my concern is that the value "created" by startups like uber and taskrabbit come not from displacing large and slow incumbents (e.g., taxi dispatchers & courier services) but from shifting economic risk onto disempowered individuals.
the people who pay (largely the top 20%) see value in at least two ways: (1) greater certainty of commodity products & services and (2) lower prices.
the startups themselves are shielded from market risk, particularly on the supply side (labor), because they have disproportionate power over labor, which then smooths out profit by automatically matching costs to revenues.
taskers bear all the market risk while also giving up traditional employment benefits. the value of this shift is passed on to the consumer and to the startups themselves (capital), leaving taskers in even more volatile economic circumstances.
by the way, i'm distinctly not condemning the startups here, because they're only part of larger economic trends that they have little control over. now that the structure is in place, they can't do much individually (e.g., if one tried to raise prices to raise wages, they would be competed out of the market).
Not only are they shifting risk onto workers, but they are replacing small, local, owner-operated businesses with Wall Street funded national corporations. They're seeking to put people like my cleaning lady (who runs a small business with a couple of employees) or the local Chinese laundromat out of business. I'm not saying that's a bad thing (frankly, big Wall Street funded corporations are much more efficient than small local businesses), but I do detect some cognitive dissonance in people who rail against big corporations but also support companies like Uber.
Of course I think it's still possible for a small owner operator to use one of these services to gain a consistent customer base (and even get referrals from that customer base) and then cut out the big corporation that gave them the contacts in the first place. And operate on their own.
Work like this is done on relationships. I'm still using the same painter for projects that was referred to me by a realtor that sold me a property. Although there are tons of other painters I can get bids from (cheaper) I'd rather go with someone that I've used that I know can get the job done with little aggravation.
that's certainly true, but there are no economies of scale to that model, so those small, disaggregated market players will have little to no effect overall. at best, collectively they may have a minor bounding effect on wages but that's unlikely to change the overall market dynamics (even the US, as the largest oil consuming country in the world by far, cannot dictate the price of a barrel of oil).
Efficient for whom? Starbucks and Mc Donalds sell worse and more expensive products than local places. Amazon is cheap, but I'm constantly getting damaged books (bent pages, water damage, single pages that are printed in light gray instead of black ...) and scratched DVDs. I've never seen any of this in a physical bookstore.
When I went back to the States recently I was shocked by just how bad Starbucks coffee has gotten. And, it was not predictable at all - the three drinks I got there (all the same drink) were each terrible in their own special way. The only reason I went back a second and third time was sheer morbid curiosity. I didn't bother going to a McDonald's, but then again McDonald's was already like that when I still lived in the US anyway.
Starbucks coffee in Japan isn't great, but it isn't fucking gross either. And it is very, very consistent.
I would't know about McDonald's, but at least where I live Starbucks offers a lot better and in many ways different service than local cafes. It's also very different from what I have seen in the US.
I made a real effort to go to the local places, but they just don't offer what I need. In a Starbucks you can come in and sit for a few hours reading magazines, studying or working. Nobody bothers you. The place offers a variety of couches, chairs and tables which you can pick based on what you plan on doing. In a local cafe once you're done with your coffee or tea you get pressured into leaving by constant questions about your other orders. Local cafes offer uniform seating which often is completely unsuitable for a laptop or a stack of books.
Fast food places killed off all the poor quality local places, so the only ones who can survive are those who are either dirt cheap (e.g. food trucks, hot dog stands), have a captive audience (e.g. movie theatres, ball games), or are low capacity so can't compete with the quickness of fast food.
But before this, you could see poor quality local food places on highways. McDonalds and co came in and create a price/quality floor. You couldn't be worse than them.
You could argue that the regression in quality is efficient. If Item X is comically flimsy yet 99% of consumers never use it more than once or twice, it could be seen as an economic win to avoid wasting the resources to make the good high-quality.
How do you get scratched DVDs from Amazon? I didn't think it was possible to scratch a DVD inside its case, without literally crushing it to splinters.
In Europe customers have the right to return online purchases within one or two weeks. It is possible that a previous "customer" damaged the DVDs and returned them.
In that case, excellent online stores would sell the items in a separate category at a reduced price.
can you explictly define "disempowered" here? Because I drive for lyft and uber and I know I can quit any time (although it's become precarious of late, I now have substantial savings and investments underneath me that can help keep me afloat if TSHTF). Moreover, the work has enabled me to launch a nonprofit research effort (details in profile).
