The regulation that this article tries to pretend is the problem is actually what protects so many people. Uber drivers are not harmed because the government doesn't recognise them as independent contractors, they are harmed because they aren't recognised as employees. Independent contractors should hold the power in the relationship not the other way around. As it currently stands independent contractors are just a way for companies like Uber to avoid paying taxes, sick pay and any other number of hard fought rights.
I agree a company like Uber and their workers' incentives do end up misaligned in certain ways, and when that happens the contractors often end up losing. But that is all because of this system that we continue to perpetuate, for really no good reason imo. As I heard it phrased by an economist once, why do we look to the government to create jobs and look to private corporations to protect workers? Surely the incentives & competencies would be better aligned the other way around.
If all of the basic, expected workers' rights that we've come to expect were decoupled from full-time employment, surely removing that friction from both workers and companies would be beneficial to the economy.
A couple years ago I left a full-time job to work on a new startup and the overhead was surprisingly stressful - making sure to set up COBRA correctly because it's all but impossible to find good health insurance as 3-person company, and if you do the process wrong you just won't have health insurance for the year. Your 401k was tied to your job so you can't keep contributing without setting up some other system. And this was just transitioning to a new, funded company, I imagine quitting to become a freelancer or independent contractor would be even more confusing.
I suppose it's in companies' best interests to keep this stuff convoluted and keep themselves in the position of power by having built up the knowledge of understanding this stuff. But if we passed laws to change these expectations (Obamacare is at least a step in this direction) so that companies just paid cash and it was reasonable to set up these things yourself, it would make workers' lives so much simpler. And our society wouldn't have to keep having this argument, plus all the lawsuits that stem from it, about whether or not Uber or anyone else should be covering more of these "benefits" for their employees.
> But if we passed laws to change these expectations (Obamacare is at least a step in this direction) so that companies just paid cash and it was reasonable to set up these things yourself, it would make workers' lives so much simpler
You can go one step ahead and make it completely automatic: you get health insurance the moment you are born. You retire the moment you need to. You are automatically insured against unemployment and other mishaps. You get free schooling for as long as you need. It can all be funded by taxes, personal and corporate.
"Surely the incentives & competencies would be better aligned the other way around."
Or, make it easier for Uber drivers to form a union or do other forms of collective bargaining. If there is a more equal balance of power, it should reduce the need of the government to be involved in setting the rules.
I agree with your point that health and retirement benefits should not be coupled to the job.
I don't disagree with you that those are problems, but isn't the low friction to "hiring" an Uber driver, or renting your room on AirBnB, or picking up odd jobs via Postmate, part of what allows them to function?
Some of these are a bit more like real independent contractor relationships than others, so I don't think entirely the same questions are implicated. For example, someone renting rooms on AirBnB can set their own rates, house rules, minimum/maximum stays accepted, etc., which makes them much more like an independent contractor merely using AirBnB as a storefront/marketplace, than like an AirBnB employee.
Signing up for a job as an independent contractor agreed upon by both the contractor and the company...and then after the fact being told that they are actually employees isn't protecting either party involved in the initial agreement. It's using the government to protect OUTSIDE parties by by crippling the business with additional expenses.
Before the overreaching government stepped in and got in the way, parents had the freedom to get gainful employment for their idle children.
Some parents even took it upon themselves to increase their productivity by having the kids do piecework at home. For example, 6 year olds were able to roll cigars at home.
What is the premise of your argument here? That bad things happened in the past so there's now no such thing as too much regulation?
Because child labor existed we should now consider independent contractors employees...?
Care to actually provide a somewhat coherent response instead of baselessly denigrating the parents ideology and implying it represents forced child labor.
I find this kind of cheap, tangentially related strawman so intellectually lazy it's actually offensive.
Your argument for why Uber's workers should be able to sign themselves up as independent contractors can be used to show that children should be able to work in mines, fast food workers should be able to work for minimum wage, and generally that employees should be able to sign off on giving up any and all employment rights.
The point is that either you need a new argument, or you actually believe all of those things.
Keep in mind that I have not actually taken sides on the issue at hand; I'm just claiming that your particular argument is a bit flawed.
My argument is that as a legal adult you should have the ability to make your own decisions. Children in mines do not apply. Kids working for McDonald's at 16 do not apply.
Grown adults should ABSOLUTELY be able to sign off on giving up any and all employment rights if they so choose, as long as they are free from duress when making that decision.
If you can agree to volunteer at a company you should be able to agree to any level of compensation above "volunteer". It is simply, your choice. Nobody is forcing you to do it.
It wasn't my arguement. Care to clarify which argument you're attributing to me?
>The point is that either you need a new argument, or you actually believe all of those things.
