Wal-Mart knows that hiking minimum wage would help it kill mom-and-pop stores that it competes with.
[1] https://www.cnn.com/2019/06/05/business/walmart-shareholders...
Do you have a source for that? I find it a bit hard to believe, given the decline of mom-and-pop stores in general.
https://www.nytimes.com/2014/08/15/us/starbucks-to-revise-wo...
[1] https://www.epionline.org/oped/who-really-employs-minimum-wa...
"Some of these businesses are small diners or independent grocery stores; others are franchisees that own a handful of stores affiliated with a recognizable brand. (For instance, over 80% of McDonald’s locations are owned by franchisees.) In either case, the profits and executive pay at the country’s largest businesses have nothing to do with the stark economics these small-business owners face: single-digit profit margins."
If over 80% of McDonald's locations are owned by franchisees, then it's likely that MANY of these are franchise-related (also, profits and executive pay at McDonald's would certainly have something to do with the related economics of franchise fees and the back-end of the supply chain).
Also, a high minimum wage for drivers really bumps the value of their self driving car arm.
Won't even have to do that, wait for inflation to take hold (I believe inflation is very likely to explode in the next few years) and just ride it out.
A home near me is about 100k for 2000 sq ft main floor. Does that mean inflation doesn't exist?
What a weird argument.
Why?
1. Money is essentially free at current interest rates and I don't see a sign of that reversing course.
2. Large firms are hording cash and have more than they know what to do with. They are at the point where they are buying their own stock because that is the most productive thing they can do with that money.
3. The democratic party is running on minimum wage increases. While it is debatable if that will have a huge impact it certainly isn't a deflationary measure.
4. Democrats are also running on the green new deal, universal income and medicare for all that I predict will not actually result in higher taxes for the wealthy in any meaningful way but instead the printing of money in order to fund those programs as that is what seems to happen every time. Even if taxes were implemented as discussed, moving money from investment vehicles (where the wealthy have it) to consumers will still probably cause inflation in terms of housing and consumer goods.
5. China is sitting on about 3 trillion dollars that is currently effectively out of the money supply and they will likely deploy that as a weapon in the trade war.
2&3. Democrats "running on" some policy does not at all mean it will happen. In the current political climate, it's quite likely their holding a position means it won't happen.
4. Large firms have already been using record low interest rates to finance stock buybacks. This has been going on for years. The last three or four years of stock price growth has been fueled by financed buybacks, with every year breaking the previous year's record. At some point will need to stop.
As an aside, these buybacks are likely going to be the cause of our next stock market calamity.
5. This is sort of legit fear, but 3 trillion dollar is not really enough to make a market-wide impact and selling their bonds would just push interest rates lower, serving to help the US achieve their current monetary policy. They could use this money to selectively certain industries though.
And its not just housing in downtown San Francisco, even housing in middle america podunk nowhere has soared
Just look at the M2 monetary velocity[1]. It fell off a cliff in 1997 and never really recovered. It's now at an all-time low. For all intents and purposes we're operating on a light version of MMT.
So I don't think it was due to people honestly thinking the average inflation would be .5% but just an idiosyncrasy of how we estimate market expectations of inflation.
That someone failed to make money on the market doesn't necessarily mean they were wrong, it may just mean nobody gave them a pile of money they could afford to risk.
Now we have a bunch of presidential candidates that tell me they are going to print money all day long and a bunch of people who "know better" telling me that won't cause inflation to spike. ¯\_(ツ)_/¯
Also it is my belief that moving money from investment vehicles to consumers will have a inflationary effect on consumer goods. The slow trickle of subsidized Uber rides for example probably has less of an effect than a direct cash transfer that happens more rapidly. More so much of that money is invested internationally, by increasing taxes on the wealthy we may be in effect increasing the total money supply in the United States.
It was much more difficult for housing. The Big Short tells a story about how even if you knew housing was over valued it was very difficult to short, and the ones who did almost lost everything.
Heh. I heard it was bad in CA but wow.
Depends how you look at it. If you're looking purely at supply and demand of drivers, it's fine. If you think people working 40 hours a week should be able to afford decent housing and health insurance it's probably too low.
For political reasons that can make sense, it's hard to push for a minimum wage bump right after a different one, but I am unaware of other cab companies advocating for a higher minimum wage prior to this.
It's always hard to say where an idea in a company "comes from". We probably don't mean literally the human being who said it out loud first. Most ideas have been around for a long time before they become policy, waiting for circumstances to change or politics in the organization to favor them. If the politics in an organization favor an idea for a combination of reasons, both ethical and self-interested, it might not be fair to say which reason "gets the credit" for the idea.
In the past (pre-Uber), if you made this amount of money by engaging in large-scale, coordinated law breaking, you were called a gangster and got a big old nice RICO charge.
Don't be confused or blinded by the valuation. That is a byproduct of breaking the rules. The rules were not broken because they were unfair - that's a meme - you don't get to pass arbitrary judgement of which laws you do and do not respect (in theory). As a business, if you do not like the legal environment (rules) of a certain location, the logical (and respectable) choice is to not operate in that region/location.
