How Much Are People Making from the Sharing Economy?(priceonomics.com)
priceonomics.com
How Much Are People Making from the Sharing Economy?
https://priceonomics.com/how-much-are-people-making-from-the-sharing/
103 comments
> Basically the sharing economy in the UK (with the exception of airBnB) is a way of undermining works rights to save money.
AirBnB definitely still counts here, if the charge is dodging tax/regulatory costs. A high proportion of offerings are either intentionally or unknowingly avoiding the various restrictions and/or costs associated with running a short term let business.
It's not just workers rights, it's the societal contributions of paying employee tax.
AirBnB definitely still counts here, if the charge is dodging tax/regulatory costs. A high proportion of offerings are either intentionally or unknowingly avoiding the various restrictions and/or costs associated with running a short term let business.
It's not just workers rights, it's the societal contributions of paying employee tax.
Point taken, In my argument I wanted to seperate individuals avoiding tax, and buisnesses deliberatly undermining rights.
Also, people who do AirBnB, have an asset, unlike gig workers, so at least they have something to negotiate with.
Also, people who do AirBnB, have an asset, unlike gig workers, so at least they have something to negotiate with.
Employers can't be forced to hire workers, so I don't think "worker's rights" is the right term. What restrictions to employment such as holidays, sick pay and maternity care actually mean is that workers are unable to negotiate on those grounds. For instance, if a single female in her early 30s is interviewing for a position, she is unable to tell waive her right to maternity care by telling her employer that she does not intend to have children. If she were to have children, her employer would not be able to legally deny her maternity benefits, making her promise unenforceable. Employers can get around paying some benefits by preferring to hire men, who are statistically less likely to take the full extent of their mandated paternity benefits.
So I think in some sense "worker's rights" is more a restriction on worker's right to negotiate. It's fine if people think that a regulatory body has a role in restricting the types of things that can be negotiated, but let's not talk about it as "worker's rights"
So I think in some sense "worker's rights" is more a restriction on worker's right to negotiate. It's fine if people think that a regulatory body has a role in restricting the types of things that can be negotiated, but let's not talk about it as "worker's rights"
Okay what should we call fundemental and federally enforced privileges granted to individuals by the state that cannot be disregarded by anybody?
Ah.. rights.. that's basically what they are.
Nobody is forced to listen to you, yet you cannot waive you rights to free press or whatever.
Ah.. rights.. that's basically what they are.
Nobody is forced to listen to you, yet you cannot waive you rights to free press or whatever.
Ok, in the UK workers rights, are well rights.
At no point was I suggesting that employers are forced to hire workers. I'm talking about the right to a safe, equal workplace.
You are assuming in a wonderfully cute and naive way, that the power balance between employer and employee is equal. It is not and has never been. In the UK literally thousands of people have died for workers rights.
I suggest you try quitting your current job, loosing all your money and becoming a taxi driver, living paycheck to paycheck.
then we can have a talk about negotiating.
Also, your hypothetical basically negotiates away a fundamental human right in the UK/EU, to suggest that its a tool for negotiating is pretty abhorrent.
At no point was I suggesting that employers are forced to hire workers. I'm talking about the right to a safe, equal workplace.
You are assuming in a wonderfully cute and naive way, that the power balance between employer and employee is equal. It is not and has never been. In the UK literally thousands of people have died for workers rights.
I suggest you try quitting your current job, loosing all your money and becoming a taxi driver, living paycheck to paycheck.
then we can have a talk about negotiating.
Also, your hypothetical basically negotiates away a fundamental human right in the UK/EU, to suggest that its a tool for negotiating is pretty abhorrent.
not because its "flexible" its because its cheap.
Maybe I work for a food delivery company, and order levels will depend on how a local sports team does, or something like that. Let's say there's a 33% chance I'll need 4 workers, a 33% chance I'll need 5 workers, and a 33% chance I'll need 6 workers.
If I have hourly-paid employees, I gotta have 6 of them on shift just in case - and if we only have 4 employees worth of orders, it'll be me, the owner, who goes home empty-handed.
But if I can pay the employees by the order? I can ask 6 of them to turn up, and if demand is low they all go home having made 33% less than they usually do (or two of them go home empty handed). I, the owner, make the same as if I'd predicted demand perfectly and only had 4 guys come in.
In other words, by having 'flexible' employees I can transfer risk from myself to my employees, thereby saving myself money.
Zero hours contracts are not the same as self employed.
It is perfectly possible to have non self-employed employees on zero hours contracts, with holiday pay, sick pay, pension and maternity.
However, its more expensive, because you have to pay more NI and pro-rata holiday pay.
It is perfectly possible to have non self-employed employees on zero hours contracts, with holiday pay, sick pay, pension and maternity.
However, its more expensive, because you have to pay more NI and pro-rata holiday pay.
This is surely the main feature of what's euphemistically called "the sharing economy". It's so frustratingly cynical.
This isn't the first time this happens either. Doing everything freelance was a big thing end of 80s beginning of 90s as well. It had the exact same problems and was legislated and taxed out of existence.
For the people earning, let's face facts here, "the gig economy" is a big tax dodging scheme (also regulation dodging). Not even just tax dodging: How many Uber drivers switch their healthcare to the freelancer healthcare, as is required by those contracts (and it's more expensive) ? As soon as the tax office gets permission from the government to say what they definitely want to say : "taxes need to be withheld by the sharing economy companies before paying out", the gig economy is over and done for.
In the end the "gig economy" is the result of endemic unemployment. It is a normal feature of the employment landscape in 2nd/3rd world countries and it is a huge impediment to progress.
For the people earning, let's face facts here, "the gig economy" is a big tax dodging scheme (also regulation dodging). Not even just tax dodging: How many Uber drivers switch their healthcare to the freelancer healthcare, as is required by those contracts (and it's more expensive) ? As soon as the tax office gets permission from the government to say what they definitely want to say : "taxes need to be withheld by the sharing economy companies before paying out", the gig economy is over and done for.
In the end the "gig economy" is the result of endemic unemployment. It is a normal feature of the employment landscape in 2nd/3rd world countries and it is a huge impediment to progress.
