the actual bill. So it is minimum pricing on time and miles backed into by hourly wages after utilization.
So 1.33/mile, but I think the time is total time not idle time like taxis, if so assuming an average of 30 mph add another dollar which puts it right at taxi pricing, and probably doesn’t include ubers fee.
In a demand and offer model we should expect a drop of offer as the result of the price being artificially raised therefore a loss of revenue for the Drivers...
"By April 1, as the compensation for drivers fully phases in, fares could increase by 50% compared to today’s prices,"
There should be a law banning this offloading of expenses directly to the customers. Uber earns enought to pay it's drivers fairly. It's basically doing what the super car manufacturers did when EU slapped them with penalty for fuel ineffeciency, they just transferred it to the customers by raising the prices of the cars.
I’m not sure this is practical, if this were truly an unnecessary charge wouldn’t there be about margin for a competitor to undercut them, as they once undercut taxis?
I don’t get it.
“Uber points to a study from Cornell University’s Industry Labor Relations School that found the median driver made about $23 an hour after expenses”
Then they raise the price by 25%, because minimum wage adjusted to $17?
Uber, just admit that you faked the study.
“Uber points to a study from Cornell University’s Industry Labor Relations School that found the median driver made about $23 an hour after expenses”
Then they raise the price by 25%, because minimum wage adjusted to $17?
Uber, just admit that you faked the study.
At those prices you might as well take a taxi...
An increase in consumer prices, as a result of contract-freedom-violating regulations, is effectively a wage decrease for every one.
In a demand and offer model we should expect a drop of offer as the result of the price being artificially raised therefore a loss of revenue for the drivers. I tend to disagree with Socialist laws, Seattle did benefit a lot of Amazon extension but like California we should see many tech company leaving.
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Title should be “Uber will charge 25% more …”
We've changed the title to be that of the article, in keeping with the site guideline: "Please use the original title, unless it is misleading or linkbait; don't editorialize."
(Submitted title was "Uber will charge 25% starting Jan. 1 in Seattle as per minimum wage law". Submitters: please don't do that.)
https://news.ycombinator.com/newsguidelines.html
(Submitted title was "Uber will charge 25% starting Jan. 1 in Seattle as per minimum wage law". Submitters: please don't do that.)
https://news.ycombinator.com/newsguidelines.html
[..] Ahmed Mahamud, 46, an Uber driver from Federal Way, said he’s looking forward to the wage increases, as he’s responsible for nine children, along with his wife who works part-time.
“I believe this will help my family to live,” Mahamud said.[..]
This man needs another job.
“I believe this will help my family to live,” Mahamud said.[..]
This man needs another job.
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Easy for you to say.
Probably because he considers nine children to be a luxury he cannot afford.
If we reduced having children to pure economic calculation, humanity would go extinct.
If people have children without regard to their finances, humanity won't go extinct, but there is likely to be increased suffering and anxiety along the way.
Birth rates go down when people are in a secure situation. The solution isn't to make having children hard through impoverishment. That increases birth rates further.
Besides, in the case of this Somalian man, in subsistence-oriented societies having more children is often economically advantageous.
Besides, in the case of this Somalian man, in subsistence-oriented societies having more children is often economically advantageous.
He's an American man now, not a Somalian subsistence farmer.
Where is it mentioned in the article that he is Somali? I searched but didn't see it.
It's not in that article, but that driver is affiliated with the Drivers Union, an advocacy group for drivers with backing from the Teamsters 117 union, and this is not the first article that he's been covered in, so is presumably well-known to others advocating for drivers.
Haven't you seen the window into the future known as "Idiocracy"?
They cover this pretty well.
They cover this pretty well.
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Uber isn't the problem in these cases. He needs a far better job. Uber is for college students and high school students. We rarely think about this kids who have very few skills and no professional experience.
These stories put out by corporations - that consumers are victimized by %thing-disliked-by-company% because the companies are forced to raise prices - are absolute BS. It's anti-tax/regulation propaganda.
Put your business hats back on: Companies don't price based on some 'cost plus' formula (e.g., 'our cost is $100, a 20% markups is 'fair', therefore we'll charge $120!'). If they did, your soda would cost 10 cents (rough estimate). Don't ask what your software would cost.
Companies set prices to maximize their profits. When Uber's costs decrease, do they cut prices or take more profit? Do they tell this story when other expenses increase? This expense is no different than all their other ones in terms of its affect on pricing. When competitive SV salaries increase, does Uber whine and say they are forced to raise prices by the cruel demands of software developers? What about when the drivers' expenses increase, such as the cost of gasoline? On an economic level, pricing depends on supply and demand, and price changes depend on the elasticity of demand (among other things).
The new law merely causes Uber to share more of its profits with the drivers. If Uber wants to raise prices, that's their problem.
Put your business hats back on: Companies don't price based on some 'cost plus' formula (e.g., 'our cost is $100, a 20% markups is 'fair', therefore we'll charge $120!'). If they did, your soda would cost 10 cents (rough estimate). Don't ask what your software would cost.
