Maybe predictions were off for reasons the article says, but the article woefully misses the biggest factor in why the “gig economy” (cringe) won’t be as big as we originally thought - you can only pay sub minimum wage for so long before people say fuck it and walk away flipping you off.
These companies provided very little as far as tech revolution. They mostly rely on cutting wages and offputting risk/liability/taxes/benefits onto the workers. That’s a business model that’s doomed to fail. The word we’re looking for is “greed”.
You can only win as a "gig economy" as long as you find a weak spot (a.k.a loophole) in regulations and use it. That loophole will close, and the business will either need to expand or converge to a traditional business of the kind it displaced. AirBnB will be like any other apartment rental place. Uber will be (and is already in many places) like any other Taxi company. It should be called the "loophole upstart economy". What they do is grow at a breakneck sped into an area where there is regulation that can be abused. The trick is to grow so fast that regulation can't keep up (in the US you can even grow so fast that eventually you'll be big enough to lobby your own regulation).
As an example:
In Stockholm where there are no Taxi mediallions (anyone can be a taxi or car hire service in any way they want as long as they regiser and comply with insurance, standardized meters, and other regulations) and the competition alreay has new cars, app-based booking etc - there is precious little margin for Uber to cut from, compared to a city with medallions, cab shortages, ancient taxi companies that don't offer app hauling/prepayment etc.
So how can Uber make a killing in Stockholm? Answer: they find another regulation to work around. Tax regulation. Taxis are required to enter all fares into the meter and that's reported to tax authorities. Uber drivers are supposed to enter the rides themselves into the meter after completing. The kicker is: there is a huge incentive for the individual driver to under-report the fares, and that incentive also helps Uber. This being revealed will obviously now mean that Uber will be forced to pay an estimated and much higher tax, and the drivers won't be trusted to do this themselves in the fuuture. And this will only mean one thing: Uber will pack up and leave. There is no way they can be competitive (to the extent their investors will want) without breaking either Tax law or Labor laws.
After Uber exited the Danish market, the Danish tax authority received details (from the Dutch tax authorities) of whom Uber actually paid. It turned out 99% of the drivers did not put that income on their electronic tax forms.
Uber's statement was that the individual drivers are responsible for that sort of thing. Wink, wink.
What's worse 75% of them were receiving various types of government money for unemployed people (which are supposed to be decreased if are able to find a job).
Uber is planning to return to the Danish market -- the Danish spokesperson says they will return "with integrity".
AirBnb however has agreed to automated reporting of who receives rental income in Denmark. If you agree to automatic reporting as a landlord, you get a certain tax discount.
Why is it Uber’s responsibility though? Why is this different from how restaurant servers are required to report their cash tips, but basically none of them do? Should we blame the servers, the restaurant owner, the government, all of them, no one?
Restaurants are responsible for reporting the formal wages paid by the restaurant to the staff, which can be counted, tracked and reported to the IRS.
Cash tips paid to the server are essentially invisible to the employer. This is an accepted trade-off in a system where restaurants can pay below minimum wage.
An Uber customer cannot pay cash. They pay Uber first (fare + optional tip) and Uber in turn pays the drivers. So they know with 100% certainty how much money is changing hands. For a company that is worth literally billions, having a basic financial reporting system that calculates the government's cut is not some kind of overbearing regulatory hassle.
The servers in states which allow below minimum wage for tipped employees is keeping servers near starvation wages if not for state benefits and undeclared tips.
The "market" rate is partially set based on those assumptions because employees wouldn't be able to live on what they are paid thus the labor force and thus the company would collapse without an increase in wages.
In both cases its a transfer of wealth from the middle class to relatively rich owners.
The extra cash helps for when business is slow and the server has to report they made the minimum wage to the employer anyway because the employer is responsible for ensuring that the server makes state minimum if the wage plus tips doesn't equal such.
Basically the employer will just fire people who make the employer actually do this.
It also helps cover the foregone wages when the employee is working through breaks and lunches even though the half hour lunch is deducted from the employees pay.
