What's not OK is when the company wants all the advantages of having contractors but still wants to dictate all these things.
Personally, I think OP is calling out that most of the issues with current Uber (and similar companies) is the asymmetry of information. Only Uber knows where all the riders are, what they are paying, and where they are going. They also are the only ones that know where all the drivers are and how much they are expecting to be paid. This information asymmetry allows them to expose just enough information to both rider and driver to facilitate the outcome Uber wants. In my mind, when Uber (or anyone else) starts controlling the flow of information they cease to be simply a platform/market place.
The majority of issues (in my mind) resolve themselves when this data asymmetry is removed. Driver's have more freedom of choice if they can see all available fares rather than just a yes/no prompt on an individual basis, for example.
I also think there is far more gray area to these types of employment relationships that is generally acceptable when it comes to things like how you do the job, how you dress, etc. For example, if you are an independent delivery driver but enter into a contract with FedEx it is acceptable for FedEx to stipulate that you wear a FedEx uniform while delivering FedEx parcels. If you don't find that stipulation acceptable, you can decline the contract. Likewise, if FedEx discovers you aren't following contractual obligations they can terminate the relationship.
What does set your own hours look like? If I hire someone to mow my lawn, and want it to happen while I'm at the store, am I setting that person's hours?
What does decide how you want to do the job look like? If I specifically want them to use an electric mower for noise reasons, am I deciding how they do the job for them?
Ultimately I feel like we are trying to shoehorn a fundamentally new model into preexisting paradigms, and as a result we waste time haggling over who is what. It feels like instead we should just say this is a new thing, and create a new set of laws to regulate it in the way that we think is best.
Generally, contractors should have expertise, use their own equipment, decide how the job should be done, and have a risk of losing money.
If you insist they use your lawnmower, that's a very quick employee classification (from what I've experienced). My gardener refuses to use any soil/mulch/whatever we own - likely for this reason. I've worked with real estate folks, and when they do a flip, they're very careful not to buy raw materials for the contractors lest some of them sue to be classified as an employee and collect benefits. They'll even use SW to set up an order with Home Depot, which emails the contractor's a simple way to place that order at HD and pick up, and then they'll ask the contractor to add the raw materials cost to the invoice. But they will not buy the materials for them.
Also, if I screw up my current job, I'll merely get fired. My employer cannot demand I repay wages (generally). If your situation with your contractor is comparable, he will be classified as an employee. They must take on risk of losing money if they negotiate poorly or screw up a job.
> It feels like instead we should just say this is a new thing, and create a new set of laws to regulate it in the way that we think is best.
I don't think anyone is disagreeing with this.
In WA State (https://esd.wa.gov/employer-taxes/independent-contractors), there is a three part test. If you force someone to mow your lawn with specific equipment, and at a certain time, they would be en employee; they are not free from control.
When I order an Uber I can never get a ride from a 1980 Ford truck or a snowmobile because those vehicles don't meet Uber's standards and I'm actually scheduling a gig with a representative of Uber who adheres to Uber's standards and acts in line with Uber's policies and takes pay from Uber that is disconnected from what I pay them. There is virtually nothing "independent" about the driver except they independently chose to work for Uber. Yet the driver still bears the costs of equipment maintenance and liability, which happens to be the exact costs that business newbies overlook the most. It's exploitative.
> If I specifically want them to use an electric mower for noise reasons
The fundamental difference is you, as a customer, can want these things, but the person doing the mower is self-employed and they can negotiate and figure out whether or not they can come to a mutual agreement with you. They could also just simply not come to an agreement with you and the worst that would happen is they don't get your money, and move on with their work and life.
It's different than if there was Uber Mowing Co. that managed them and forced them to forgo their lunch and mow your lawn while you were at the store or be fired.
These two things are in fundamental conflict, which is part of the issue.
Are you even hearing how ridiculous this sounds.
The important thing is them passing on not doing your job won't affect their next one, unlike what happens if an uber driver declines too many rides.