Workers shouldn't have more rights than humans.
Humans shouldn't have less rights than workers.
So let's fight for that and not for discrimination between workers and humans.
You seem to imply that some people are fighting for discrimination between workers and non-workers. This is a weird point of view because most people fighting for worker rights are also sharing the fight for non-workers rights. But it happens to be very hard politically as the current political trend is to destroy social infrastructure and dismantle any kind of safety net and capital redistribution.
No people are asking for more rights for workers. Workers aren't any more disadvantaged than a farmer, homemaker or the unemployed. If you think people deserve paternity leave ask that from the government not the companies. So that everyone gets it not just the people with jobs.
I think people are missing the point of the article. I summarize that the sharing economy is not a good way to make a living. In search for the lowest price we have people that can't make enough to get an apartment and raise a family. Raising a family has become a luxury for some people. Try to raise 2 kids and you fall into poverty status.
The scary part is that it's possible to see a future where a big chunk of the economy is powered by gigs. The uberizing of the economy is just starting.
People say that all these workers will eventually get better jobs but that's not the case. We are hundreds of years into the industrial revolution yet low/unskilled work is still something society needs. For whatever reason, some people just can't get enough skills to move up the food chain.
I wish the new tech entrepreneurs would find a better way to fix the low skill problem rather than find a way to reduce services/costs to the bone.
The scary part is that it's possible to see a future where a big chunk of the economy is powered by gigs. The uberizing of the economy is just starting.
People say that all these workers will eventually get better jobs but that's not the case. We are hundreds of years into the industrial revolution yet low/unskilled work is still something society needs. For whatever reason, some people just can't get enough skills to move up the food chain.
I wish the new tech entrepreneurs would find a better way to fix the low skill problem rather than find a way to reduce services/costs to the bone.
The somewhat optimistic view of these "gigs" is that they have two important qualities:
- They can be picked up/put down at any time - They require no specific time commitment and can be managed in parallel with other money making endeavors/jobs
Most "jobs" are actually difficult to get (go try to get a job as a waiter - you probably need to know someone), require a very specific time commitment, and if you decide you have other opportunities you want to pursue for any period of time you have "quit" the job and renounce the right to work it likely forever.
Those are really shitty qualities! There's tremendous value in a job you know you can start/stop anytime and don't require any specific commitment in order to continue to have the job available to you. We should look at the gig economy not in any way as a career (although some may find it appropriate to use it as such) but rather as a new income generating tool. When considering whether the gig economy is good or bad, we should consider that context. My overall take is that we need more "gigs" but that the rate of the shift towards "gigs" in general is too fast and is worrying. I assume it will slow dramatically but if it doesn't...
- They can be picked up/put down at any time - They require no specific time commitment and can be managed in parallel with other money making endeavors/jobs
Most "jobs" are actually difficult to get (go try to get a job as a waiter - you probably need to know someone), require a very specific time commitment, and if you decide you have other opportunities you want to pursue for any period of time you have "quit" the job and renounce the right to work it likely forever.
Those are really shitty qualities! There's tremendous value in a job you know you can start/stop anytime and don't require any specific commitment in order to continue to have the job available to you. We should look at the gig economy not in any way as a career (although some may find it appropriate to use it as such) but rather as a new income generating tool. When considering whether the gig economy is good or bad, we should consider that context. My overall take is that we need more "gigs" but that the rate of the shift towards "gigs" in general is too fast and is worrying. I assume it will slow dramatically but if it doesn't...
Automated marketplaces are generally really efficient, which means that they drive the end-user cost down until it meets the cost of supply (ie. they drive the profit for suppliers down to zero). This is what's happening with Uber, even with their subsidised ride prices. (And for a virtual example, this is what happened in the Diablo 3 auction house, and basically killed the 'grind bosses for upgrades' endgame until they removed it.)
The problem is less with the qualities of the job and more with the pay of the job.
It's poverty wages and exploitative. It's not profiting off these people, it's profiteering off of them.
It's poverty wages and exploitative. It's not profiting off these people, it's profiteering off of them.
Low wages are the result of competition. If nearly everybody can be a waiter, and the demand is limited, there are two options: the salary would be very low, OR: there will be very few jobs (the imposed minimum salary case). This is mathematics, you can't change that.
You can subsidize these low-income jobs, but this is expensive and unsustainable (by definition, there are a lot of low-income people who need to be subsidized).
The only way out of the situation is to raise demand, and sharing economy does exactly that. In the days before (except maybe in the NYC), taxis were used relatively rarely; now, Uber is ubiquitous and used without hesitation in many places.
You can subsidize these low-income jobs, but this is expensive and unsustainable (by definition, there are a lot of low-income people who need to be subsidized).
The only way out of the situation is to raise demand, and sharing economy does exactly that. In the days before (except maybe in the NYC), taxis were used relatively rarely; now, Uber is ubiquitous and used without hesitation in many places.
It's not a matter of subsidizing. We all need a base from where to work. There was a time when people worked 7 days a week, were forced to work over 40 hours a week without additional compensation, no vacations, no health insurance and work safety was iffy. Thanks to unions and an improving economy things changed. The gig economy is bringing some of us back to that. Where is the improvement we hoped tech was supposed to bring. We have a chance to make things better but we are not choosing to do it.
Money is not everything. I know society is better when people are healthy and happy than when they are not. The gig economy is not helping society it's making life more difficult for those that have no choice on what job they can get.
Money is not everything. I know society is better when people are healthy and happy than when they are not. The gig economy is not helping society it's making life more difficult for those that have no choice on what job they can get.
The "jobs" economy is over. It felt good while it lasted (about 140 years), when the economic output was mostly measured in material goods, and jobs were organized around large factories (either belonging to corporations, like in the US or Europe or Japan, or directly to the state, like in the USSR). Now in the post-industrial world, when the material goods production is mostly saturated, still believing that jobs can provide economic sustenance is about as realistic as believing that everybody can work as a farmer and live a good life producing food.