In short employers sometimes pay as little as $2 an hour x 24 hours per week.
Since nobody on earth can live on $200 a month some combination of tips from you, government benefits paid for by you, and second or third jobs makes survival possible.
Most of us are not terribly concerned if the server is paying taxes properly and are concerned that the business is basically welfare for inefficient businesses who should probably go under.
Uber is a better example. Airbnb is a different case in my view. Vacation rentals have been around for forever, and they were pretty terrible before Airbnb. When I used VRBO back in 2006 or so, it wasn’t horrible but wasn’t amazing. And the market was fragmented and inefficient. Airbnb basically made it so easy to both rent out space and rent space from others that it grew the market very dramatically in a short period of time. So much so that it exposed a lot of problems that weren’t present before with a few hard-to-book vacation rentals here and there.
Yes, the difference I think is that AirBnB has grown so big it actually changed neighborhoods and accomodation markets in a way we didn't see before. The question becomes the same as for Uber in some sense: once a single company professionally rents out all the flats in a highrise building, what makes them different from a hotel and why do they get to dodge expensive regulations and inspections that hotels need? Their business model is being an apartment hotel and not admitting it.
But again, Airbnb doesn’t own or rent those units, or choose to put them on the market. Should they only allow a certain percentage of units in a particular building or neighborhood to be rented out? How is that fair to marginal apartment owner who also wants to rent their space out?
I think Airbnb could do a better job of working with cities to ensure that negative externalities don’t poison the well. But I don’t hold them responsible for the tsunami of demand on both sides of this market. It seems pretty clear that people really, really want this, and I don’t think the right answer is “too bad, stay in an overpriced chain hotel”
AirBnB rents those units out if they have a nontrivial gain from it. That they merely provide the service doesn’t seem important. Same with Uber - doesn’t matter who owns th cars or whether they claim to not employ anyone. They are a large taxi operator and the drivers should have employee benefits (as was ruled in many places already).
About the Stockholm Taxi market? I live there and follow local news, and have some interest in the area, that's it. Regular taxi drivers aren't paid that much and those companies offer everything Uber offers: app haul/pay, nice cars and so on, so if Uber don't have an edge anywhere either legally, technologically or economically (e.g use contractors instead of employees, be the only one to offer nice apps, have greater scale scale, adaptive pricing) then they aren't going to make a large margin. I might be wrong though but this is my guess. Companies that have good margins without tax fraud tend to not do tax fraud.
Don't you have to pay high startup costs to be a driver in stockholm?
As far as I know it's a completely different setup with Taxi companies and their hired drivers that work on comission, compared to Uber that works with private contractors.
Do you need a company to start earning money as a cab driver?
Startup costs depends on what way you do it. Own company would be most expensive but a regular taxi driver just works for one of the big taxi companies and owns their car or shares it with someone to het higher utilization.
Simplest and cheapest with least risk (and least profit) would be working for an established company using a car owned by someone else.
Note that in Stockholm Uber is a regular licensed taxi company. Any taxi company can operate like Uber and vice versa.
Yes. It's a driver job like any other (bus license for bus, taxi license for taxi, truck license for trucks...). Most companies probably have cars unused at times. E.g. if you are a student and want to make some extra money it's usually easy to get a weekend job using someone elses car when that driver is off anyway. That way you can make some money without a big investment in a car.
You can use any car as a taxi, but to use for commercial driving your car needs to be just that - a taxi. So you’d spend say $1-2k to register it as a taxi (new license plates, install a meter).
So there are hundreds of taxi companies and Uber is just one and like all the others. Uber cars are registered with the vehicle authority as taxis and have regular meters.
1. Get taxi driver license and driver for a fleet for a certain % to take home. This basically means that Uber is just one of the systems you use to get customers.
2. Get a taxi driver license, a sole trader company (1 person company) and a taxi operating license. This means you are a contractor for Uber, and pay the 25% comission.
--> You do not need a meter
--> You do need a specific insurance for taxi business.
