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These mistakes and the ending advice are pretty distracting tangents to a fundamental flaw: The business model can't afford employee overhead at even poverty sa

These mistakes and the ending advice are pretty distracting tangents to a fundamental flaw: The business model can't afford employee overhead at even poverty salary levels. Everything else is just noise. The best take away is yet another damning piece of evidence against the "gig" economy.

jessaustin 8y ago
That wouldn't be "poverty" in the rural South and Midwest, but one does wonder how much recruiting Zirtual would have done in those regions...
- driverdan 8y ago
  $11-12/hr is poverty everywhere in the US.
  - gnicholas 8y ago
    $12/hr is about $24k/yr, which appears to be double the poverty level for one person: https://aspe.hhs.gov/poverty-guidelines https://aspe.hhs.gov/poverty-guidelines Not saying $24k is a lot of money, just pointing out how low the poverty line actually is in government regulations.
  - StudentStuff 8y ago
    Austin may be skewing your perspective due to the recent run up in rent, I know more than one person who lives on $11/hr. Most don't live on the coasts or in a major city though! Housing is really cheap in some parts of the US, though it isn't a great life to earn that little after getting a college degree.
  - rayiner 8y ago
    I don’t think you realize how cheap most of the US is. If you get 40 hours a week, that’s $2,100 per month. You can rent a 2BR in Des Moines for $700 per month; split that with a roommate and your rent is $350. That probably leaves about $1,300-1,400 which is totally doable for a single person. (I spent less than that after rent while I was in law school, and I went out all the time, etc.)
    - TylerE 8y ago
      At some point an adult doesn't want a roommate.
      - jjeaff 8y ago
        Usually the adult exchanges a roommate for a spouse, who also works to help pay the rent.
        epicureanideal 8y ago
        Is that how it usually works? That's not what my wife says... oh.
        chii 8y ago
        > Usually the adult exchanges a roommate for a spouse, who also works to help pay the rent. and then, a child comes along.
        rayiner 8y ago
        And you can have a kid in a 2BR and its not “poverty.”
      - perl4ever 8y ago
        When I got my first job after I got my CS degree in 2007, my rent was under $400 without a roommate and my base pay was about $18/hr. I thought that was pretty good, because it was a real hourly rate, with a significant bonus for overtime.
      - paxys 8y ago
        Well at some point an adult has to stop making entry level wages at a startup as well.
    - throwawayboye 8y ago
      Then you need to go to the ER and suddenly you owe $25,000. Oops.
Tade0 8y ago
To me this article indirectly implied that everything would've been okay if only the workers shouldered the risks of this business.
paxys 8y ago
Worst of all, they required college degrees and offered employees $11-$12 per hour?
- mud_dauber 8y ago
  Exactly. I could push a broom at Home Depot for that much.
  - StudentStuff 8y ago
    You'd need to be in a large city for Home Depot to pay that, and even then in places like Austin and especially Boise, many people make less than that per hour. $10 an hour after a bachelors degree isn't uncommon in economically depressed parts of the US.
    - Spooky23 8y ago
      I drove by a Home Depot near Utica, NY advertising $15/hr a few months ago. Utica isn’t exactly a big city or prosperous place.
    - Xeronate 8y ago
      No you don't. I'm from a small town in Ohio and my first job was at Home Depot for $12 an hour 6 years ago.
    - zenexer 8y ago
      Minimum wage is around $12 here in MA, if I recall correctly. There’s been talk of increasing it to $15.
      - cannonedhamster 8y ago
        It just became $11 in 2017 and that's only for non-service workers. Tipped workers still only make $3.75 and STILL have to pay taxes as if they were fully compensated. Tipping needs to go.
  - 8y ago
scarface74 8y ago
The problem isn’t the “gig” economy. Having flexible part time work hours can work for some people if they want some extra money and they aren’t the primary bread winner. Also $12-$14 hour is a livable wage in rural America, for full time hours, if you didn’t have to worry about health care. The biggest issue with the gig economy is our insane health insurance system where the only way you can get affordable insurance is through your job. But expecting college students to work for that amount is crazy.
- th3iedkid 8y ago
  >The biggest issue with the gig economy is our insane health insurance system where the only way you can get affordable insurance is through your job. Are there good books/papers that have good research on this?
  - scarface74 8y ago
    The difference between contract work and being an employee is that you have to pay “self employment tax” - the half of Medicare that your employee pays (2.8%) and social security (6.2%). The usual difference between part time and full time employment is subsidized health insurance, paid time off, and sometimes a 401K employment match. At least with the ACA, everyone can get insurance, whether everyone can afford insurance is a different issue. For people like IT workers in the right market, whether to go contract vs. full time is just a numbers question - can you make enough to compensate for having to pay self employment taxes, health insurance, and unpaid time off. For people on the other end of the spectrum - those who are getting paid much less and have to pay thier health insurance - it sucks. The people hit hardest are for some reason some of the same ones who support candidates who want to get rid of the ACA.
    - votepaunchy 8y ago
      The employer and employee each pay 1.45% into Medicare (and OASDI 6.2%) at these salaries.
      - 8y ago
duxup 8y ago
Yeah it's all "omg full time employees" than you read $15 an hour ... oh yeah that's not that much of a cost there. I don't care how many bad charts they put up, their employee costs were pretty low either way I think. They just couldn't float the boat through a storm fundamentally.
- dabockster 8y ago
  And why full time? Why not part time? Were they paying out benefits?
dabockster 8y ago
> The business model can't afford employee overhead at even poverty salary levels. And on 1099 too. You've managed to play so much financial hop scotch that you've gotten out of paying FICA taxes and labor premiums, and you still can't sustain your business? Just wow.
- traek 8y ago
  Did you read the article? A big part of their financial problems was that the virtual assistants were full employees, not 1099/contractors.