No. I can't find one arguement in the thread above that requires 'believing all these things'
-children being able to work in mines(appeal to emotion) is tangentially related we aren't even discussing child labor here.
-fast food workers should absolutely be able to work for minimum wage, I did. Should it be raised? I think so, but again this is a tangentially related appeal to emotion.(seriously what did you mean with this one other than 'feel bad for poor people'? How is minimum wage relevant in this context?)
-Employees should be able to sign off on all employment rights?
Look a relevant point, and generally I agree they shouldn't be able to.
Can you please clarify exactly how this arguement of mine can be used to show the three things you've outlined?
Edit:
The funny thing is I don't even disagree with you or the grandparent on the underlying issue here, I just find this constant strawman bullshit so grating.
Apologies for confusing you with brightball; I didn't notice that you jumped in after the back-and-forth.
The entire argument put forth was that the government can't annul a contract agreed upon by both parties (even if it is illegal under current law). Which is how pretty much all labor laws. It is a completely generic argument. Once we admit that there are exceptions (oh, but children can't form a contract!), the generic argument has been thrown away.
Society reached consensus a long time ago about what an employee is and isn't. Companies have been nipping at the edges of this for years to push more risks on "independent" contractors, which in reality means pushing business risk to society at large.
...Which I think would be fine - employment liquidity seems good just like monetary liquidity - except that we do a shit job of providing benefits (like health insurance, and maternity/paternity leave) via the government.
Making them employees of Uber isn't an answer. Making a Union isn't an answer (I don't think; again, too much overhead, and the point isn't negotiating power anyway). Government probably isn't an answer (regardless of "should", look at effeciveness). Maybe needs a rethink from first principles?
> employment liquidity seems good just like monetary liquidity
Right, but such liquidity is formed either on the basis that individuals don't have to work to survive, or on the basis that employees are so scare and desirable that mobility becomes a non-issue.
I don't disagree that we could address some of these problems by starting over from first principles, but that kind of change takes lifetimes to implement -- we still have to do something about the current people.
Of all those you mentioned, this is the only one that applies:
* When 'this task' classifies you as an employee of the payer and the compensation is under the minimum wage.
That part right there is the problem and is why the entire issue is ridiculous. Every contract programmer should be an employee of the company that they are contracting for. Staffing firms should virtually be out of business. The only thing that minimum wage laws do for society is widen the divide between "Volunteer" and "Paid" because everything in the middle is deemed illegal for reasons that provide no discernible benefit to society while decreasing available jobs and encouraging companies to simply go to countries where they don't have to deal with:
"Well, I can afford to pay you $10 / hour for this job and I realize that you want to take this job for $10 / hour because would be very beneficial to you right now but unfortunately the state says that's not enough so I'm going to have to hire somebody in China for $10 / hour instead. Hopefully the welfare or unemployment office can help you out. As you are aware, the state knows what's best for two people to decide is agreeable."
It has always been illegal if an employer tells you you're an independent contractor but without meeting the requirements of an independent contractor relationship.
Last time someone ignored that, it cost them $240 million. I'm interested to see how much it costs Uber.
Taxis and public transportation systems SUCK. At least within the Los Angeles area.
It's obscene to pay regular taxi fares. You can take the bus but good luck getting anywhere within a reasonable time and with the risk of some stupid random event that slows the process down. Not to mention the cognitive taxation of being around strangers of varying quality. It's not something you think about until you're in the bus and you're standing up and the guy behind you smells and the bus is stuck in godamn traffic and you have 30 more godamn stops to go...
Uber and Lyft and the other ride-sharing apps are positively godamn humanitarian in comparison to having to use the other options.
I have strong feelings because discussions that focus on the needs and wants of bus drivers and taxi drivers ignores the heavy taxation laid onto the customer for the crime of not having a car (at least in LA). I would rather a hundred thousand more rides accomplishing the personal goals of a hundred thousand people than a thousand pensions for a thousand bus drivers.
As a fellow Angeleno, this mirrors my experience. Public transit is getting better, but it's still not there, and the taxis pretty much suck in all the ways it's possible to suck. Worse vehicles, worse drivers, worse prices, more hassle.
(I think the next hurdle for LA Public Transit is express busses / trains, that DON'T stop everywhere.)
Except if ride sharing services are hobbled, a great public good is hit in the knees in favor of ideological adherence.
I don't think the same standard of employee protection applies to something like being a driver. I don't think you could apply the heavy hand of regulation without fucking over more people than you think. The moment you get the modern state on in, you get professional rentiers sniffing out any holes they can put roots in.
This isn't children being abused by clothing factories. These are an entirely new class of people and provider who are enabled by the fact that the regulatory appartus doesn't choke them before they even make their first step.