So basically if Uber runs a fleet of contractors, it's massively more important than having taxi companies that operate phone-based (as well as app-based) ordering systems. They have massively more overhead than the tiny operations office that Uber needs to operate in any certain city.
It seems like you're leaving out a bit about information asymmetry. maybe multi billon dollar companies don't have any extra facts that aren't available to somebody in the 'gig economy' but this [1] keeps ringing a bell.
It’s not entirely arbitraging labour costs or paying low wages. Look at Uber or Lyft. You can come to work whenever you want, for as long as you want, as often as you want as long as you have a good enough car. The convenience beats working at McDonald’s comfortably. I’m sure some of these companies were working off of new people realising it was a bad deal but there’s no way Uber or Lyft are. People aren’t reliably, exploitable stupid over long time periods.
> People aren’t reliably, exploitable stupid over long time periods.
They don't have to be stupid to be exploitable. They just have to be in a desparate situation.
In England people who claim unemployment benefit (Universal Credit (UC)) will lose that benefit if they refuse to take gig economy jobs. They're forced into these jobs by the state.
And then, because of the way UC works they are forced to work as many hours as possible. The flexible bit doesn't work for them because UC doesn't work well for people doing variable hours part time.
Conditionality isn't a bad thing. This particular version of conditionality, combined with cuts to housing benefit,combined with the hostile regime around benefits in general, mean people are suffering as a result. Importantly it's not saving any money.
It's not having to drive lyft or die.
It's about being forced to drive for lyft, and still lose your income, and lose your home.
It's not being able to predict your income from one month to the next, which puts you at risk of losing your home because you can't pay rent and the state keeps paying you weird amounts because of the way that benefit works.
We've seen huge rises in street homeless numbers. In 2007 we had about 500 people in the UK sleeping on the street. Today that's over 4,000 people.
In 2017 over 30,000 single parent families (the kind who should benefit most from the flexibility of zero hours and gig economy) were made homeless.
In England you can claim UC while working, if you do less than 16 hours per week and less than (I think) £120.50 per week.
This is a route back into employment for people who've spent years out of work. The intent is to provide a ramp from "no work, full benefits", though "some work, some benefits", to "full time paid employment, no benefits". (in fact, with tax credits, many people in full time (over 16 hours per week) work are also getting state benefits).
This ramp is broken by the gig economy because zero-hours contracts make it impossible for the state to know how much top-up benefit to pay month to month. This plunges people into debt and poverty.
The gig economy employers benefit because they don't have to pay a lving wage, they don't need to compete for workers by offering sensible wages.
This is an unintented distortion of the free-market. If you believe in free markets you should wish to see the end of this distortion.
I’m not saying that we shouldn’t have a social safety net, but the “distortion” in the free markets here is the UC benefits, not a contract gig that lets the worker decide whether they want to work 0 hours per week or 100 hours per week or anything in between. That’s pretty free market to my ears, and having a sharp public benefits cliff that starts at 0 hours instead of 16 is the source of the distortion.
Instead of blaming Uber for having work available for people who want to only do a few hours per week (or who can’t do more for whatever reason), why not blame the government for not updating their rules to better fit the actual reality on the ground?
> Four working single mothers have won a High Court challenge over the government's universal credit scheme.
> They argued a "fundamental problem" with the system meant their monthly payments varied "enormously", leaving them out of pocket and struggling financially
Uber can't have it all ways. At the moment Uber are exploiting the market to get paid employees, but without having to offer them the protections they'd normally have, and without all the tax and NI payments either.
US companies really need to understand the English concept of "taking the piss".
No-one expects companies to pay all their tax and obey the law all the time. What they do expect is that companies do not take the piss. Uber is taking the piss, and they're going to be regulated if they don't make changes.
> blame the government for not updating their rules
It is their decision to take advantage of it. Moreover, most of these companies did disseminated and promoted half-truths and falsehood about how much people will earn and what costs are offloaded. When you knowingly manipulate people or lie to them, you have no business to complain when someone else comes in and talks openly about you not being truthful.