Companies set prices to maximize their profits. When Uber's costs decrease, do they cut prices or take more profit? Do they tell this story when other expenses increase? This expense is no different than all their other ones in terms of its affect on pricing. When competitive SV salaries increase, does Uber whine and say they are forced to raise prices by the cruel demands of software developers? What about when the drivers' expenses increase, such as the cost of gasoline? On an economic level, pricing depends on supply and demand, and price changes depend on the elasticity of demand (among other things).
The new law merely causes Uber to share more of its profits with the drivers. If Uber wants to raise prices, that's their problem.
> The new law merely causes Uber to share more of its profits with the drivers.
If you actually use the microeconomic model of supply and demand curves that you refer to when you talk about “elasticity of demand”, you’ll see that it is by no means clear that it will cause Uber to share “more of its profits” with the drivers. It all depends on shapes of the supply and demand curves, and the exact amount of minimum wage. You might very well find that the total amount of money paid by Uber to its drivers is reduced, as a result of fewer rides being taken because of higher prices of rides.
To know the actual outcome, you’d need the data that you don’t have, and that Uber only partially has. However, you seem very confident about the actual outcome, almost as if you assumed it before making an argument to justify it.
If you actually use the microeconomic model of supply and demand curves that you refer to when you talk about “elasticity of demand”, you’ll see that it is by no means clear that it will cause Uber to share “more of its profits” with the drivers. It all depends on shapes of the supply and demand curves, and the exact amount of minimum wage. You might very well find that the total amount of money paid by Uber to its drivers is reduced, as a result of fewer rides being taken because of higher prices of rides.
To know the actual outcome, you’d need the data that you don’t have, and that Uber only partially has. However, you seem very confident about the actual outcome, almost as if you assumed it before making an argument to justify it.
>>Companies set prices to maximize their profits. When Uber's costs decrease, do they cut prices or take more profit?
Profit margins can only absorb cost increases until they go to zero, after which point prices have to be raised.
Additionally, it is NOT good if companies are forced to reduce profit margins below what free market forces would place them at.
Profit is compensation for investors. Too low profits leads to under-investment and stagnation of productivity/wage growth.
Profit margins can only absorb cost increases until they go to zero, after which point prices have to be raised.
Additionally, it is NOT good if companies are forced to reduce profit margins below what free market forces would place them at.
Profit is compensation for investors. Too low profits leads to under-investment and stagnation of productivity/wage growth.
> Profit margins can only absorb cost increases until they go to zero, after which point prices have to be raised.
That's not true. Businesses sell things at a loss all the time because that price still generates the most revenue. What good is raising the price if it reduces overall revenue? Consider when you buy something on sale.
> Additionally, it is NOT good if companies are forced to reduce profit margins below what free market forces would place them at.
It's not always free market forces. For example, businesses abuse their market and political power all the time, including to pay workers less.
Also, free market forces are useful tools, not scripture. They are not 'good' in themselves; like you and me, they are good when they do good. Like all tools, they are useful for some things and not for others; they have limitations.
That's not true. Businesses sell things at a loss all the time because that price still generates the most revenue. What good is raising the price if it reduces overall revenue? Consider when you buy something on sale.
> Additionally, it is NOT good if companies are forced to reduce profit margins below what free market forces would place them at.
It's not always free market forces. For example, businesses abuse their market and political power all the time, including to pay workers less.
Also, free market forces are useful tools, not scripture. They are not 'good' in themselves; like you and me, they are good when they do good. Like all tools, they are useful for some things and not for others; they have limitations.
>>That's not true. Businesses sell things at a loss all the time because that price still generates the most revenue
This is completely ignorant of basic business operations.
Revenue that is less than expenses means the company runs out of money. Companies need profit. Revenue only helps insofar as it contributes to profit.
>>Also, free market forces are useful tools, not scripture. They are not 'good' in themselves; like you and me, they are good when they do good.
Free market forces maximize investment, with it, productivity/wage growth, so they are in fact good.
I recommend you study some Economics because there is very good evidence for all of this.
This is completely ignorant of basic business operations.
Revenue that is less than expenses means the company runs out of money. Companies need profit. Revenue only helps insofar as it contributes to profit.
>>Also, free market forces are useful tools, not scripture. They are not 'good' in themselves; like you and me, they are good when they do good.
Free market forces maximize investment, with it, productivity/wage growth, so they are in fact good.
I recommend you study some Economics because there is very good evidence for all of this.
But if you're on the lower income scale and you need Uber to help you get between your second and third job (because you can't afford a car and public transit is unreliable) or you need it to get to a doctor's appointment, this kind of change is a big deal.
What will also likely happen is that ridership decreases at the margins. People won't cut it out completely, they'll just use it proportionally less. Drivers might make a little more, but fewer drivers will be able to make any money at all.