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Thought of the day: in the same way that Uber succeeds by exploiting the depreciation of its "driver-partners" cars, Zirtual failed because people value a large

Thought of the day: in the same way that Uber succeeds by exploiting the depreciation of its "driver-partners" cars, Zirtual failed because people value a larger paycheck but no benefits over a pay package with benefits but a smaller cash component, even when the package costs the company more to provide and (at least on paper) has more value.

prolikewh0a 8y ago
>people value a larger paycheck but no benefits over a pay package with benefits but a smaller cash component How did you arrive at this conclusion?
- dannyw 8y ago
  The increased churn that Zirtual faced after moving to employees, keeping total cost around the same and making up for it the difference by reducing pay.
  - prolikewh0a 8y ago
    That doesn't really answer my question. What shows that these employees preferred $15 over $12 with presumably employer subsidized health care (they wouldn't have it on contract, I assure you), 401k, and other standard benefits?
    - scarface74 8y ago
      A lot of startups don’t have 401K matching.
    - stale2002 8y ago
      The thing that "showed" that they valued the wages more was the fact that they quit over it, and that it was more difficult to hire people. That's literally what the article says. That people started quiting because of it.
      - prolikewh0a 8y ago
        You can't then make the assumption that they prefer a higher wage over benefits. You can merely take away that they started quitting over having _their wages cut_.
        jpatokal 8y ago
        No, the article says they had great difficulty hiring new people at the lower wage (plus benefits), which they did not at the higher wage (without benefits).
        gred 8y ago
        Just read the article (and the Fortune article which it links to). It will save all of us a lot of time.
paxys 8y ago
Cash definitely matters more up to a certain point, since you can't replace essential needs (rent, food) with benefits. Plus at the rate they were paying (~$11/hr) employees would have likely been eligible for various federal and state programs anyways.
jfim 8y ago
> Zirtual failed because people value a larger paycheck but no benefits over a pay package with benefits but a smaller cash component, even when the package costs the company more to provide and (at least on paper) has more value. One thing that's not mentioned about the gig economy is that contractors on 1099 don't have taxes withheld from their paychecks, so they get the temporary impression that they're getting paid more than their actual post tax amount. They're usually in for an unpleasant surprise when taxes are due.

prolikewh0a 8y ago

>people value a larger paycheck but no benefits over a pay package with benefits but a smaller cash component How did you arrive at this conclusion?

dannyw 8y ago
The increased churn that Zirtual faced after moving to employees, keeping total cost around the same and making up for it the difference by reducing pay.
- prolikewh0a 8y ago
  That doesn't really answer my question. What shows that these employees preferred $15 over $12 with presumably employer subsidized health care (they wouldn't have it on contract, I assure you), 401k, and other standard benefits?
  - scarface74 8y ago
    A lot of startups don’t have 401K matching.
  - stale2002 8y ago
    The thing that "showed" that they valued the wages more was the fact that they quit over it, and that it was more difficult to hire people. That's literally what the article says. That people started quiting because of it.
    - prolikewh0a 8y ago
      You can't then make the assumption that they prefer a higher wage over benefits. You can merely take away that they started quitting over having _their wages cut_.
      - jpatokal 8y ago
        No, the article says they had great difficulty hiring new people at the lower wage (plus benefits), which they did not at the higher wage (without benefits).
      - gred 8y ago
        Just read the article (and the Fortune article which it links to). It will save all of us a lot of time.

paxys 8y ago

Cash definitely matters more up to a certain point, since you can't replace essential needs (rent, food) with benefits. Plus at the rate they were paying (~$11/hr) employees would have likely been eligible for various federal and state programs anyways.

jfim 8y ago

> Zirtual failed because people value a larger paycheck but no benefits over a pay package with benefits but a smaller cash component, even when the package costs the company more to provide and (at least on paper) has more value. One thing that's not mentioned about the gig economy is that contractors on 1099 don't have taxes withheld from their paychecks, so they get the temporary impression that they're getting paid more than their actual post tax amount. They're usually in for an unpleasant surprise when taxes are due.