People criticising and blaming companies eager for taking advantage of either naive or uninformed people is how the economic system becomes less vulnerable and how people learn what to be careful off. Openly criticizing these companies is how next workers become informed about traps like this.
Interestingly, in India, Uber paid drivers upwards of $1700, in in the initial 1-2 years, as incentives to get them onto the platform. Drivers took loans and mortgages to buy cars which they couldn't pay after the incentives were taken off.
Lot of drivers went into debts and sold away their cars. The market has probably more stabilized now.
But inspite of all the talk of tech, we are still looking at these platforms taking 25%-30%.
They can exist as long as there is exploitable cheap labor willing to work for peanuts with no job protection or benefits. As soon as there are real jobs everyone would leave such companies in droves... and their business model would collapse. In order for such a company to exist you need an indentured lower class that's barely surviving and has very little ability to lift itself up. In another words from a societal perspective such companies an anathema to be eliminated, not cheered on.
> indentured lower class that's barely surviving and has very little ability to lift itself up
Thriving poverty industry and a steady stream of immigrants who have to start from the bottom of the visa/stay permission hierarchy ensures that at any time, there exist a solid share of a society qualifying as such. It's trivial also to embitter these two groups (domestic and incoming) onto each other.
> you can only pay sub minimum wage for so long before people say fuck it and walk away flipping you off.
That's exactly what the article is saying, though. Informal work arrangements (the gig economy) take off when unemployment is high due to a big recession; but when labor markets are tight (and unemployment is really, really low right now) traditional, formalized work is a lot more attractive.
The estimates here were wrong because there was nothing to estimate at all - gig economy is a marketing buzzword for an unusually isolated yet reasonably substantial unemployment bracket. The upper bound of the bracket being the sub-minimum wage compensation that Uber pays their drivers[0] and the lower bound being the amortized cost of the cheapest vehicle that Uber lets drivers utilise for their 'gig'.
That's a really small demographic who would fit both criteria. Recently unemployed people and students come to mind.
Importantly - Uber knows this fact very well and are doing everything they can to survive until fully autonomous self driving cars reach mass production.
Uber betting everything on self driving cars may be their only hope, but it should be clear by now that their runway is shorter than the time required to bring lvl5 to market. We’re not even into the real edge cases yet, and automation is still really hard to get right. Maybe the tools being applied are simply not up to the task, or if they are, decades away from the maturity required.
All of which is to say that Uber is in trouble, and having been such a notoriously bad actor, will be kicked down the hill at every step.
Uber's competitors aren't trying to get into self-driving car business.
If you're talking about investing in antisocial companies, then I guess investors' mentality might change if we somehow puncture the abstraction layer that separates the investors from the people their investees affect. For instance, if the investee breaks the law and gets fined, if there was a chance for that to flow back to the investors and take some extra money out of their pockets, I expect they'd put extra pressure on investees to behave.
The Gig Economy hasn't even started yet. We've yet to solve Identity (Who is this?) and Merit (Is this person qualified/competent?). Hell, we've only barely started decentralized finance let alone scalable-decentralized-organizations. Uber/Lyft/Taskrabbit/Fiverr are low-hanging fruit compared to the complex workflows most services entail.
I expect we're going to see more niche gig-economy businesses being built around more complex workflows with higher skilled labor. Lots of B2B and B2C potential when you break up services into smaller tasks that can be fulfilled. Success is providing the benefits of scale without the challenge of doing it yourself.
That's the issue. How do you solve merit without an Orwellian system monitoring everything everyone does? Without some kind of capability for privacy-respecting decentralized systems - solving for Merit is a function of dystopia.
> We've yet to solve Identity (Who is this?) and Merit (Is this person qualified/competent?).
Thank god that back when I was babysitting for extra cash, there wasn't some faceless, soulless automated system judging my Identity and Merit.
What is it about technology that induces people to zoom straight toward dystopia? The gig economy has always been there; just because we now have the technology to turn it into an Orwellian hellscape doesn't mean there are suddenly safety concerns that demand we do so.