My view is 10x more harsh on companies breaking the law in a coordinated manner than compared to an individual person.
Thank goodness it was only in theory. The taxi industry was and is terrible, the only thing propping it up is regulatory capture.
> As a business, if you do not like the legal environment (rules) of a certain location, the logical (and respectable) choice is to not operate in that region/location.
As a consumer, I'm glad that the rules were systematically broken in a way that benefitted everyone except the taxi industry.
I can definitely get aboard the taxi hate train, but do bear in mind that there has been a higher incident of sexual assaults tied to uber drivers over taxi drivers - it's not a free win for everyone, they broke both rules intended for regulatory capture and those intended for public safety.
This makes sense to me because it's far easier to track down the an Uber driver than a taxi driver.
citation with statistics? I don't know what world you lived in, but there was no lack of local news stories involving crimes by taxi drivers pre-ridesharing and there is a reason why taxi drivers were commonly suspects on crime drama shows like Law&Order.
These are good times for the consumer, but of course the situation won't be this way forever.
Ridesharing is more convenient, safer, cheaper, and more environmentally friendly. There's less idling, less aimless driving, less congestion, more carpooling, no clumsy exchange of cash or credit cards, the reputation of drivers is visible, and the ride is fully tracked so your whereabouts are known.
This is really problematic for me. If you restrict the scope rightly to only democracies that are truly representative (which many regulatory capture environments are not) I might be able to agree. But many governments in the world are not nearly legitimate enough to deserve this respect.
I have no issue with individuals, businesses, revolutionaries and other for profit or not for profit companies trying to undermine the dictates, decrees, laws or rules or whatever you want to call them of oppressive or authoritarian governments.
Taken to a logical extreme, this justifies for profit companies supporting and entrenching dictatorships, under the excuse of “we were just following the law”.
Laws are the social contract that we've all agreed to - I am totally in agreement that a lot of laws were created through corrupt government action, but giving free reign to any private entity to ignore laws they find onerous pretty much removes lawful society.
We have? I may go through the actions of consenting because I fear the repercussions of not doing so, but no part of me consents to giving the average person the right to harm me because of their personal beliefs.
The tyranny of this process is that all of the activities you go through on a daily basis are only possible because of this contract and, having grown up within this contract, if you were to leave it it would require you to invest massively in self-sufficiency (the real kind, not "I can grow a garden"), a skill that is not only excluded from general education (both within a scholastic setting and within more traditional knowledge passing routes) nearly everywhere in the world - but is often actively discouraged by societal norms.
This, I think, is a pretty good thing, because all of us being hunter gatherers who fought over bountiful locales would be a lot less interesting than knowing things like agriculture, computers and boats exist.
I hope you can see the issue telling someone they consented when they tell you they have not.
>you are beholden to the laws of your locale without ever explicitly agreeing to them
And yet we are free to break them as long as we are not caught.
>if you were to leave it it would require you to invest massively in self-sufficiency
I doubt so, because I find avoiding society is not an option. I guess if you can build your own rocket and launch yourself into space it is possible, but anywhere else in the world and you are subject to the local laws generally set by whomever has the biggest stick. I'm not exactly sure when it happened, but there was one day, not too long ago on the historical scale, where the ability to really live away from people self sufficient became impossible.
I guess there are some places you might be able to move to, not pay taxes on, and be so remote that they don't bother enforcing the laws on you. But that still depends on the idea of breaking laws as long as you can avoid any punishment you find unbearable.
>This, I think, is a pretty good thing, because all of us being hunter gatherers who fought over bountiful locales would be a lot less interesting than knowing things like agriculture, computers and boats exist.
Society has it's benefits, and yet I do wonder if every law was fully enforced would it continue to function? Think of work to rule, at national scale. Laws seem to be a sort of selectively enforced tax that helps keep society from crumbling, but even that isn't guaranteed since it seems to also give us the ability to crumble society in a way that hunter gatherers could never imagine.
Even then I cannot. The majority can be wrong at times and a bad law, even one with majority support, is a bad law. In such cases the only value to following such a law is to reduce risk of enforcement (and there is plenty enough evidence that following the law is no defense against being harmed by those who enforce the law).
I am sure you can dig up illegal acts, but the secret sauce was the new dynamic that bent what people thought was possible at scale.
I'm thinking this isn't actually true. In some cases you definitely were. In others, you become the dominant player and enjoyed becoming wealthy.
What exactly divided the former from the latter? I wish I understood that better.
I'd say that's firmly on the "breaking the law" side of things.
I think most people consider onerous regulations to construct a barrier against entry aimed at any new market entrants[1] to be a different sort of law breaking than normal law breaking (more... morally and ethically acceptable). IMO Uber has flagrantly ignored a number of regulations regarding driver background checks that have allowed it to become less than safe to ride in, especially for single women, there have been a plethora of stories about women being stalked by uber drivers - even within the water-cooler talk at my office.
So technically they've broken a bunch of laws - and ethically they've acted in bad faith.