The problem is competitive market forces, uber does not increase the number of people who want rides enough to offset downward wage pressure. Supose you work 30 hours a week for minimum wage, uber unlike most jobs lets you back fill even sub minimum wages after costs. So now those workers displace people unwilling to work random shifts as needed and taxi drivers who can work below minimum wage creating an ever growing downward spiral.
In the end when one player gets to ignore the rules they will do so making things worse workers industry wide.
Do you realize that these companies would never have existed in the first place if they had to do those things?
It's objectively better to have Uber and not regulate it than to regulate it and not have it. And make no mistake, that is the choice that is being made here.
> It's objectively better to have Uber and not regulate it than to regulate it and not have it
How is that "objectively better"? What's the limit on regulations that, in your opinion, should be removed if they threat Uber capacity to make money? Or there is no limit?
I think it's pretty reasonable to let two consenting adult parties enter into a short term agreement to provide a ride in exchange for a fee. An Uber driver doesn't have to show up to work in the morning - they can look at the rate on offer at the moment and decide whether or not they feel like driving. You could be an Uber driver for 1 hour a month if you wanted to. It is about as independent as a contracting relationship could possibly be, and I see no reason for the government to interfere in that extraordinarily simple, non-coercive relationship.
If you don't like Uber's terms, just don't drive for them. If you only feel like it's worthwhile to do so when the fares are high enough - wait until they are, if enough people agree with you, then the fares will rise on a permanent basis.
> It is about as independent as a contracting relationship could possibly be
I completely agree that is really independent. And that is what leaves one of the sides completely unprotected. At one side you have Uber that has a big business (that can mean a lot of investors around the glove), lots of money and lots of drivers. It can decide unilaterally to increase/reduce prices as it is better for them. At the other side you have a lot of drivers competing for a small part of the pie. They cannot change anything else than stop working for Uber, and that has a negligible impact on the big company. The only way to compensate for that is for drivers to create an alliance that allows them to actually be able to have negotiation power. And THAT is what the government does with regulations and taxes. They are representing the citizens that want a better quality service, they are representing the citizens that want to drive for Uber and have a fair pay.
Isn't reasonable to let consenting adult citizens to enter into a long term agreement to provide companies, employees and consumers with fair negotiated norms? Why is Uber allowed to bring capital from as many investors as they want while the drivers should not be allowed to organize themselves?
Ya, I agree they are in a much weaker bargaining position. But I guess the way I see it is that at each particular moment, these drivers are making the conscious choice to continue driving.
If at any moment they feel like stopping and looking for other work, they're totally free to do that. So on the one hand, Uber does set the prices and has lots of leverage because of that - but on the other hand, they are pretty beholden to the drivers, because if they set the prices too low, they won't drive. And that might sound a little hollow, until you remember that in most places they aren't even profitable - even though of course they could be if they were willing to lower rates enough. But they must not feel like they have the leverage to do that. Which, IMO, is pretty strong evidence that they don't have undue power if they can't even get themselves a decent margin yet.
I guess from my perspective, when a relationship between two entities is, to this degree, transient, transparent, and independent, it's really hard for me to feel like one of the parties is being exploited to a degree that requires government intervention. If people didn't feel like being an Uber driver was benefiting them, they simply wouldn't do it, or they'd only do it when there were large surge pricing premiums available.
> It's objectively better to have Uber and not regulate it than to regulate it and not have it.
That's a really big assumption and non-obvious.
Uber is currently subsidizing ride costs with VC money. Uber can succeed in driving a lot of taxis/ride services out of business before the VC money shuts off and it implodes leaving people without ride services.
Airbnb can improve the efficiency by moving more people through unused housing. However, that can take away from long term rentals, and also brings problems with it like vermin (bedbugs, etc.) and transient crime.
Whose responsibility is it to clean these problems up? How do we clean those up? Or, do we regulate sufficiently up front that when damage is being done we have some limit to it?
I don't consider it an assumption. Uber reduces transactions costs, increases competition, and improves the user experience of hailing a taxi. They are eliminating deadweight loss.
It is a quantifiable fact that the harm done to taxi drivers is outweighed by the jobs given to Uber drivers (quantifiable in the sense of dollars paid out - Uber has increased the size of the market).
> Uber is currently subsidizing ride costs with VC money. Uber can succeed in driving a lot of taxis/ride services out of business before the VC money shuts off and it implodes leaving people without ride services.
They are actually profitable in the US. However, this is true in many other markets, though I don't really see how its relevant.
> Airbnb can improve the efficiency by moving more people through unused housing. However, that can take away from long term rentals, and also brings problems with it like vermin (bedbugs, etc.) and transient crime.