If only people would put down Mieses and pick up Ronald Coase.
The "gig economy" relies on the jobs being simple and atomised. It relies on the quality being easy to collapse into a single number, and no tacit knowledge or ongoing relationship involved in the production. Managers keep assuming that these kind of internal transaction costs are unimportant, and that's how you get outsourcing disasters.
This is of course a major reason why looking at sharp growth and thinking it might be an accelerating trend doesn't always work.
"Gig economy" startups pick at the low hanging fruit first. Taxi drivers who are already hired by the journey are much more easily "decentralised" than people who are supposed to be the face of their company or undertake jobs with learning curves. There's plenty of scope for online services to improve the hiring of the latter, but it's still going to entail longer term contracts and often more regular working hours, and often better comparative performance metrics than a skewed star rating system.
Uber and similar companies are nothing about decentralisation - on the contrary, they are centralising. One mega company which serves tens of countries where before you had hundreds of small taxi operators. Their value lies mostly in this centralisation.
I always found the narration of Uber the Underdog going against the Evil Taxi Mafia to be funny. In reality, the only mafia-like player in this story is Uber - the multinational corporation that fights against multitude of small local players.
>Except in the real reality there are a lot of Taxi companies run buy real organized crime for the purpose of laundering money...
So? The fact that the business might by people using it as a front for money laundering is immaterial because it does not affect how they do business, how they treat customers or how they treat employees. Letting your money laundering workflow impact your business is how you get caught laundering money.
As someone working in this industry on the "employer"-side: Yes, I believe this is exactly whats going to happen. It's a real business pain that we don't have these kind of informations about gig workers and would pay top dollars to have them... it's only a matter of time until this becomes standard practice in these business modells... just like credit rating agencies we're gonna see it on a work-level too.
I have a friend who owns a small family business in France. He's doing well. He would have enough work to take on extra staff, except that he claims the local worker protection legislation mean that it's not worth it, particularly since he wouldn't be able to get rid of anyone if he hasn't got the work for them.
So, he'd rather work himself and family members extra hard, than employ anyone new.
>> Should be cheaper in the long run.
Except if the politicians in charge make sure it's not. See above.
IIRC, the compensation for firing someone is 0.25 months of salary per worked year (first ten years, after that it's 0.33 months). It's not that much, and if he has enough work to take on extra staff he probably could put away that money in the case of a firing. If the company is going down because of end-of-contract compensations, the company would be going down anyways. Also, temporary contracts exist if he just wants extra help during specific times, and those do not have any compensation at the end of the contract.
In other words, the compensation for end-of-contract is just 2% of the salary of the worker per month. If the benefits of having a worker is more than 2% of their salary, it's worth it.
But to avoid deviating from the topic: the gig economy is not about small family businesses. Gig economy is a buzzword used by companies that could pay decent salaries and worker protections but are too dominated by greed to do it.
You neglect the cost of lawyers when he’s sued and the cost of spending time talking with his lawyer about something that won’t make any money while he’s being sued. I presume French businesspeople aren’t fools and their extreme reluctance to hire is rational. If you see total idiocy everywhere sometimes you’re right but mostly there’s something you don’t know that explains the behaviour.
I presume French businesspeople aren’t fools and
their extreme reluctance to hire is rational.
Well, hiring your first employee is a special case.
You gotta learn what legislation applies to you now and start following it. Gotta pay people regularly, instead of when it's convenient for you. Gotta have policies for things like expenses and sick leave and holiday and car use and overtime and bribery and dress code. Gotta apply the policies consistently and fairly. Gotta get them work space and equipment and maybe parking. Maybe you need to provide training. Gotta to figure out how to put job ads into the newspaper or whatever your industry is doing these days. Gotta decide what sort of interview questions you're going to ask...