But I don’t think your examples are relevant. The customer should be able to request as much as they want on the gig worker, as long as there is no middle man employer forcing the worker to agree to subpar conditions.
I don't think it's that clear - it's more like people are still arguing about a) is it really a new paradigm and b) if so, is it on net enough benefit to be worth doing.
Majority of tech contractors are actually employees of contracting company, so that is one way to get around it. At one point, I was freelancing, and I had only one client. My/their accountant had me open an LLC for this reason.
Now there are a lot of gig workers who are on all of the platforms and probably earn equal amount of money from each platform. But there are plenty who are only on one platform, so they will need to be classified as employees.
You're not setting your own rates. You can't choose which rides you take. You can't follow your own rules.
Remember when Uber was giving back to back rides to drivers that had Lyft driver app installed so they couldn't effectively drive for both? That doesn't sound like freelance work to me.
Much of the pay structure is based on hitting a certain number of rides per week. So to get "decent" pay rate you need to work a certain number of hours.
Sometimes the company even owns your car and leases it to you contingent on doing a certain number of rides.
And you have no input on which rides you get once you go online.
It's nothing like traditional freelance work. It's more like high tech pizza delivery driver. And those workers are all considered employees.
> You're not setting your own rates. You can't choose which rides you take. You can't follow your own rules.
As of a few years ago you can choose which rides you take without penalty. This is effectively how you negotiate rates as well. Only drive during busy times and accept high rate rides.
> Remember when Uber was giving back to back rides to drivers that had Lyft driver app installed so they couldn't effectively drive for both? That doesn't sound like freelance work to me.
The back-to-back ride thing has nothing to do with having the Lyft app installed or not. It's a great feature that allows you to have your next ride lined up while on the current ride. It dramatically increases profit and efficiency (which also means less dead-miles -> less gas wasted -> less emissions). You can decline these "back-to-back" rides just like any other ride request.
> Much of the pay structure is based on hitting a certain number of rides per week. So to get "decent" pay rate you need to work a certain number of hours.
If you drive when it's busy the incentives don't matter. My take home-profit (even after depreciation of vehicle) is $15-30/hr for about 20 hours per week.
> Sometimes the company even owns your car and leases it to you contingent on doing a certain number of rides.
I don't know any Uber drivers in my city who lease their cars from Uber. Never heard of this happening.
> And you have no input on which rides you get once you go online. You get all the ride requests near you. You can decline at will with no penalty.
Apparently, that was harming Uber’s business and they are considering removing that feature from the driver app.
https://www.sfchronicle.com/business/article/Uber-may-stop-l...
That wasn't there before and I have no reason to believe it now without evidence. Turning down rides always had negative effects such as less rides being assigned to you.
> The back-to-back ride thing has nothing to do with having the Lyft app installed or not
You should look this up in older news articles. AFAIK that's just not true. Maybe it's changed, but at one point Uber was changing their app behavior when you had Lyft driver app installed.
> If you drive when it's busy the incentives don't matter.
So you're implicitly agreeing with me that the incentives are perverse and encourage you to drive during peak times?
> I don't know any Uber drivers in my city who lease their cars from Uber. Never heard of this happening.
Then I encourage you to read about this. There's a large fraction of people who don't believe anything unless it's happened to them or their friends personally. And I think this is a shame given how available information is with today's internet. This definitely 1000% happens. I've seen it with my own eyes.
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There are also lots of Barbers who have to basically come in at certain hours to keep the barbershop open. Barbers however, are largely "gig" work by technicality. You're technically an independent contractor.
Etc. etc.
These sorts of positions are only "gig" because the companies are exploiting those workers. You really can't choose your hours in sales and/or barbershops. You gotta come in when the customers come in. You gotta close up shop and/or open up in the morning, (kinda like open / close employees / managers).
But they're "gig" because the companies want to avoid paying social security taxes, among other taxes associated with proper employment.
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Freelancing probably is a "proper gig". That's not the segment of the economy that people are talking about. There are true gig workers. And then there's the huge number of "non-employee / gig-work" where its just a collection of companies avoiding social security taxes.
