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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

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”.

frankydp 8y ago
The entire model is labor arbitrage, with any employer obligation/cost removed. When nonprofits pop up to help gig workers determine if they are actually making any income, the business plans seems pretty obvious.
- jfoutz 8y ago
  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. [1] https://en.wikipedia.org/wiki/The_Market_for_Lemons https://en.wikipedia.org/wiki/The_Market_for_Lemons
  - thatoneuser 8y ago
    Oh totally. Hell, lyft and Uber straight up withhold information for the explicit purpose of coaxing workers to do work they wouldn’t otherwise do.
    - ithinkinstereo 8y ago
      A hallmark of a scam is unnecessary obfuscation and complexity in the business model (i.e., how you get paid).
- Pristina 8y ago
  not the company's problem, the gig workers cannot into maths.
  - johnchristopher 8y ago
    Neither can governments that promotes the uber-economy then. Or, god forbids, they are accomplices ?! /s
  - watwut 8y ago
    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.
    - kopos 8y ago
      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%.
    - Pristina 8y ago
      It's each individual's own responsibility to consider all information before deciding to partake in any activity. failure to do so is their own fault.
- barry-cotter 8y ago
  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.
  - DanBC 8y ago
    > 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. https://publications.parliament.uk/pa/cm201719/cmselect/cmworpen/997/99704.htm https://publications.parliament.uk/pa/cm201719/cmselect/cmwo... https://www.theguardian.com/society/2018/mar/25/universal-credit-self-employed-benefit-slash https://www.theguardian.com/society/2018/mar/25/universal-cr... https://www.ftadviser.com/protection/2018/03/29/meeting-the-needs-of-the-uk-s-gig-economy/ https://www.ftadviser.com/protection/2018/03/29/meeting-the-... https://www.litrg.org.uk/sites/default/files/Gig%20economy%20factsheet%20FINAL.pdf https://www.litrg.org.uk/sites/default/files/Gig%20economy%2...
    - orf 8y ago
      People on unemployment benefit are denied those benefits if they turn down employment? Oh no! While I'm not saying these gigs are exactly long term careers it's better for the state and for the person than not working.
      - DanBC 8y ago
        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.
devoply 8y ago
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.
- expertentipp 8y ago
  > exploitable cheap labor > 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.
coldtea 8y ago
>you can only pay sub minimum wage for so long before people say fuck it and walk away flipping you off. Not if your other palls in different industries and politics help deprive them of better options...
alkonaut 8y ago
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.
- Jommi 8y ago
  How do you know this much about the market?
  - alkonaut 8y ago
    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.
zozbot123 8y ago
> 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.

frankydp 8y ago

The entire model is labor arbitrage, with any employer obligation/cost removed. When nonprofits pop up to help gig workers determine if they are actually making any income, the business plans seems pretty obvious.

jfoutz 8y ago
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. [1] https://en.wikipedia.org/wiki/The_Market_for_Lemons https://en.wikipedia.org/wiki/The_Market_for_Lemons
- thatoneuser 8y ago
  Oh totally. Hell, lyft and Uber straight up withhold information for the explicit purpose of coaxing workers to do work they wouldn’t otherwise do.
  - ithinkinstereo 8y ago
    A hallmark of a scam is unnecessary obfuscation and complexity in the business model (i.e., how you get paid).
Pristina 8y ago
not the company's problem, the gig workers cannot into maths.
- johnchristopher 8y ago
  Neither can governments that promotes the uber-economy then. Or, god forbids, they are accomplices ?! /s
- watwut 8y ago
  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.
  - kopos 8y ago
    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%.
  - Pristina 8y ago
    It's each individual's own responsibility to consider all information before deciding to partake in any activity. failure to do so is their own fault.
barry-cotter 8y ago
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.
- DanBC 8y ago
  > 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. https://publications.parliament.uk/pa/cm201719/cmselect/cmworpen/997/99704.htm https://publications.parliament.uk/pa/cm201719/cmselect/cmwo... https://www.theguardian.com/society/2018/mar/25/universal-credit-self-employed-benefit-slash https://www.theguardian.com/society/2018/mar/25/universal-cr... https://www.ftadviser.com/protection/2018/03/29/meeting-the-needs-of-the-uk-s-gig-economy/ https://www.ftadviser.com/protection/2018/03/29/meeting-the-... https://www.litrg.org.uk/sites/default/files/Gig%20economy%20factsheet%20FINAL.pdf https://www.litrg.org.uk/sites/default/files/Gig%20economy%2...
  - orf 8y ago
    People on unemployment benefit are denied those benefits if they turn down employment? Oh no! While I'm not saying these gigs are exactly long term careers it's better for the state and for the person than not working.
    - DanBC 8y ago
      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.

devoply 8y ago

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.

expertentipp 8y ago
> exploitable cheap labor > 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.

coldtea 8y ago

>you can only pay sub minimum wage for so long before people say fuck it and walk away flipping you off. Not if your other palls in different industries and politics help deprive them of better options...

alkonaut 8y ago

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.

Jommi 8y ago
How do you know this much about the market?
- alkonaut 8y ago
  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.

zozbot123 8y ago

> 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.