The cost of lawyers he's sued is the same no matter the legislation. I assume that different laws give different ways to sue, but I don't think that cost depends that much on the cost of firing someone. If the employer does everything according to the norm (e.g., if the workload diminishes and he cannot take on the employee anymore, he needs to have the numbers that prove that) nothing should go badly.
"Gig Economy" is a new label on an old practice. Take, for instance, nurse staffing in the United States. In unregulated, non-unionized states, nurses are staffed as-needed. Hospital administrators partner with nursing agencies, who manage relationships with nurses and contract short-term work. This market of nurses enables work-life flexibility and pays fairly well. Yet, the costs and risks continue to rise for nurses.
If hospital census (# of patients) is low, shifts are cancelled up to minutes before work is scheduled to begin. Further, hospital administrators have dramatically increased the burden on nurses, increasing nurse-to-patient coverage and demanded more and more of them without assistance. Staffed nurses play the role of scapegoats, too, blaming them for mistakes and shifting risk from the hospital. There are more problems and risks for staffed nurses than ever.
Yet, despite its Gig-like behavior, nurse staffing seems to elude journalists and academics. This is only one example. There are others.
Again, the gig economy isn't a new phenomenon. It's just spreading to other sectors now because of technology innovation. We must learn what works well and what doesn't, for all involved parties. Academics and journalists are thus far failing to learn what works by ignoring legacy business activities.
"About a third of what passengers pay goes to Uber for commissions and booking fees."
Holy shit. That's way too much commission for a company that uses software and not actual labor to connect drivers to riders.
Software costs labor to develop, maintain, and operate. If you feel operating Uber's systems should cost much less, why not invest or found a competitor ?
Hmm. Not an Uber user myself as we have cheap and reliable taxis in Germany, but how is payment handled? Does Apple take their usual 30/15% cut as with Netflix, Spotify and friends?
I'm an American in Munich, and while taxis here are indeed reliable, I wouldn't call them cheap. Ballpark, I'd say they're about twice as expensive as the Uber/Lyft trips I've taken back in the States.
> I'm an American in Munich, and while taxis here are indeed reliable, I wouldn't call them cheap.
Compared to the stories I have heard about US taxis (underqualified drivers, bad technical maintenance, general unreliability), I am not surprised. You can't have reliable and cheap.
In addition to the mentioned factors, of course Uber/Lyft can be less expensive in the US - they ditch the contributions to social security, healthcare and pension system that is required for German employees.
btw, I am Munich-based too... yes our taxis are expensive indeed but so are the living costs. Can't have no taxi drivers when they don't have a place to live in.
Just to add to a sibling poster, Uber doesn’t require, but does allow you to use Apple Pay for rides. Apple Pay costs about the same as a regular credit card payment to the merchant.
Everyone focuses on driving which in the long run is probably going to go away as self-driving cars come onto the scene.
The best example I've seen of the gig economy is jobs that were already contract based but where it was hard to find and connect contractors with customers.
Walking dogs, small home renovation, etc. I've seen these apps make a massive positive change in the market where people are able to find more work than they code before (at roughly the same rate) and customers can find contractors willing to do the work and they are rated by past customers rather than just word of mouth.
Yeah, the problem with the driving apps is the damn greed. They could have made an improved taxi service where people still payed a fair amount and in exchange you get a pleasant, on demand taxi (without the credit card machine being “broken”).
But they didn’t just want to compete with taxi. They wanted more. They wanted everyone to use their service. How do you do that? Offer it cheaper and pass the responsibility to the driver. If Uber and Lyft has stayed humble they could have had profit, happy workers and happy riders. Instead they wanted billions.
> They could have made an improved taxi service where people still payed a fair amount and in exchange you get a pleasant, on demand taxi
This was what Uber was. Then Lyft launched its product and, to Uber’s shock, didn’t get any regulatory pushback. (Most people in most American cities had horrible cab experiences. Also, the tech backlash hadn’t yet begun.)
Uber probably improved the pay laws for New York’s taxi drivers by bringing light to their plight. It also improved quality across the board.
Not in submissions but welcome (and helpful!) in comments, it seems.