Source: I like to get to know my barber's and every shop was run different.
Employees are taxed 6.2% by the government, and 6.2% to the Employer.
Gig workers are taxed 12.4% by the government ("self employed" tax). So in US-law, the government gets its money either way.
That's why a "gig-worker in name only" is such an advantage to companies in the USA. It allows companies to cut out 6.2% of its taxes and shove it to the gig-worker instead.
Gig worker sees the whole .124, which is probably why govt wants more classed as employee.
TANSTAAFL
that extra 6.2% isn't a tax on the employer at all! it is a tax on employment, and it really is part of the employee's taxation (in fact that 2 * 6.2% is a "socialized" part of the employee wage, that fraction of wage goes to the Social Security Administration to be put in a fund used then to pay out retirement pensions). Hiding this fact is the best part of tax: a tax you do not feel is the best kind of tax from the point of view of the tax collector... of course it is the worst kind of tax from the point of view of the taxed entity.
"Gig worker sees the whole .124, which is probably why govt wants more classed as employee." <-- that's right! however one could argue that everyone should see the whole .124 so that they know better how they are taxed (I'm not saying this level is too high, on the contrary I think it's too low, but what irks me is that it is done under the covers...).
There ain't no such thing as a free lunch
That doesn't make a lot of sense when the employee still has to pay the tax. Nobody is avoiding it. The claim that employers pay half is just a feel-good claim with no economic basis.
There is no real difference between paying $10.62 to a contractor who has to pay $0.62 more in social security tax and paying $10 to an employee and $0.62 to the social security administration. And the employee would (all else equal) choose a job paying $10 as an employee over a job paying <$10.62 as a contractor, so the companies hiring contractors have to pay that much more or offer some other countervailing benefit to be competitive.
Except the ads posted in your local bulletin board / signposts are "Want a job for $10/hr?!??"
So what happens in practice, is that the gig-worker is paid $10 (costing the company $10), vs the employee who'd be paid $10 (costing the company $10.62 + other bits, like health care and various insurances)
Give people some credit. The education system isn't perfect but people can do basic arithmetic. Or if they can't then maybe solve that instead of this.
Why not both? If a problem is identified with our culture, its not exactly a strong argument to say "Well, here's another problem I'm more concerned about".
All I'll say is: lets solve both problems simultaneously. There's many problems in the world, and we should work on solving as many of them as possible.
I've got friends (who were with me in that knife salesman gig work) who didn't understand the difference at all, no matter how many times I explained it to them. People's brains just don't work the way you say. Sure, I understood the difference and how to do my own taxes, but not everyone has that capability unfortunately.
Because they're alternatives to each other. You don't need both.
If people don't understand how to compare their alternatives, they're going to get screwed left and right, not just in the difference between employee and contractor. So we have to fix that more general problem if it exists.
And solving that problem means not only that you don't need to prohibit people from being classified as contractors but that doing so is a net harm. Because prohibiting it for the benefit of the person doing the math wrong (solvable the other way) is a harm to the person who benefits from the arrangement, e.g. because they want the more flexible hours that come from being a contractor instead of an employee.
Sure we do.
Our education system sucks (as proof by my friends who were unable to grasp this basic arithmetic). AND we have a Gig vs Employee issue that also needs to be clarified through the law.
Lets fix both. I don't see any problem working towards the problem you suggested, nor the problem I suggested. I'm sure our failure in education is also causing issues in other aspects of our society unrelated to this particular issue.
Fixing the education system solves both of them, because then people aren't fooled into becoming a contractor when it doesn't benefit them. Then you don't need the government to force them into being an employee including in cases where they're better off as a contractor -- you only need to do the first one.
Also, if you tried to explain it multiple times to them, maybe it isn't the education's systems fault? Like you said above, their brains are unable to grasp it. No amount of education reform is going to fix that.
Can you expand on this? Is it that employers don’t really contribute an equal amount to the employee withholding? Or is it an acknowledgment that absent this withholding, one would expect the money to show up in the regular paycheck?