Today in developed countries, only about 3% of population work as farmers. Soon, only about 3% of population will have jobs — the rest will have to do something else (like be employed in the sharing economy gigs). This is inevitable, and there is no way to reverse this. Government regulations can't do anything to oppose these immense natural forces, nor they will need to.
Or rather there is a way to reverse the trend and provide the need for immense material economic output: a war. A world war — because warring parties quickly lose the economic edge in a peaceful economy, and it's either everyone's in, or nobody goes. There are no unemployed at wartime.
Today in developed countries, only about 3% of population work as farmers. Soon, only about 3% of population will have jobs — the rest will have to do something else (like be employed in the sharing economy gigs). This is inevitable, and there is no way to reverse this. Government regulations can't do anything to oppose these immense natural forces, nor they will need to.
Or rather there is a way to reverse the trend and provide the need for immense material economic output: a war. A world war — because warring parties quickly lose the economic edge in a peaceful economy, and it's either everyone's in, or nobody goes. There are no unemployed at wartime.
The gig economy gets a lot of hate, but it is successful because it is better than the alternative for both sides.
Uber competes with McDonald's for workers, but no one really thinks about whether workers are better off than at McDonald's.
With the fight for 15 and other minimum wage increases, many people argue that increasing wages will not substantially effect demand for labor, but it's sort of hard to make the case in the taxi space since reduced price has clearly led to an explosion of demand.
Uber competes with McDonald's for workers, but no one really thinks about whether workers are better off than at McDonald's.
With the fight for 15 and other minimum wage increases, many people argue that increasing wages will not substantially effect demand for labor, but it's sort of hard to make the case in the taxi space since reduced price has clearly led to an explosion of demand.
My biggest problem with Uber/Lyft is how the costs are incredibly obscure to the driver. I think that sucks. With Postmates, for example, a friend of mine was making $15 - $20 an hour riding his bike. That's ok money! Especially given the characteristics of the job I mentioned above. If he'd been driving a car, it's not really ok money.
I'm eyes wide open about the downsides of many of these jobs, especially the ones that involve using your own car. I just want to mention the upside because it's important. It has helped a really save a few of my friends butts at really tough times in their lives. I don't want to lose site of that. Optionality is important.
I'm eyes wide open about the downsides of many of these jobs, especially the ones that involve using your own car. I just want to mention the upside because it's important. It has helped a really save a few of my friends butts at really tough times in their lives. I don't want to lose site of that. Optionality is important.
Indeed and additionally they're taking work away from people with previously reasonably paying work (cab drivers, etc). Some of these really are zero-sum games and the gig economy is destroying pay in these.
In what ways do you think they would be better off if these companies were shut down?
No don't shut them down. Just make sure they're not jobs where people are struggling.
> I wish the new tech entrepreneurs would find a better way to fix the low skill problem rather than find a way to reduce services/costs to the bone.
Just a few years ago there was a big push in this direction. MOOCs reduced the price of access to college level material close to zero [1].
There is more to it than access, of course.
[1] edit: following others, notably MIT, who have been releasing great stuff for free for a long time, and the Open University who have had great distance ed with online content for 48 years and counting. ('Online' started out as radio and TV shows). MOOCs were a fresh push, not a wholly original idea.
Just a few years ago there was a big push in this direction. MOOCs reduced the price of access to college level material close to zero [1].
There is more to it than access, of course.
[1] edit: following others, notably MIT, who have been releasing great stuff for free for a long time, and the Open University who have had great distance ed with online content for 48 years and counting. ('Online' started out as radio and TV shows). MOOCs were a fresh push, not a wholly original idea.
We have better access to information than ever before. Twenty years ago, I quit university/college and taught myself to do what I do now, and the learning materials have only multiplied since then.
I think that big issues that remain are motivation and incentive. You can study for 3-4 years with no guarantee that by the end of it you'll have a job or enjoy it. Or you can teach yourself for six months (or likely more) and have a very slow start as a freelancer, or an up-hill battle pitching your ability to a company looking for a college degree.
I don't love that the gig economy pushes costs and burdens to the employee, but it does provide a quicker opportunity. Someone who's done two weeks of HTML/JS online could well pick up shrapnel work on the side as they learn.
Outside of motivation and incentive, I'd be tackling costs of living so people can get by on 15-25 hours a week of work rather than grind themselves into the dust just to prop up their family.
I think that big issues that remain are motivation and incentive. You can study for 3-4 years with no guarantee that by the end of it you'll have a job or enjoy it. Or you can teach yourself for six months (or likely more) and have a very slow start as a freelancer, or an up-hill battle pitching your ability to a company looking for a college degree.
I don't love that the gig economy pushes costs and burdens to the employee, but it does provide a quicker opportunity. Someone who's done two weeks of HTML/JS online could well pick up shrapnel work on the side as they learn.
Outside of motivation and incentive, I'd be tackling costs of living so people can get by on 15-25 hours a week of work rather than grind themselves into the dust just to prop up their family.
Yes, but most people get a degree from an accredited university because they feel eventually it will get them ahead in life. True or not MOOCs don't carry the same prestige. They need to fix that. Also, with no one pushing the student it's easy for them to give up. MOOCs are great to improve your skills and enhance your college transcript but not to get a degree.
But I see your point, they have value. I took a tv based class to get credits for my degree. Now I would do it online. In time, moocs value will improve.
But I see your point, they have value. I took a tv based class to get credits for my degree. Now I would do it online. In time, moocs value will improve.
It turns out that course material is only one of the things you learn in college. And it's not the one that is necessarily a predictor of being gainfully employed.
Very true, some of the classes have very little value. I can go to any auditorium based class and sit in the class and the professor would likely not know. The TA's might but mostly I can be there and learn. There are no security guards. What people pay for is that final grade and the degree you are working to get. You can even hang out on campus. When I was getting my degree there were always former students that would hang out.That was there base of operation.
Strange how it works.
Strange how it works.
I believe there were predictions that the gramophone, radio, television, videos, DVDs, and computers (back before the net was a big thing, then several times after it was) would all revolutionize education.
And they all did, a little bit.
Every generation rediscovers distance education, and gets equally excited about it.
Every generation rediscovers distance education, and gets equally excited about it.