jessaustin 8y ago

That wouldn't be "poverty" in the rural South and Midwest, but one does wonder how much recruiting Zirtual would have done in those regions...

driverdan 8y ago
$11-12/hr is poverty everywhere in the US.
- gnicholas 8y ago
  $12/hr is about $24k/yr, which appears to be double the poverty level for one person: https://aspe.hhs.gov/poverty-guidelines https://aspe.hhs.gov/poverty-guidelines Not saying $24k is a lot of money, just pointing out how low the poverty line actually is in government regulations.
- StudentStuff 8y ago
  Austin may be skewing your perspective due to the recent run up in rent, I know more than one person who lives on $11/hr. Most don't live on the coasts or in a major city though! Housing is really cheap in some parts of the US, though it isn't a great life to earn that little after getting a college degree.
- rayiner 8y ago
  I don’t think you realize how cheap most of the US is. If you get 40 hours a week, that’s $2,100 per month. You can rent a 2BR in Des Moines for $700 per month; split that with a roommate and your rent is $350. That probably leaves about $1,300-1,400 which is totally doable for a single person. (I spent less than that after rent while I was in law school, and I went out all the time, etc.)
  - TylerE 8y ago
    At some point an adult doesn't want a roommate.
    - jjeaff 8y ago
      Usually the adult exchanges a roommate for a spouse, who also works to help pay the rent.
      - epicureanideal 8y ago
        Is that how it usually works? That's not what my wife says... oh.
      - chii 8y ago
        > Usually the adult exchanges a roommate for a spouse, who also works to help pay the rent. and then, a child comes along.
        rayiner 8y ago
        And you can have a kid in a 2BR and its not “poverty.”
    - perl4ever 8y ago
      When I got my first job after I got my CS degree in 2007, my rent was under $400 without a roommate and my base pay was about $18/hr. I thought that was pretty good, because it was a real hourly rate, with a significant bonus for overtime.
    - paxys 8y ago
      Well at some point an adult has to stop making entry level wages at a startup as well.
  - throwawayboye 8y ago
    Then you need to go to the ER and suddenly you owe $25,000. Oops.

Tade0 8y ago

To me this article indirectly implied that everything would've been okay if only the workers shouldered the risks of this business.

paxys 8y ago

Worst of all, they required college degrees and offered employees $11-$12 per hour?

mud_dauber 8y ago
Exactly. I could push a broom at Home Depot for that much.
- StudentStuff 8y ago
  You'd need to be in a large city for Home Depot to pay that, and even then in places like Austin and especially Boise, many people make less than that per hour. $10 an hour after a bachelors degree isn't uncommon in economically depressed parts of the US.
  - Spooky23 8y ago
    I drove by a Home Depot near Utica, NY advertising $15/hr a few months ago. Utica isn’t exactly a big city or prosperous place.
  - Xeronate 8y ago
    No you don't. I'm from a small town in Ohio and my first job was at Home Depot for $12 an hour 6 years ago.
  - zenexer 8y ago
    Minimum wage is around $12 here in MA, if I recall correctly. There’s been talk of increasing it to $15.
    - cannonedhamster 8y ago
      It just became $11 in 2017 and that's only for non-service workers. Tipped workers still only make $3.75 and STILL have to pay taxes as if they were fully compensated. Tipping needs to go.
- 8y ago

scarface74 8y ago

The problem isn’t the “gig” economy. Having flexible part time work hours can work for some people if they want some extra money and they aren’t the primary bread winner. Also $12-$14 hour is a livable wage in rural America, for full time hours, if you didn’t have to worry about health care. The biggest issue with the gig economy is our insane health insurance system where the only way you can get affordable insurance is through your job. But expecting college students to work for that amount is crazy.

th3iedkid 8y ago
>The biggest issue with the gig economy is our insane health insurance system where the only way you can get affordable insurance is through your job. Are there good books/papers that have good research on this?
- scarface74 8y ago
  The difference between contract work and being an employee is that you have to pay “self employment tax” - the half of Medicare that your employee pays (2.8%) and social security (6.2%). The usual difference between part time and full time employment is subsidized health insurance, paid time off, and sometimes a 401K employment match. At least with the ACA, everyone can get insurance, whether everyone can afford insurance is a different issue. For people like IT workers in the right market, whether to go contract vs. full time is just a numbers question - can you make enough to compensate for having to pay self employment taxes, health insurance, and unpaid time off. For people on the other end of the spectrum - those who are getting paid much less and have to pay thier health insurance - it sucks. The people hit hardest are for some reason some of the same ones who support candidates who want to get rid of the ACA.
  - votepaunchy 8y ago
    The employer and employee each pay 1.45% into Medicare (and OASDI 6.2%) at these salaries.
    - 8y ago

duxup 8y ago

Yeah it's all "omg full time employees" than you read $15 an hour ... oh yeah that's not that much of a cost there. I don't care how many bad charts they put up, their employee costs were pretty low either way I think. They just couldn't float the boat through a storm fundamentally.

dabockster 8y ago
And why full time? Why not part time? Were they paying out benefits?

dabockster 8y ago

> The business model can't afford employee overhead at even poverty salary levels. And on 1099 too. You've managed to play so much financial hop scotch that you've gotten out of paying FICA taxes and labor premiums, and you still can't sustain your business? Just wow.

traek 8y ago
Did you read the article? A big part of their financial problems was that the virtual assistants were full employees, not 1099/contractors.