1. Please note, I think what regulations would be in this group varies extremely across HN, with the more freebretarian folks placing all regulations here, while others may consider labour regulations or environmental regulations to provide real value - and I really don't want to get into this discussion, I just think we can all mentally place a line _somewhere_
Regulations are enforced by regulatory bodies that operate under a different legal basis than civil / criminal law. Regulatory bodies are not legislative in nature but rather executive. Being sanctioned by a regulatory body is a very different thing than getting prosecuted.
For one, a regulatory body does not enjoy legitimate use of force, and cannot imprison individuals. They can only sanction according to their mandate. If you refuse to pay a sanction, this may escalate to a prosecutable criminal infraction. But simply breaking regs isn't a crime.
For instance, if you're operating an illegal home-based business, you may be subject to sanction by the zoning authority and the entity that you were supposed to register with. Like the local real estate board if you were providing realtor services without a license.
Only in rare situations is it a criminal offense to provide commercial services without the proper licenses, such as providing legal or medical services. It is not, as you say, the norm.
Even in the case of environmental regulations, rarely are they elevated to the status of crimes under criminal law. More usually you'll get contacted by the appropriate environmental protection administration and fined. I recall hearing about one company who would simply call up the authorities whenever they needed to dump into the river and pay the token fine.
There's a lot of room for improvement.
How many companies can afford to pay 21$/hr minimum for example?
So somehow it's both a great step forward and terribly anti-competitive at the same time.
If Uber unilaterally increased minimum salary, then those competitors would have to do the same, otherwise they would lose all their drivers to Uber. So, if Uber really cared about drivers they would just do it. Instead they are making PR stunt by "demanding" government regulation.
It's not actually a race to the bottom because it's still a competitive market. Even unskilled people have a choice between being Uber drivers or janitors or stock clerks or fast food workers, or anything else that someone will pay them to do. If Uber pays less than Walmart then people can quit Uber and go work for Walmart. That creates a floor for the pay of Uber drivers independent of anything the government does.
And if the government is going to do something, it's much better to raise that floor, which minimum wages can actually do the opposite of because people have non-monetary job preferences. If a $21/hour minimum wage appears then you have to pay Uber drivers $21/hour, but suppose they have $15/hour in expenses (fuel, wear and tear), so that's really only $6/hour. Meanwhile a work from home job might have paid $10/hour -- a real $10/hour -- but now that's well below $21, so is no longer available. So now you're paying $15/hour to make $21 instead of paying $0 to make $10, which means you make less, and Uber gets to pay $21 when they would have otherwise needed to pay $25 to actually be competitive. And the same thing (to various degrees) with ordinary commute-to-work jobs vs. stay at home jobs, or jobs with longer vs. shorter commutes or in higher cost of living parts of the city or that require some training or other expense that ultimately has to be paid for out of wages, or the job is just downright less of a grind and people are willing to accept less money in exchange for easier work. By removing options people used to have, you only make them more desperate for the remaining ones and require them to accept worse options even if they're better on paper.
Case and point: Uber was basically a (hugely popular) mediator for illegal cabs in my country. They had to shut down, but as a response the government introduced new vastly relaxed regulations to the whole taxi industry, setting the rules under which services like Uber could operate. I am not yet sure if it will actually result in lower rates, but at least they catalyzed a historical change.
Thanks.
The proposal suggests to me that they think their customers are not extremely price sensitive but they're also not loyal to a specific supplier. In other words, they'll take almost as many rides even if the price goes up but they'll still go with whoever is cheapest.
It makes sense, if something is cheaper, you use more of it. If its more expensive, you start using substitutes, as the benefits of rideshare gets dwarfed by its extra cost. It’s literal econ 101
If they can establish a regulatory framework that favors them (Uber), they can raise prices as competition is further restricted, to more than offset the $21 / hour. Their ideal has to be to establish that favorable competition environment, enabling considerable price increases that get them closer to profitability (ie exceeds the wage cost increase by a large margin). In the current situation, Uber is facing a bankruptcy scenario with their low sales growth, extreme burn rate and with a competitive market where they can't freely increase prices. That tells you what their goal has to be.
If they were certain their customers were not price sensitive, Uber would have already spiked their pricing far higher to push toward profitability.
Many/most Uber customers would use a materially cheaper equivalent service if available because the switching costs are low.
However, that's not the same as price elasticity (of demand) which is what the term usually refers to. Price elasticity is about how much less they'd use any price-competitive service as the price increases.
I'm honestly not sure what that curve looks like. Within reason, pricing wouldn't affect my usage much at all. But I'm a light user of these services and use them almost entirely for business. Certainly I'm a very different profile from a young urban professional who doesn't own a car.
ADDED: Between surge pricing and other pricing experiments I'm sure they conduct, I would imagine that Uber has a pretty good idea of what demand and driver supply curves look like.
https://www.theverge.com/2019/8/8/20793793/uber-5-billion-qu...
If it were a sincere ethical position, once again, they would just implement it... no need to make a big deal about it
Such as?