I assume this is because otherwise every link would seem to be hosted (in the parenthetical trailer) by outline.com or other depaywaller instead of wsj.com, ft.com, et al.
The two terms reflect different segments of the market though. You'd be hard pressed to find a freelance Management Consultant willing to self-identity as a gig economy worker.
That's true, but if you were at conferences for SuccessFactors or Workday about 4 years ago, you'd have heard lots of presentations about the rise of contingent workforce and the gig economy. In fairness to management consultants, most of them are not "contingent labor". Most of them are employed by companies. I think the major distinction is that "gig economy" tends to reflect contracting individuals only, while contingent labor includes both gig workers and those who are contracting through some kind of corporate entity like an LLC.
Fail. A more simple way of looking at this is sustainability of the end product. Can an Uber driver earn a practical income and benefits equivalent to the taxi driver they are replacing? Is that Uber driving willing to work in that field/position as long as the taxi driver they are replacing?
Sometimes you don't need to be a math genius to see that major economic shifts incur cost restructuring that caps growth/penetration.
Seems to me Uber has led to a huge increase in the number of hired rides. So in most cases, the Uber driver isn’t replacing anything, except perhaps the passenger driving themselves for free.
If you want to look at it that way, I think it's unfair to not consider the startup costs of operating a taxi. A medallion in New York is no longer over a million dollars, but it's still pretty expensive. https://nypost.com/2018/06/09/139-taxi-medallions-will-be-of...
Becoming an Uber driver has comparatively much lower startup costs (buy a car). In the short-term, Uber drivers will have a much better cash flow, and potentially in the long-term too. Taxi drivers would see their cash flow significantly drop, but that's due to competition. Uber artificially has lower prices in most locations except when surge pricing kicks in. If their prices were not artificially low, I think you'd actually see a bit of parity. Yes, taxis would see lower cash flow, but it would not be a race to the bottom like it can be if Uber is artificially pricing lower.
Paywall, so I can't read the whole article and see if they address this.
The two primary metrics that Berkshire Hathaway considers before making an investment is management satisfaction and employee compensation. The higher these things are the healthier the company appears internally and there are all manners of second and third order consequences that come from this.
In the case of the gig economy there is no company. The people doing the work are underpaid consultants. So, where does the money go, the money that would have been paid to employees in an healthy company? It remains at the gig company. There are all kinds of economic problems with this, particularly if the company is itself not profitable and not on track to become profitable. For example how can these people invest back into the company to further stimulate the company and thus their long term earning potential?
Does Facebook as referrer get around other paywalls as well?
It would lend itself as 'quick search' (i.e. by using a keyword from the adress bar) in that case.
Gig economy can be a victim of its own success if it starts accounting for a significant portion of the labor force. Because of the inevitable political backlash about its business model. Once you see too many successful companies with workers scraping by, you will also see political demands to treat these as full time workers instead of mere contractors. At that point, gig economy's business model would stop working and these companies will have to live with far lower margins of the traditional industries they are disrupting.
> You can see they knew this by the lobbying effort that Uber did to even get where they did so they could ignore laws without immediate consequence.
In the US that worked (simply because US politicians can be bought off via Super PACs etc, which is absurd in itself), but in other markets (esp. Europe) they got quite a beating from regulatory agencies.
Not really, the British regulators and courts keep finding against them but there’s zero enforcement, Uber continue operating as normal. The Mayor Of London is weak.
Uber Pop (=private drivers) got banned in Germany, France, Italy, Spain and Belgium [1], Uber Black (=cars for hire, with pro driver) got banned in Germany [2]. Given that Germany, France, Italy and Spain are the Top 5 EU economies by BIP (with the half-exception of UK where Uber simply ignores court rules), I'd say "took a beating" is the most civil way to write what really happens.
These companies provided very little as far as tech revolution. They mostly rely on cutting wages and offputting risk/liability/taxes/benefits onto the workers. That’s a business model that’s doomed to fail. The word we’re looking for is “greed”.