Why is it a problem if it takes away from long term rentals? And i'm not sure how it would increase vermin, bedbugs, or transient crime, though i'd be curious why you think that might happen.
> Whose responsibility is it to clean these problems up? How do we clean those up? Or, do we regulate sufficiently up front that when damage is being done we have some limit to it?
If there are indeed negative, uncaptured externalities from these things, I think it's fair to price them in accordingly, through some sort of tax or similar system. But i'd like to see better evidence that these externalities are real.
Uber, in its most profitable market, currently makes an average of $.19 per ride[1]. These regulations would substantially more than destroy that margin.
And that isn't even addressing the fact that driver liquidity would be worse because it'd be harder for people to start/stop ubering at will. Which would create inefficiencies whereby they'd have to probably maintain an oversupply of drivers just to meet demand, further compounding their profitability problem.
> These regulations would substantially more than destroy that margin.
Why is that bad, though? The customers (or at least some of them) would go back to taxis, and then either taxi drivers/companies or customers would capture the $.19 that Uber was previously taking. It isn't immediately obvious why that would be worse.
Well, because every single person on earth would be slightly worse off. The size of the ride-hailing market would contract to pre-Uber levels, for one. This means fewer jobs for drivers and fewer dollars paid out overall. The liquidity of the ride-hailing market would go back to taxi-levels. You'd have to carry cash, and the rides would be slightly more expensive.
These might seem like relatively inconsequential details, but the sum of them over an entire economy adds up to billions of dollars of deadweight loss. And in an era of slowing growth, we really shouldn't be throwing these things away because it makes some people uncomfortable.
And yet you are dodging the argument again -- the argument is that allowing Uber to dodge all regulations is bad for Uber employees (while it is of course better for customers). And Uber is not the only company capable of writing a simple mobile app for taxi services. Taxi services certainly can do it (it is not hard) and will.
If it were the case that allowing certain companies to use slave labor were good for the economy (it is) then should we allow that as well? It would make every single person on earth better off. Well, so long as I don't include the slaves that's the case, but as you've chosen not to include the Uber drivers in your characterization I think that's fair.
> And yet you are dodging the argument again -- the argument is that allowing Uber to dodge all regulations is bad for Uber employees (while it is of course better for customers). And Uber is not the only company capable of writing a simple mobile app for taxi services. Taxi services certainly can do it (it is not hard) and will.
I disagree that it is bad for Uber employees. Yes, if you regulate Uber, the employees that remain will be better off. However, there will undoubtedly be fewer of them, and they will have a much less flexible relationship with their employer. Those are real costs that you can't simply ignore.
> If it were the case that allowing certain companies to use slave labor were good for the economy (it is) then should we allow that as well? It would make every single person on earth better off. Well, so long as I don't include the slaves that's the case, but as you've chosen not to include the Uber drivers in your characterization I think that's fair.
It is, at best, arguable whether slavery is good for the economy [1]. However, that doesn't really matter, because slavery violates basic human rights. Two consenting, informed adults entering into a voluntary, temporary agreement to exchange a ride for a fee violates nobody's rights.
>Uber, in its most profitable market, currently makes an average of $.19 per ride[1].
If Uber can't pay real wages and benefits to their employees because they make a margin of $0.19/ride, their business model is pathetic and deserves to be replaced by something more productive and efficient.
Uber already produces enormous amounts of consumer surplus. Two examples would be making it possible to get a ride while black and making it possible to get a ride while in San Francisco. If you feel they should go out of business unless they can live up to your standards cool but taxi regulators will be just as effective at protecting consumers after Uber goes out of business as before it existed.
Most of the problems with taxi drivers (and taxis) is that they are independent contractors. If you think you can offer a better service by controlling what your employees can and can’t do then that is fine, but don’t pretend that they are not employees just to get out of paying taxes and benefits.
The specific group of people is the voting populace of the United States which has clearly defined the minimum wage that is allowed to be paid to an employee and also legally required benefit structure.
They get to decide because they are us and we vote to prevent brutal gilded-age era exploitation and abuse by companies, who are unbelievably powerful and can essentially decide on any terms in the employment contract which workers must accept, unless we vote to make them illegal.
I think Uber drivers should be able to decide what "real wages and benefits" means, and they should have the right to make that decision collectively if they so choose.
I think they get to decide it because they are the ones most directly affected.
The other option is Uber, but I think there's too much of a conflict of interest. Uber's primary interest is to maximize profits for Uber, not to maximize the profits of its subcontractors.
Believe or not, there are people who like to have such relationship. The last thing I would like to see is the end of the freedom of choice how you want to be employed. There is a lot of advantages of not being recognised as employee - like minimal exposure to internal politics, zero red tape, tax efficiency, ownership of your time outside of contract and so on.