I think the gig economy is just a modern addition to day labouring, peacmeeal work and such. These segments have always existed. In many cases, they have played a positive role.
When "Labour" (unions and political movements) get heavy handed, they try to kill off these segments. They don't fit into the model. They want to promote job stability above all else, where workers have a right to their job in as close to perpetuity as they can achieve.
I don't think gig economies (and peacemeal or day labour) are completely without merits. The biggest advantage is a lack of gatekeepers. This has value.
Anyway, "uberization" is not going to replace the whole labour market. It's going to become a small segment of it. We need regulation that preserves it's character (low barriers, low committment, worker independence..) while bringing in standard worker protections.
There are many parts of the labour market that do not provide a middle class family income. The solution is not to kill them.
When "Labour" (unions and political movements) get heavy handed, they try to kill off these segments. They don't fit into the model. They want to promote job stability above all else, where workers have a right to their job in as close to perpetuity as they can achieve.
I don't think gig economies (and peacemeal or day labour) are completely without merits. The biggest advantage is a lack of gatekeepers. This has value.
Anyway, "uberization" is not going to replace the whole labour market. It's going to become a small segment of it. We need regulation that preserves it's character (low barriers, low committment, worker independence..) while bringing in standard worker protections.
There are many parts of the labour market that do not provide a middle class family income. The solution is not to kill them.
> They want to promote job stability above all else
No, please no. The labour movement want(ed) good living conditions for the majority rather than for the few. And yes, to not be fired by the whim of the bosses daily feeling is part of that, but not "above all else". And ofc these kind of jobs is the enemy of the labour movement, because it's exactly the opposite of what's been fought for in the last ~150 years.
No, please no. The labour movement want(ed) good living conditions for the majority rather than for the few. And yes, to not be fired by the whim of the bosses daily feeling is part of that, but not "above all else". And ofc these kind of jobs is the enemy of the labour movement, because it's exactly the opposite of what's been fought for in the last ~150 years.
I suppose we disagree, somewhat.
In my view/experience labour movements have generally pursued job stability as a primary instrument (for worker rights), even if it was not formally a goal in itself. This may be somewhat at odds with solidarity, but every movement deals with some internal contradiction.
There a multiple reasons for the focus on permanent employment. One is the labour union history of labour movements. Unions represent members and their interests, which are protecting their jobs, not jobs in general. Another reason is practical: it's almost impossible to unionize and hard to apply protections to a casual workforce. Labour movements (esp unions) are empowered by permanent workforces. Another reason (possibly the dominant one) is simple practical politics: people want a guarantee of permanence.
I believe that casual employment types have a role, in many cases one that permanent employment struggles to fill. From the worker perspective, this has to do with the low commitment, low barriers to entry, and relative absence of gatekeepers. Historically, when labour movements have tried to regulate casual labour they have tried to turn it into permanent labour.
In my view this is misguided. They should try to insert worker rights into the class while maintaining the casual noncommittal aspects of it.
For a practical example, I recently talked to some squatter/anarchists. They're hardly a major group, but weird and marginal enough that they're good at illustrating a point. Many of them work in the Gig economy (bike delivery). No Gatekeepers is what makes it work for them.
In my view/experience labour movements have generally pursued job stability as a primary instrument (for worker rights), even if it was not formally a goal in itself. This may be somewhat at odds with solidarity, but every movement deals with some internal contradiction.
There a multiple reasons for the focus on permanent employment. One is the labour union history of labour movements. Unions represent members and their interests, which are protecting their jobs, not jobs in general. Another reason is practical: it's almost impossible to unionize and hard to apply protections to a casual workforce. Labour movements (esp unions) are empowered by permanent workforces. Another reason (possibly the dominant one) is simple practical politics: people want a guarantee of permanence.
I believe that casual employment types have a role, in many cases one that permanent employment struggles to fill. From the worker perspective, this has to do with the low commitment, low barriers to entry, and relative absence of gatekeepers. Historically, when labour movements have tried to regulate casual labour they have tried to turn it into permanent labour.
In my view this is misguided. They should try to insert worker rights into the class while maintaining the casual noncommittal aspects of it.
For a practical example, I recently talked to some squatter/anarchists. They're hardly a major group, but weird and marginal enough that they're good at illustrating a point. Many of them work in the Gig economy (bike delivery). No Gatekeepers is what makes it work for them.
I'm not sure why your definition of labour movement is so local rather than national/global? It seems like a strange premise to your whole reply.
Causal employment doesn't have to mean worse worker rights.
We don't seem to disagree that much, I'm just questioning that you think it's the top priority.
I'm surprised by your bike delivery claim because I've recently seen exactly the opposite; the organizing of strikes in Berlin: https://deliverunion.fau.org/2017/06/27/riders-unite-protest... (syndicalist/anarchist union too)
Causal employment doesn't have to mean worse worker rights.
We don't seem to disagree that much, I'm just questioning that you think it's the top priority.
I'm surprised by your bike delivery claim because I've recently seen exactly the opposite; the organizing of strikes in Berlin: https://deliverunion.fau.org/2017/06/27/riders-unite-protest... (syndicalist/anarchist union too)
I'm not sure what the dynamic is in Germany, but here (Ireland), the subtext to such demands would almost certainly be upgrading these delivery people to permanent employee status.
The way the law (much of it case law and labour court conventions) works currently is that arrangements similar to permanent employment are considered permanent employment, with all rights. If a company wants to keep it's "contractors'" status and avoid inadvertently picking up the responsibilities of a permanent employer, they need to avoid treating them like employees. Controlling hours, workflow and such (employee freedom) falls into that category. Providing sick pay, reimbursements, holiday pay and such also fall into that category.
Again, I don't know for sure this is an issue right now in germany, but I suspect it is. Intentionally or not, agreeing to this request/demand would weaken deliveroo's case that these are not "employees." It would set up a general ruling that effectively considers the whole employment model (which is technically not employment) unlawful.
What I'm suggesting is: (1) we find a new name/category for these employees, (2) remove the defacto laws that cause contractors to default to permanent employees when/if you treat them like employees (3) legislate new rights that are relevant to this category. These must be realistic about preserving the casualness of the arrangement.
