Wanted to chime in with my $0.02 regarding barbershops. My family owned a salon growing up. I’m sure you’re right and abuses exist. But in my experience, the shop is a landlord. The independent contractor rents a chair. They can come/go at will. Having a schedule is useful so not everyone is there the same time fighting over walk in traffic. People regularly no show and that’s ok too.

That may be how your families shop was run, but your experience is not representative of the industry at wide which uses various schemes to staff their shops from straight hourly, tipped, rented, etc.

Source: I like to get to know my barber's and every shop was run different.

You say barber and I say salon so I wonder if that’s part of the difference. I tend to go higher end places where women are the main customers. I know my stylists too and it’s almost always either been rent a chair and a few W2. Also my experience was a collection of talking to every stylist that ever worked in our salon and that’s a lot because churn is high. But I’d not be surprised if what you’re saying is also true. I have no idea how the chains are ran for example (Supercuts, etc)

That's a good point. One suspects tho that governments are more interested in getting the "proper freelancers" to be treated as employees, since they usually have higher earnings and therefore offer higher revenue possibilities. The UK is going through a similar reform process right now and lots of people are being classed as employees and therefore taking massive pay cuts. End the end, you end up with temporary workers who're taxed as employees but have almost none of the benefits of permanent employees (in the UK at least).

In the USA: the government gets its cut no matter what.

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.

The total cost of an employee isn't different to the employer in either case. For any X which is the cost of an employee .124X goes to govt. When .062 is sent to govt directly from the employer the govt is effectively hiding .5 of tax liability from the employee.

Gig worker sees the whole .124, which is probably why govt wants more classed as employee.

TANSTAAFL

"the govt is effectively hiding .5 of tax liability from the employee " <--- this. this is the important part.

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...).

>TANSTAAFL

There ain't no such thing as a free lunch

I wouldn't mind changing this.

> 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.

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.

> 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 contractors have to pay 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)

Which lasts until you send them the documents showing the real numbers and they figure it out.

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.

> 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.

> Why not both?

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.

> Because they're alternatives to each other. You don't need both.

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.

> 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.

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.

I agree we need to do both.

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.

> The claim that employers pay half is just a feel-good claim with no economic basis.

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?

If two jobs are equivalent, workers are going to pick whichever one pays better. That means if Walmart is offering $10 to employees and Target tries to offer $10 to contractors (who have to pay more of the taxes), workers will take jobs at Walmart because they get a bigger paycheck. Target will have to pay more if they want to get people to work there as contractors by an amount equivalent to the difference in taxes.

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.

What if the minimum wage for employees in the jurisdiction is $10?