The dominant unit cost by far is paying the drivers, which doesn't go down with scale. Then you get a bunch of other stuff like credit card processing fees and customer service that also doesn't scale much if any better with volume either.
The server cost is barely a unit cost at all. That's fixed cost. Though it still needs to be paid from something.
> You don't think employees notice when they are paid less? You don't think customers realize when they pay more? If you really want to make the claim that employees don't notice lower pay and customers don't notice higher prices, that's tantamount to admitting that the free market doesn't work.
They notice how much they're paying and being paid, but they lack the information to know how much they would be paying or being paid in the alternative. So they think they're getting "free" insurance when they're really getting insurance instead of a cost of living increase.
> Yes, obviously investors will pass the cost off to employees and customers, but if they pay an unjustifiably high insurance premium and try to pass that cost off, they open up a business opportunity for a competitor to pay employees better and/or charge customers less by buying cheaper insurance and passing off less of that cost.
You're assuming that the problem is caused by which insurance company the employer chooses and not that it is difficult to accurately detect insurance fraud without using invasive methods, so all the insurance companies charge rates that exceed the value of the insurance and the companies only buy it at that price because it's required by law.
> There are additionally some regulations in place that prevent employers from passing off too much of the cost to employees or customers (i.e. minimum wage or fixed taxi fares).
There are two options here. One is that the money comes from somewhere. The other is that it doesn't, the cost of the service now exceeds its value, and you lose your job.
> The advantage that a big company has is that when they shop around for insurance, they're much more likely to be able to get a good price than an individual because they're a large, valuable customer.
Insurance companies compete aggressively on price for all customers. Historically larger buyers had a slight advantage because they could get a discount to account for the lower per-customer acquisition cost of getting many customers at once, but now that insurance is a thing that you buy from a website after comparing prices on the internet, even that is becoming an increasingly negligible advantage.
Meanwhile if you buy it yourself you get to choose the policy that you want rather than whatever your employer stuck you with.
When I lived in NYC, I talked to a lot of Uber drivers and cab drivers. Many Uber drivers are cab drivers and have been cab drivers. They're quite capable of making the comparison.
> You're assuming that the problem is caused by which insurance company the employer chooses and not that it is difficult to accurately detect insurance fraud without using invasive methods, so all the insurance companies charge rates that exceed the value of the insurance and the companies only buy it at that price because it's required by law.
No, I'm simply ignoring the possibility you're bringing up, because it's no less a problem for individuals buying their own insurance. This is just a red herring.
> There are two options here. One is that the money comes from somewhere. The other is that it doesn't, the cost of the service now exceeds its value, and you lose your job.
But we already know the answer to that. The cost of the service doesn't exceed its value because people payed for taxis for decades before Uber (and in fact, they paid a lot more than the insurance, since medallions were a humongous additional cost).
> Insurance companies compete aggressively on price for all customers. Historically larger buyers had a slight advantage because they could get a discount to account for the lower per-customer acquisition cost of getting many customers at once, but now that insurance is a thing that you buy from a website after comparing prices on the internet, even that is becoming an increasingly negligible advantage.
Alternative hypothesis: insurance companies compete aggressively on advertising for individual customers, which allows them to overcharge because the average person doesn't have the time to find cheaper alternatives. Larger customers can devote more resources to researching so competition is actually more based on price.
> Meanwhile if you buy it yourself you get to choose the policy that you want rather than whatever your employer stuck you with.
Which seems to be very okay with the drivers.
This is one of those cases where you're just abstracting things away from the issue at hand to justify your position, which hides nonsense like this because you're talking theoretically rather than concretely. But if we look at the actual companies targeted, no, GrubHub, Uber, DoorDash et al are NOT low-margin industries. With worldwide services like this where your costs per-unit are basically only server costs, the margins are extremely high because your costs approach zero as users increase. The costs these companies incur are mostly money they reinvest into business development.
For example, Uber taking a loss on rides should be seen as reinvestment into the business (trying to undercut competitors and drive them out of business) rather than a result of the fixed costs of a ride.
> You no longer even realize its cost, because you never receive a bill for unjustifiably high insurance premiums, you just get paid that much less or pay more when you buy stuff.
You don't think employees notice when they are paid less? You don't think customers realize when they pay more? If you really want to make the claim that employees don't notice lower pay and customers don't notice higher prices, that's tantamount to admitting that the free market doesn't work.
Yes, obviously investors will pass the cost off to employees and customers, but if they pay an unjustifiably high insurance premium and try to pass that cost off, they open up a business opportunity for a competitor to pay employees better and/or charge customers less by buying cheaper insurance and passing off less of that cost. There are additionally some regulations in place that prevent employers from passing off too much of the cost to employees or customers (i.e. minimum wage or fixed taxi fares).
The advantage that a big company has is that when they shop around for insurance, they're much more likely to be able to get a good price than an individual because they're a large, valuable customer.