The way the law (much of it case law and labour court conventions) works currently is that arrangements similar to permanent employment are considered permanent employment, with all rights. If a company wants to keep it's "contractors'" status and avoid inadvertently picking up the responsibilities of a permanent employer, they need to avoid treating them like employees. Controlling hours, workflow and such (employee freedom) falls into that category. Providing sick pay, reimbursements, holiday pay and such also fall into that category.
Again, I don't know for sure this is an issue right now in germany, but I suspect it is. Intentionally or not, agreeing to this request/demand would weaken deliveroo's case that these are not "employees." It would set up a general ruling that effectively considers the whole employment model (which is technically not employment) unlawful.
What I'm suggesting is: (1) we find a new name/category for these employees, (2) remove the defacto laws that cause contractors to default to permanent employees when/if you treat them like employees (3) legislate new rights that are relevant to this category. These must be realistic about preserving the casualness of the arrangement.
You do touch on a point here: this gig economy only exists because full time employment does not offer living wages in the majority of the places where it exists.
Another benefit is wealth redistribution from richer to poorer countries, at least for gigs which can be delivered online.
" For whatever reason, some people just can't get enough skills to move up the food chain."
The assumption that this is an skills problem is only true for the individual but not in the aggregate. Payment is not a function of skills, but of supply and demand.
If everybody was able to work as a programmer, programmers would be pay as unskilled people and business could keep the profits.
That's the reason of the insistence, in the States, in not enough STEM professionals and the need for immigration.
The assumption that this is an skills problem is only true for the individual but not in the aggregate. Payment is not a function of skills, but of supply and demand.
If everybody was able to work as a programmer, programmers would be pay as unskilled people and business could keep the profits.
That's the reason of the insistence, in the States, in not enough STEM professionals and the need for immigration.
> Try to raise 2 kids and you fall into poverty status.
When was this never the case? Kids have always been costly, and families in poverty have always had kids.
When was this never the case? Kids have always been costly, and families in poverty have always had kids.
But should that continue to be the case? Poverty is not a plus in any society. We all know the problems poverty brings with it. The new economy should not add to the problem. It should help solve it. We'll never get past the multi-level economy. There will always be the people at the top and the people at the bottom. We mostly feel that those that work hard to get ahead should not be treated at the level as someone that has not. We project laziness on the poor but that's not necessarily the case. So, if you have the motivation to work should poverty be your reward? I say no.
Making things cheaper is another way of solving it.
So the idea is to make things cheaper for the poor by lowering their wages?
Yes, that reduces the cost of production. Everyone can be paid a high salary and produce expensive stuff. Or low salary and cheap stuff. Both of them are valid solutions.
But due to the current concentration of wealth in rich countries we are seeing preference for one of them.
But due to the current concentration of wealth in rich countries we are seeing preference for one of them.
So the wages of the poor is dynamic, but the profit margins etc are static by some force of nature?
Is any of this supported by evidence that "a big chunk of the economy (will be) powered by gigs"? I doubt it is true, and I believe your conclusion is likely off, even though I agree with (what I think are) your implied goals. Let me explain why.
> I wish the new tech entrepreneurs would find a better way to fix the low skill problem rather than find a way to reduce services/costs to the bone.
I doubt these low skill workers are the gig economy workers. Many people on AirBnB are doing fairly well, as no one wants to stay in the Ghetto, and the places with high take up are relatively well off places (London, NYC, SF). Ditto Uber, which requires a car under a certain age - is it 5 years? - not the sort of bombs truly poor people have.
The Minimum wage is a good comparison point here: http://www.pewresearch.org/fact-tank/2014/09/08/who-makes-mi...
> Just who are minimum-wage workers, anyway? ... people at or below the federal minimum are:
> Disproportionately young: 50.4% are ages 16 to 24; 24% are teenagers (ages 16 to 19). > Mostly (77%) white; nearly half are white women. > Largely part-time workers (64% of the total).
The problem isn't that minimum wage is unlivable - it is that some people can't get a job. Increasing minimum wage doesn't help people who can't get a job at all.
Similarly, the gig economy isn't reducing the cost of services for people who currently do it. Rather, it is an extra source for people who already make OK money. There aren't a lot of poor people living in the Haidt, or NYC, two places where I have taken AirBnB places, and there aren't a lot of people looking to rent a room in Gary, Indiana. Or Nairobi. Or Soweto.
That's the real issue - not the cost reductions in rich areas, but finding a way to engage people who don't have a way in to the economy at all. I'd say this is not even a low skilled issue, I'd almost say it os a no skilled, combined with a no history (as in no work history) workers' problem. The gig economy isn't really affecting these people, as it seems more likely to me to be a way to prop up middle class people and make their lives slightly better, rather than a way-in for these almost-no-skilled workers.
Just as an increase in minimum wage isn't the panacea to poverty alleviation, if it does much of anything at all, so addressing the gig economy, when so many of the means of making money have rather high barriers to entry, isn't going to fix much.
I have no answers BTW, I just think the suppliers to the gig economy aren't the group - poor, low skilled people - that is the common perception, and this mis-alignment of who we need to help and HOW we help them is sending people in the wrong direction.
> I wish the new tech entrepreneurs would find a better way to fix the low skill problem rather than find a way to reduce services/costs to the bone.
I doubt these low skill workers are the gig economy workers. Many people on AirBnB are doing fairly well, as no one wants to stay in the Ghetto, and the places with high take up are relatively well off places (London, NYC, SF). Ditto Uber, which requires a car under a certain age - is it 5 years? - not the sort of bombs truly poor people have.
The Minimum wage is a good comparison point here: http://www.pewresearch.org/fact-tank/2014/09/08/who-makes-mi...
> Just who are minimum-wage workers, anyway? ... people at or below the federal minimum are:
> Disproportionately young: 50.4% are ages 16 to 24; 24% are teenagers (ages 16 to 19). > Mostly (77%) white; nearly half are white women. > Largely part-time workers (64% of the total).