On the other hand, I used to work in academia which came with accoutrements such as 'traditional employment benefits' but is incredibly exploitative because there's an absolute lock on the labor market. A PhD in biochemistry with years of experience can expect a ~35,000 salary in an expensive city. But you know, health benefits.
Of course, economic risk has always found a way to be foisted onto disempowered individuals. A history of corporate bailouts and crony deals that stretch back to the 19th century are examples of this; socialism is not really that much better, although the disempowerment is typically 'political' instead of 'economic'.
You'll have to explain to me how exactly does, say, uber, have 'disproportionate power' over labor? As a driver, I can log out whenever the heck I want and go to a job interview, and they'll never even know that they were competing for my unit of labor. Heck, I can even work for a direct competitor and seek rides from both simultaneously.
I drive for Uber too, or used to anyway. I applied because I heard stories of drivers earning $2k in a weekend during a conference which seemed like the perfect side income source. After a number of drives I jokingly told my coworkers that I'd quit because the money seemed easy. But then uber dropped their rates and I went from earning $35 / hr to $20. And now all of a sudden I had to work twice as long to make the same income.
It wasn't worth it for me to continue as I value my free time from my normal job more than $20 /hr. But there are many more people who don't have that luxury. There are drivers who sunk in a lot of money to become drivers - bought cars, dropped jobs, moved cities, etc. When a company has that power to cut your wage so easily with the sending of an email or text message, that's disproportionate power.
It's actually the opposite of disproportionate... It's proportionate. Firstly, these aren't wage jobs, so you're not entitled to a definite hourly yield. Secondly, if they lower their prices then they lower their returns too because it's a fixed commission. Thirdly, it's possible that a lowered price results in improved profits, if the frequency of rides go up. I've seen nearly no change in hourly profits despite lowered prices.
And I do think Uber is very sketchily overestimating their driver performance in their recruitment efforts. And I think the extended line of credit for car purchases was dumb, but I didn't take it.
Also your analysis has this problem -- by your argument, drivers who are more willing to accept a slimmer margin are "more powerful" although those are exactly the "economically disenfranchised" drivers.
that's awesome you were able to do that. but i think you might have been one of the lucky ones who got in when the dynamics weren't quite as unbalanced. uber, lyft, et al. needed initially to entice drivers to the platform so paid more to jumpstart the labor supply.
the disproportionate power i'm talking about is the ability of these companies to unilaterally decide the terms of the contract with labor as a whole (and really, they don't have as much choice as this makes it sound). yes, you can choose to accept or not accept, but your decision has no bearing on the market dynamics because you have no power to dictate the terms for which you'll work (e.g., you couldn't demand an extra $5/hr). part of this is because the fluidity of fractional employment means that labor supply can instantaneously fill demand--there's no longer a penalty for an employee leaving.
so uber and lyft[0] have "disproportionate power" because they operate a marketplace of drivers, and some of these drivers have a sense of entitlement that they should be paid X, but actually there are even less fortunate individuals that these companies are empowering because they aren't as entitled and are willing to be paid X - δ. Are these X - δ drivers victims or villains?
Keep in mind that uber and lyft aren't so powerful that they can force drivers to drive pro bono.
[0]sidecar lets drivers effectively set their own rates, so the effects of being too entitled about what you're owed become clear pretty rapidly if you're counting on it for a steady income.
you have no power to dictate the terms for which you'll work (e.g., you couldn't demand an extra $5/hr)
That's right. And if there is zero market on the passenger side, you can't demand squat. Maybe Uber and Lyft should unilaterally raise their rates to $10/mile and $100/hour for the benefit of their drivers. What Uber and Lyft are doing is just price discovery. Now that may seem unfair to the driver, but the flip side is if you charge too much, people don't use the service as much, and start getting into drunk accidents.
For quite a few of these "micropreneurs", the "disproportionate power" over them comes is about at least two things:
* The "micropreneur" jobs outcompete traditional services with their lower labour cost. Because of this, the job interview you refer to is more out of reach than before.
* They do it out of economic necessity, to survive. They don't necessarily have the possibility of quitting. They are not like most HN visitors: healthy, well educated, mostly white and male.
Freelancing is a luxury when you can relatively easily get a filthily well paid consulting gig. Like probably you and I could. It's an entirely different story when you have to hustle...
Are you seriously trying to privilege check? I made less than "minimum wage" as a postdoc (salaried, 80 hour work weeks). After I quit my job I was at zero dollars in my bank account within a month. Have you actually met any of your Lyft or Uber drivers? They're not idiots, they are aware that things can get precarious. Your argument basically infantilizes them. Good job.