Which means saying that the company pays this amount and the worker pays that amount doesn't really mean anything. In the case where the worker nominally pays less of the tax, the company doesn't have to pay as much to the worker to make the job equally attractive. It doesn't really change who pays.
Of course this is theoretical and real systems have friction and stupidity in them, so people who are lazy or bad at math may end up taking a worse deal because it was framed in a particular way. But that's an information problem -- it has information solutions.
Instead of spending all this time campaigning to classify people as employees, just send out pamphlets to all the Uber drivers with a cost breakdown of what the equivalent employee wage would be compared to what Uber is paying them. Maybe some of them will quit and then Uber will have to pay the others more. Maybe the people doing the job aren't as dumb as they're made out to be and have their reasons. Either way, you solve the information problem with information, not prohibition.
We came up with this agreement as a society that people should be able to survive and have their basic needs met, and then we forced businesses to actually make it happen through minimum wage (and to a lesser degree insurance, pre-Obamacare). If we came up with it as a society, our society (as represented by our elected government) should be the one actually charged with making that agreement a reality.
If UBI helps people do useful things like caregiving or job training, then it has achieved something.
If UBI just causes less (useful) work to get done, then it is a net harm to society.
Maybe it's good if it shifts investment towards automation that eventually improves productivity. For example, if paying Uber drivers becomes less attractive, maybe researching self-driving or investing in mass transit becomes more attractive; maybe that's good.
But things still need to get done, and money by itself doesn't do anything. In the extreme case you end up like Kuwait, where citizens get (in that case oil) UBI, and guest workers outside the UBI system do all the actual work.
The US could do that, and it might reduce inequality among US citizens, but new outgroups would become painfully apparent.
I suspect this instead leads to companies determining "nobody is willing to work at the prices we're happy to pay. Therefore there is a labour shortage; we need more immigrants, and we're happy enough to sponser them for a time"
Note they don't raise prices, they instead increase the applicant pool.
Boss makes a dollar, I make a dime, that's why I shit on company time. If I got paid fairly and had a seat at the table for discussions about profit sharing then I would plan my shits to not impede my work. Until then, big capital can keep blowing their hot air, workers don't care what these suits think and are realizing the suits don't even care about the health of safety of the workers themselves, let alone their ability to afford a family or house.
This is the big problem that no policymaker wants to address, because there is a huge amount of money being made off of the status quo. And decades of bad-faith "big government" rhetoric plus "starve the beast" policy have soured the public on it.
The people trying to pass things like Medicare for all would disagree with the “no policymaker” part. Not a majority but they exist and are generally vocal about mentioning this exact point.
Just wanted to note that there are systems which are not tax-paid and still avoid the problems that you have in the US.
E.g. in Switzerland health insurance is private, but the variables that can be used to determine the price are regulated. The employers cannot directly provide health insurance as a benefit (some provide a cash supplement, but that's effectively a higher salary). This way big companies don't get preferential treatment. You can be a freelancer and have the exact same health insurance as people in big tech.
Freelancers doing gig work are a drain on society if they fall back on to social safety nets when not employed. It's not in society's interest to have these people paying taxes only when they feel like it, especially if it ends up cannibalising slightly less efficient industry which reliably keeps people employed and paying taxes.
Not entirely serious - I do have sympathy for the position that gig work puts otherwise idle labour to good use - but I do think Uber and many similar companies are extracting efficiencies that hadn't been locked out with laws only because the tech to extract them hadn't been invented yet, a kind of regulatory arbitrage on a functional status quo.
In response to your second paragraph, regulatory arbitrage is efficiency seeking. I'm sure you're familiar with the phrase "vote with your feet". It's not like people move to a new job out of a state or out of country with the expectations that the laws remain same. In a similar fashion, Uber isn't obligated to base it's behavior on laws or regulations that don't exist. The same could be said of Paypal, Youtube, AirBnB and more recently with cryptocurrencies and NFTs. The way you phrase your sentences seems to suggest you classify pursuing economic freedom as a preemptive regulatory evasion.