The problem isn't that minimum wage is unlivable - it is that some people can't get a job. Increasing minimum wage doesn't help people who can't get a job at all.
Similarly, the gig economy isn't reducing the cost of services for people who currently do it. Rather, it is an extra source for people who already make OK money. There aren't a lot of poor people living in the Haidt, or NYC, two places where I have taken AirBnB places, and there aren't a lot of people looking to rent a room in Gary, Indiana. Or Nairobi. Or Soweto.
That's the real issue - not the cost reductions in rich areas, but finding a way to engage people who don't have a way in to the economy at all. I'd say this is not even a low skilled issue, I'd almost say it os a no skilled, combined with a no history (as in no work history) workers' problem. The gig economy isn't really affecting these people, as it seems more likely to me to be a way to prop up middle class people and make their lives slightly better, rather than a way-in for these almost-no-skilled workers.
Just as an increase in minimum wage isn't the panacea to poverty alleviation, if it does much of anything at all, so addressing the gig economy, when so many of the means of making money have rather high barriers to entry, isn't going to fix much.
I have no answers BTW, I just think the suppliers to the gig economy aren't the group - poor, low skilled people - that is the common perception, and this mis-alignment of who we need to help and HOW we help them is sending people in the wrong direction.
I usually enjoy priceonomics posts, but this analysis is disappointing. The sharing economy is a way of deploying labor and capital. So the operating question is, is it a good way of doing so on net?
In some sense the market is spoken in that many people are willing to sell in these marketplaces. However, an argument could be made that services like Uber actually exploit the hidden costs associated with selling through the service. How many Uber drivers have done a fully netted anlaysis of their cost basis when driving on the service, including capital cost and depreciation of the vehicle?
Rather than attempting to dig into the financial viability of these services for sellers, this article focuses on the most superficial metric: monthly revenue. $500/mo on average would be consistent with $50/hour fully netted earnings, which would be amazing, or even a negative income if true costs tend to exceed earnings.
In some sense the market is spoken in that many people are willing to sell in these marketplaces. However, an argument could be made that services like Uber actually exploit the hidden costs associated with selling through the service. How many Uber drivers have done a fully netted anlaysis of their cost basis when driving on the service, including capital cost and depreciation of the vehicle?
Rather than attempting to dig into the financial viability of these services for sellers, this article focuses on the most superficial metric: monthly revenue. $500/mo on average would be consistent with $50/hour fully netted earnings, which would be amazing, or even a negative income if true costs tend to exceed earnings.
I think it's pretty patronizing to suggest that people spending 40+ hours a week driving for Uber / Lyft are too incompetent to calculate out their own finances.
I've talked to a lot of drivers who understand in-depth cost per mile they are able to deduct from depreciation for tax purposes, the impact of buying a new car on Uber black, the cost savings per mile of buying a Prius, etc etc.
I've talked to a lot of drivers who understand in-depth cost per mile they are able to deduct from depreciation for tax purposes, the impact of buying a new car on Uber black, the cost savings per mile of buying a Prius, etc etc.
No one is saying they're too incompetent. What's being said is that they're not doing the analysis for whatever reason. And while you may know some who have run the numbers I also know some uber drivers who haven't. Furthermore, we shouldn't apply this only to people who drive 40+ hours. I bet as we transition down to people who drive 20 hours, 10 hours and less we'll find a lot of people who are barely breaking even or worse once other costs are considered.
I suspect a lot of those low-hour, occasional drivers were going to have all of the fixed costs of the vehicle anyway and are only looking to cover the marginal costs.
That's a perfectly reasonable strategy and the fact that they aren't covering average cost is irrelevant, so long as they're covering the marginal costs of driving Uber/Lyft.
That's a perfectly reasonable strategy and the fact that they aren't covering average cost is irrelevant, so long as they're covering the marginal costs of driving Uber/Lyft.
I think those low cost drivers, if they even think about it, believe they're more than covering their marginal costs. They idea that they're essentially paying depreciation plus a small premium to themselves would not go over well if it were more apparent. Perhaps what we need is another anti-ride-sharing calculator where you can plug in a whole bunch of details about your car and insurance, normal driving habits and ride-sharing driving habits and it will tell you how much you make minus the hidden risks/costs.
The car's going to depreciate whether you drive for Uber or not. Most car owners treat the car as a sunk cost that you need to live in America today, and figure they might as well earn some extra money if they have to pay that cost anyway. I really doubt there are many people going out there and buying cars just so they can drive for Uber.
There are businesses which will sell/lease you a new car just to get you into the car-share business. If such companies exist, I'm willing to bet people are buying new cars to start driving for Uber.
That's problematic thinking, putting more miles on a car wears it out faster. Sunk cost or not, say you drive twice as much because you're an Uber driver, you will now have to perform maintenance and repairs twice as often, give or take based on differences in driving and whether or not the car starts cold every time. Maybe the numbers work out, but ignoring them probably doesn't make sense, especially if you drive a car that is known to be on the less reliable side.
Such calculators already exist: https://www.finder.com.au/uber-driver-income-calculator
> I think it's pretty patronizing to suggest that people spending 40+ hours a week driving for Uber / Lyft are too incompetent to calculate out their own finances.
Your average person isn't great at calculating out their own finances. I don't see any reason to assert Uber/Lyft drivers are better than average in this regard.
I'd suspect this is one of the reasons 96% of Uber drivers don't last a year. http://www.cnbc.com/2017/04/20/only-4-percent-of-uber-driver...
Your average person isn't great at calculating out their own finances. I don't see any reason to assert Uber/Lyft drivers are better than average in this regard.
I'd suspect this is one of the reasons 96% of Uber drivers don't last a year. http://www.cnbc.com/2017/04/20/only-4-percent-of-uber-driver...
You can't really avoid taking a position on the distributional aspects. All "willing to sell in the marketplace" gives you is that their choice is better than their next-best alternative. It tells you nothing about whether the system as a whole provides fair choices and opportunities for people. It tells you nothing about whether rents are getting extracted through coercion. It passes no judgement on who gets the surpluses from trade.
For larger income Lyft/Uber drivers (probably those in SF/NYC), is it common to setup an S-Corp? Or you could setup an LLC with S-Corp accounting..