Yes, this is a recurring trend over the last few decades. Sharing economy companies are only one more piece in an accelerating trend. Yale Political Science professor Jacob Hacker wrote a book about this, called "The Great Risk Shift", you might find that an interesting read to help work through the ideas you've expressed in this piece (which, in my crude opinion, are on point).
i'm afraid that with the ever greater concentration of wealth in the US that there will never be a strong enough economic cycle to deplete the fractional labor supply. i'd love to be proven wrong though.
I find it amazing that these companies have gotten "sharing economy" to stick. I seriously don't get it. People are buying and selling services, and companies like AirBnB, Uber, and TaskRabbit are the middlemen facilitating these transactions. Nobody is sharing anything any more than Starbucks is sharing a cup of coffee with me in exchange for money.
"To share" means "to use or enjoy something jointly or in turns" (source: http://thefreedictionary.com/share). I hear Starbucks customers generally receive their own coffee each.
Note also that sharing does not imply "for free". It simply implies more than one person using a given resource.
OK, then by that rationale every time I stay at a normal hotel I'm "sharing" it with the other guests who have stayed there before? It's a misuse of the word, plain and simple, popularized by well-financed corporations that want to be seen as altruistic populist movements as they skirt the current laws/regulations.
I get that there's a real distinction between these new companies that facilitate peer-to-peer transactions. But I'd much prefer a term like "peer economy" than "sharing".
Taxi service doesn't allow you to easily share your car and hotels don't allow you to easily share your flat. Traditional renting of an apartment is a long-term proposition which again inhibits sharing.
> Taxi service doesn't allow you to easily share your car and hotels don't allow you to easily share your flat.
Sharing your car or home (whether the latter is rented or owned) is very easy without apps and people have been doing it for just about as long as cars and homes have existed. What the apps facilitate is making money from arms-length rentals to strangers. This may be a form of sharing, but even if so its a fairly specific one with its own name, its just that using an accurate and specific label rather than a misleadingly general one doesn't make as good marketing copy -- "sharing" sounds warm and friendly and positive, "rental" not so much.
Sharing your car or home involves a substantial risk and requires trust so people have traditionally been doing it mostly within their private networks of friends and family. What Uber, Airbnb and the like have achieved is the application of technology, reviews and rating schemes to build and scale these trust networks up to sizes that are more practical for a society.
The term comes from those who have been empowered by these services to go into business sharing what they already have, e.g. sharing their residence with Airbnb, or their commute to work with Sidecar.
Obviously people aren't sharing these things for free, but they are sharing them nonetheless.
I think programmers should remind themselves how fortunate they are, to have skills that are both enjoyable and in demand.
It's an entirely different economy out there, for most people. Average citizens would love to have recruiters as a
"problem".
I think the sharing economy is a net benefit – I doubt it's preventing the creation of stable jobs. But we would do well to remember that we live in an economic bubble, a tiny pocket of prosperity amidst much harder time.
(Not a programmer personally, but I run an online business)
"to have skills that are both enjoyable and in demand."
Well that's now, in this slice of time, and if you have the skills that are hot at the given moment. If not, assumes that a programmer can easily pick up the new thing and get a job (with age bias) which I don't think is necessarily the case.
Is there a hot job market for perl programmers? That was the big thing in the 90's when I first went online. Can a 50's perl programmer learn the next new thing and be in high demand?
(Edit: More of a statement than a question as I think "probably not an easy task")
> Can a 50's perl programmer learn the next new thing
A programmer who can't learn the next new thing in their 50s, probably couldn't learn the next new thing in their 20s, likely just learned the first new thing and never deviated.
Having recruiters as a problem is typically restricted to programmers who actually have advanced and/or highly specialized skills, or who have made themselves a public image.
I worry sometimes about Uber, TaskRabbit, AirBnB and the like. Sometimes it seems like too much of their success rests on their Walmartesque avoidance of benefits, the kinds of benefits which blue-collar folks have relied on for years. If too many people get caught out in the cold, the government might start pushing back against those companies to protect the workers.
> If too many people get caught out in the cold, the government might start pushing back against those companies to protect the workers.
That seems unlike the government, they've done nothing to address the shrinking of the middle class, the dismantling of unions and the shift from stable employment towards mcjobs, so why would they do anything about the uberization of the workforce?
Just as last time this happened, when unions were created, government did not push back of its own accord- the workers had enough and lit a fire under their government's a.
the last time this happened, when unions were created, the government was basically forced in to supporting the unions by virtue of the fact that communist revolutions were happening all over the world
I feel that with ACA the government is making an opposite stand - don't trust corporations with choosing your health coverage and picking doctors. Instead focus on the money and then use that money to buy a health benefits package that's the most convenient to you.