This is completely irrelevant. I'm talking about policy-making. I'm talking about the motivations behind making the rules, not how you work within the rules.
> regulatory arbitrage is efficiency seeking
That's right. I think that's what I said.
> economic freedom as a preemptive regulatory evasion
No, but policy-makers are free to take that approach, because they create the rules. If the rules don't cover new behaviour, the motivation - the original political will - behind previous rules often, and in fact usually, creates political will to introduce new rules. That's ok, it's the system working. It's why we have governments on an ongoing basis, and don't just stop once we have one set of laws.
Should that be up to the freelancer? Ever Uber driver I’ve ever known knows their costs down to the cent. That’s what freelancing is all about.
What would be more valuable is required financial literacy courses as a condition of high school graduation. And restricting predatory student loans. But the Big University lobby would stomp that effort out quickly. Education has had higher inflation than even health costs — due almost entirely to the funny money from essentially unlimited student loan availability.
Look at the current situation where there is a 50-50 tie in the Senate, but existing rules create a 60 vote threshold for most legislation. There are a whole lot of issues that I'd like to see reform on, but right now the votes are not there for either party to do so.
Effective lawmaking is not some impossible feat under our current system, it was commonplace until very recently. All that has changed is that we've grown complacent and now continue to vote for those who refuse to do their jobs.
In my small shop of guys, we ended up having to all independently form our own corporations just so that we can share work amongst eachother to better serve the various clients we each bring in without having to do stupid things like write 3 separate contracts with the client. We don't meet the new ABC test because we all perform a similar scope, so whereas before, it was trivial to just write a 1099 for eachother at the end of the year, now we have to have all the corporate infrastructure which is a huge PITA.
It's not unlike the gun laws in CA... People that don't like guns and know nothing about them write meaningless and often incredibly arbitrary legislation that doesn't address the problem they are really meaning to address but makes things a pain for everyone else.
So, I don't really buy the argument that these types of complaints should just be dismissed. The reality is it's really hard to target "gig" work very specifically without roping in a BUNCH of other contractors that aren't really of interest but will have to comply with the law anyway.
If the worker does a good job does that impact their marketability -- enable repeat customers and advertising for them specifically (such as via word of mouth) or does it reflect more on the company they are "contracted" to?
In the case of Uber and Lift and Instacart, the platform practically prohibits customers from preferring certain providers that have provided good service in the past, so all of the reputation goes to the platform provider. Things would be a lot fuzzier if these platforms provided matching services and would depend on how competitive these markets effectively are. The market for transportation from point A to point B with pickup in the next 10 minutes is inherently limited by providers that can be at point A in the next 10 minutes, so this market may not be competitive for all sources and destinations.
In general, contractors should not be interacting with their hiring company's customers on the company's behalf. Only employees should represent the company, since the benefits of those interactions reflect on the company and not on the worker performing the interaction.
It is a good thing for the leader of a government department to have ideological goals broadly aligned with the mission of the institution.
The man heading state labor policy is a "product" of the labor movement. Is that supposed to be a scandal?
> easier for the AFL/CIO and Teamsters to unionize them
Good.
If unions aren't doing that because they are compromised or sclerotic or whatever, then they aren't much use. Who would argue.
(new account, long time reader, victim of poorly self-managed passwords)
The legit concern is whether Uber or any other freelance company misleads its gig workers on their earnings, and to me the best solution to that is not to force reclassify them as employees or prohibit gig work, but to regulate transparency in compensation. For example, require freelance employers to include expense tracking and calculate workers earnings after expenses. That by itself would fix most of the problems for the percentage of gig workers who don’t realize they’re extracting depreciation from their car more so than getting paid by Uber.
The other issues of healthcare, etc., the US needs to solve at a societal level, not an employer level. I think humans have a right to health care. But I don’t think people have a right to a particular job, nor an entitlement for that employer to provide a particular mix of benefits.
This idea that we need to provide our social contract / safety net exclusively via employers is so strange to me, compared to simply owning that if we want these to be rights of our citizens then the government should be providing them as tax-paid services.