With such a low average earning, they could basically pay FICA on the first 20%, but take the rest as a dividend distribution and avoid those taxes. Would save them about an extra 18(?)% on taxes for the cost of a CPA & S-Corp filing (probably about $1800/yr).
EDIT: Looks like it would be fairly easy..
1) Create a corporation through LegalZoom (~ $400) https://www.legalzoom.com/business/business-formation/inc-ov...
2) It'll take a couple of weeks, but they'll receive an EIN (employer identification number). Submit the "EIN" to Lyft or Uber. http://www.ridesharingdriver.com/driving-with-an-llc-or-corp...
With such a low average earning, they could basically pay FICA on the first 20%, but take the rest as a dividend distribution and avoid those taxes. Would save them about an extra 18(?)% on taxes for the cost of a CPA & S-Corp filing (probably about $1800/yr).
EDIT: Looks like it would be fairly easy..
1) Create a corporation through LegalZoom (~ $400) https://www.legalzoom.com/business/business-formation/inc-ov...
2) It'll take a couple of weeks, but they'll receive an EIN (employer identification number). Submit the "EIN" to Lyft or Uber. http://www.ridesharingdriver.com/driving-with-an-llc-or-corp...
You can get the EIN instantly from the IRS website, though the service may only be available during business hours. The process is fast and straight-forward, and you'll finish the transaction with a PDF that contains the new EIN.
Can dividends be issued at-will? Or are they restricted to being quarterly / pre-planned / etc.?
Since you'd be the only owner of the S-Corp, according to my CPA, they can be issued at-will (you don't need to hold a meeting with yourself).
I just transfer from the business account to the personal account and mark the transaction as a "DIVIDEND". My CPA takes care of the rest.
I just transfer from the business account to the personal account and mark the transaction as a "DIVIDEND". My CPA takes care of the rest.
Anybody who studied how British dock workers were hired in the late 19th Century could have told you this.
Those who fail to study history are doomed to repeat it.
Never believe the hype about extreme individualism. You will always certainly make far more money if you team up with others and make your case politically.
Those who fail to study history are doomed to repeat it.
Never believe the hype about extreme individualism. You will always certainly make far more money if you team up with others and make your case politically.
You mean if everyone teams up and makes their case politically, we'll all make far more, in real terms? So teaming up increases overall productivity? (Not impossible but would need more evidence than teaming up increasing bargaining power, though of course the latter needs evidence, too as a junior unionized worker doesn't have bargaining power against senior workers whom union arrangements incidentally tend to benefit.)
productivity changes are only part of the picture, for example real wages for most people didn't change much over the last decades, despite fabulous increases in productivity.
http://www.pewresearch.org/fact-tank/2014/10/09/for-most-wor...
(Still don't know how they measure real wages and purchasing power, thirty years ago you couldn't get a smartphone )
http://www.pewresearch.org/fact-tank/2014/10/09/for-most-wor...
(Still don't know how they measure real wages and purchasing power, thirty years ago you couldn't get a smartphone )
A good example of why the rich get richer. It would be interesting to see this on a per hour worked basis. Of course, the Airbnb host (maybe) had to work to acquire the capital to purchase the residence, and the drivers to purchase the cars, but it's still interesting to see how wealth begets wealth.
All that said, I am not saying whether such a system is good or bad, just that it's interesting to see it here.
All that said, I am not saying whether such a system is good or bad, just that it's interesting to see it here.
Without earnings per hour metric, it's hard to make much of this post.
I agree with this. They did mention that they don't know how much time workers spent earning this income, but I can see how this piece would convince a casual reader to conclude that these sharing economy platforms are a terrible way to earn money.
Agreed, and if they were lucrative jobs the service managers would gladly announce and broadcast those numbers. But they cover and hide the real numbers because it's not really worth it.
Also, the upfront or ongoing costs of using some of these platforms, like AirBnB or Uber where you might have a mortgage or car payment that far exceeds your earnings. A $1000 a month mortgage to make $924 a month isn't profitable.
At least the partially covered mortgage on a domicile might lead to increased equity in an asset with some long term retained, or even increasing, value. The car financing case seems much more dubious.
Partially covered mortgage means the bank will eventually foreclose. They take the house and, zero out the equity the owner may have, and take any asset value increase and pocket it all.
I meant partially covered by the rent you are able to charge. When I moved away from the house I had bought, I rented it out for a number of years. The rent I was able to charge covered about 90% of the payments, and I put the rest in from my salary. I sold the house a few years later after it had appreciated somewhat, and it was overall a good deal.
I could imagine a similar situation with Airbnb instead of traditional lease arrangements, assuming the numbers line up. My point was more that I can't see it working out that way with an asset like a car.
I could imagine a similar situation with Airbnb instead of traditional lease arrangements, assuming the numbers line up. My point was more that I can't see it working out that way with an asset like a car.
If you're charging money, that's not really sharing.
It's not really surprising that airbnb hosts make more money, since some people are buying houses just to rent out the rooms like a flophouse. Can you do that with Uber (one user manage a fleet of cars? It would seem not worth the effort.)
It's not really surprising that airbnb hosts make more money, since some people are buying houses just to rent out the rooms like a flophouse. Can you do that with Uber (one user manage a fleet of cars? It would seem not worth the effort.)
I'm pretty sure it's possible and being done(especially in developing countries).
If I'm not mistaken Uber itself was cutting deals with dealerships in some markets to help drivers finance cars loans and insurance, so Uber itself would be managing the fleet of cars in some way.
If I'm not mistaken Uber itself was cutting deals with dealerships in some markets to help drivers finance cars loans and insurance, so Uber itself would be managing the fleet of cars in some way.
I think until the driver is removed from that equation, it would be less popular. One person could comfortably manage multiple Airbnbs even if they were doing the cleaning themselves and dropping keys off manually (which they generally aren't).
I cannot understand the putting all together in a basket.
AirBnB revenue is essentially "return on investment" and very little "labour" (you have paid the house/apartment/room you are offering, the maintenance, cleaning and laundry work is connected to just a trifling part of the income).