I worry sometimes that when the government attempts to carve out 'protections for workers' (seriously what do most legislators know about labor anyways), that they will unintendedly create systems that enrich the already enriched.
Those workers are consciously choosing to go work for those companies, taking all differences in consideration. Why do they need to be "protected", and from what? I think you're assuming that the way things are is necessarily better for everyone.
I don't have any citations, but I would venture most people working on these platforms do it because they need extra money. Nobody quits his day job to drive people around in Uber or to spend 8 hours a day in Amazon turk.
Most of these startups try to create a monopoly at the level of the platform, but force workers to compete against each other, undermining solidarity between them that facilitates an unfair exchange
The quality of the jobs on these platforms is proportionate to the level of employment in the economy and the general strength of labour in the economy. In Australia the situation seems to very different to the US. There is a competitor to Task Rabbit - Airtasker - and my experience is that it's really expensive to hire people on this platform. In most cases I decided to do the work myself because the rates that people charge are so high in Sydney at least (for many tasks $30/hour to $50/hour as a minimum) that I would prefer to save the money and do it myself.
This is a function of the strength of the Australian economy and labour market.
There are some attempts to combine them, which is gradually becoming one of the preferred EU strategies (though countries vary widely in their opinions): https://en.wikipedia.org/wiki/Flexicurity
The basic idea is that it should be easy to hire/fire people ("flexible labor market", vs. the traditional less-flexible European model), but social policy should smooth out some of the economic uncertainty that produces.
It's considered a very good idea over here, I think, but it requires the government to redistribute money from people who work to people who don't, so everyone gets security without needing predictability. I don't think it's very popular in southern Europe, though.
In southern Europe, at the moment the idea is to give as much flexibility to hire/fire people and at the same time reduce as much as possible any benefits for people that fall on hard times.
Quick example, unemployment used to be at 75% of net income (give or take). Then they changed it to 70, then 65%. Then they capped it at 1600 euros, then 1200. Now it is capped at 1000 euros for the first 6 months, and then 900 afterwards (and the length has also been shortened).
Doesn't matter if you were earning 10,000 euros a month or 2,000, now you both get max 1000 euros unemployment, even thou one of you paid 5 times as much in social security payments.
(quick note, values are approximate as I remember this from 2 years ago).
It's easier to save on that than it is to save on tax dodging and stimulate the economy with less regulatory capture and corruption, unfortunately. It's the tragedy of austerity, that the wrong measures seem to get taken.
On the contrary, freedom is defined as the ability to do what you want, which implies a very great deal of certainty - the certainty that you won't be attacked, run out of money, run out of food, that you'll have shelter tonight, and so on.
The uncertainty of not having enough money for food, shelter, medical care, education, raising children, and so on is a huge limitation on freedom.
We see this very explicitly in concepts such as tenure: certainty = freedom.
The conflict between freedom and certainty is real. Having enough money for food, shelter and medical care means having the ability to command other people to grow food for you, build a shelter for you and provide medical care for you. These people do what you want them to do instead of doing what they would like. Your safety is improved. Your providers' freedom is reduced.
I think what we're seeing here is companies using automation to offload certain costs on to their workers - and then use the guise of "freedom" to paper it over.
In the US, think of how different these services would be if we had both a guaranteed income to give these people a baseline of safety, plus a real universal healthcare system to sidestep that entire issue. It would turn this class of people from a 'precariat' into a fluid, task-oriented labor force with few/none of the current negative implications (around both the jobs and the companies supplying them.)
I wonder if the attitude towards these services in countries with UHC systems or more generous safety nets is less negative and stigma-ridden.
my concern is that the value "created" by startups like uber and taskrabbit come not from displacing large and slow incumbents (e.g., taxi dispatchers & courier services) but from shifting economic risk onto disempowered individuals.
the people who pay (largely the top 20%) see value in at least two ways: (1) greater certainty of commodity products & services and (2) lower prices.
the startups themselves are shielded from market risk, particularly on the supply side (labor), because they have disproportionate power over labor, which then smooths out profit by automatically matching costs to revenues.
taskers bear all the market risk while also giving up traditional employment benefits. the value of this shift is passed on to the consumer and to the startups themselves (capital), leaving taskers in even more volatile economic circumstances.
by the way, i'm distinctly not condemning the startups here, because they're only part of larger economic trends that they have little control over. now that the structure is in place, they can't do much individually (e.g., if one tried to raise prices to raise wages, they would be competed out of the market).