Uber, Lyft, and similar is half and half (you have to buy a car AND put hours of work in the service)
Fiver and similar is ONLY work.
AirBnB revenue is essentially "return on investment" and very little "labour" (you have paid the house/apartment/room you are offering, the maintenance, cleaning and laundry work is connected to just a trifling part of the income).
Uber, Lyft, and similar is half and half (you have to buy a car AND put hours of work in the service)
Fiver and similar is ONLY work.
I think they observed the wrong people.
AirBnB's supply comes from property owners, not hospitality employees(i.e. hotel workers).
Uber, Lyft, Postmates and similar supply comes from driver and courier time spent on the platform, not cars, cars/bikes are suppliers tools, unlike Airbnb renters, the suppliers of cars are not necessarily the Uber drivers here, the comparison would be fairer if they compared fleet managers revenue to Airbnb property owners'.
AirBnB's supply comes from property owners, not hospitality employees(i.e. hotel workers).
Uber, Lyft, Postmates and similar supply comes from driver and courier time spent on the platform, not cars, cars/bikes are suppliers tools, unlike Airbnb renters, the suppliers of cars are not necessarily the Uber drivers here, the comparison would be fairer if they compared fleet managers revenue to Airbnb property owners'.
Their data comes from loan applications. Talk about selection bias ...
Not that I disagree with the more general point that a loan provider's data isn't necessarily the best, but in what way do you suggest there is selection bias here?
My thinking is that the population of people who are applying for loans in any given month is going to be drastically different than the population who are not applying for loans in exactly the metric, personal finances, that Pricenomics wants to look at. Kudos on Pricenomics for being so upfront about their data, but I wouldn't have titled it "How Much Are People Making from the Sharing Economy?", because it's not. It's more like "How Much Are Loan Applicants Making from the Sharing Economy?"
Different in what way? Just for example, during the housing bubble of the 2000s, people in any given slice of "personal finances" one cared to measure were applying for loans (purchases and lines of credit).
I suspect the people who are in the gig economy are more likely to be in a class that has lower education, income, and assets. In that sense I'm not sure "personal finances" as a selection bias would apply (that is, it seems likely as a rule gig economy loan applicants might resemble gig economy workers to a high degree).
I suspect the people who are in the gig economy are more likely to be in a class that has lower education, income, and assets. In that sense I'm not sure "personal finances" as a selection bias would apply (that is, it seems likely as a rule gig economy loan applicants might resemble gig economy workers to a high degree).
There's a strong inverse correlation between how much you make and how much you borrow. People who are making enough to cover their daily expenses don't need to borrow, by definition, and so they tend to be underrepresented in loan origination statistics. Similarly, people who are making very little money tend to need cash, which makes them more likely to seek out loans, because the very product a loan is selling is cash (today, in exchange for more cash tomorrow).
While its true that during the housing bubble, people who took out loans included people from all different slices of the income distribution, the borrowers were disproportionately drawn from poorer income segments. That's why they called it a "subprime" crisis; the percentage of the mortgage market lent to people who wouldn't otherwise qualify for prime loans was much higher than normal, and predictably, these loans ended up defaulting at a higher rate.
While its true that during the housing bubble, people who took out loans included people from all different slices of the income distribution, the borrowers were disproportionately drawn from poorer income segments. That's why they called it a "subprime" crisis; the percentage of the mortgage market lent to people who wouldn't otherwise qualify for prime loans was much higher than normal, and predictably, these loans ended up defaulting at a higher rate.
What he means is that typically the people who apply for loans are of the lower income bracket. You won't find higher income generators applying for these types of loans, therefore, selection bias.
There date is from a source that exists, as opposed to not having data.
It is a strange complaint to make, unless you know of a better source of data.
It is a strange complaint to make, unless you know of a better source of data.
I don't need to have better ideas to point out flaws. But in this case I do know who has a better source of data: AirBnB, DoorDash, Etsy, Fiverr, Getaround, Lyft, Postmates, Taskrabbit, and Uber.
The ol' lamp-post theory of data analysis: https://en.wikipedia.org/wiki/Streetlight_effect
The sharing economy is evil. The only making money are the big corporations, the little guy is slaving for bellow minimum wage and taking all the risk on top of that...
Well good and evil is a pretty binary description. You will only have a market if seller (the driver) and buyer (the service operator) are meeting. If the driver do not want to operate under those conditions there is no "invisible hand" forcing them to do so. Of course in lack of alternatives it is a small but easily accessible form of immediate income.
The alternative is to get educated and get thinking about starting a real business instead of this part time addictive pitty of income... it's like saying to the addict it is his fault he is spending all his money on drugs...
Is the addict not even partly at fault for spending all his money on drugs??!
Let's not get started with the moralistic stance will we? Poverty is most often due to - especially in societies with precious little social safety nets - accidents of life, hereditarity. Very few fall deservedly, most are thrown or kept down
Not everyone has the skills, patience, savings to get required education. There is a reason why McJobs exist. This is not an addition but rather the need for immediate cashflow due to economic situations.
As I see it, there used to be little guys and even littler guys. Now the income of the little guy is shared among all little and littler, resulting in an averaging. It's hard to judge which is worse.
If we're lucky, this will actually bubble up, and we can better share the medium and the big guys work also.
If we're lucky, this will actually bubble up, and we can better share the medium and the big guys work also.
That's very dependent on the specific service and on the person's situation. AirBNB, for example, can provide a very decent income for the work needed, much better than any alternative use of the property and time.
There are two types of employment, contracted employees (that is employees that are directly employed by a company) and "self employed" (where the employee creates a single person company, which the employer then contracts)
the reason why "self employed" is popular amongst the gig employers is not because its "flexible" its because its cheap.
There is a side effect that employees have less rights(no holiday pay, maternity cover, sick pay) However the simple fact is that employers pay less national insurance (social care and health tax, effectively)
The lack of holiday means 10% less wage, no sick pay means 100% efficiency, which important for cycle courier companies like uber eats, deliveroo.
Basically the sharing economy in the UK (with the exception of airBnB) is a way of undermining works rights to save money.