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Is there any reason to believe the ride sharing companies won't reorganize their drivers using a similar model to what Amazon uses for their delivery drivers: c

Is there any reason to believe the ride sharing companies won't reorganize their drivers using a similar model to what Amazon uses for their delivery drivers: contract to external firms that employ drivers so the parent entity is absolved of responsibility? https://www.nytimes.com/2019/09/05/us/amazon-delivery-drivers-accidents.html https://www.nytimes.com/2019/09/05/us/amazon-delivery-driver...

lr 7y ago
Then that makes them too much (or exactly like) a taxi outfit, which would not go down too well.
DanielBMarkham 7y ago
This is an important point, as many times these laws claim to do one thing and end up doing another. Does this fix a problem? Or does it keep the old problem, just in a new configuration, and add barriers to entry for new participants?
- Nasrudith 7y ago
  I think the answer may be "yes" effectively if it leads to establishing companies of contractors but not without side effects in themselves - like most regulations really. If gig economies lead to working with companies instead of individuals that would lead to two distinct branches. * A self established one would give more regulatory surface for things like training and background check requirements. Not as easy to sign up before any added regulations. Constituents would get more of a pure cut. The barriers to entry would make their labor slightly more valuable. * A traditional company which hires employees. They would have a middleman to make signing up easier but likely less flexibility - which doesn't matter as much to fulltimers anyway. It likely result in a less flexible market with more barriers to entry but it would solve some problems and act as a framework to add more solutions and problems for better or worse. It could be abused to create cartels again or responsibly handle externalities without unduly privileging - it depends on how the tool is used. Second order effects are likely a labor pool that cannot rise and fall as quickly which would stabilize prices for the labor supply and turn instability into a company liability as they may be left with a choice of paying for idle labor for availability and meeting demand for sure or risking being unable to fulfill demand. That said I wouldn't be surprised if widespread roll out of these sorts of laws caused a gig economy bubble to burst - especially given how many are doing a VC dumping strategy of losing money on transactions. I don't really have strong feelings as to what would be the best nor consider myself above an amateur commentator.
Aeolun 7y ago
Does it matter who the employees are employed by? All rules for an employer apply just as well for the employing company as they would for Amazon if they employed them directly.
- quaquaqua1 7y ago
  It does matter. Here's why: Uber agrees to pay X rate currently to drivers. A law is passed that makes X rate even more unprofitable. Uber then engages the services of an external company which provides labor at a lower rate, fires all of the current Uber drivers, and encourages them to work for the new external company. The external company, if sued, does not have the resources that Uber has, and simply goes bankrupt. The drivers are encouraged to work for yet another new company. This process continues for a while as ride quality and driver satisfaction all suffers. Uber gets to lengthen the runway a bit longer, and either a miracle happens and the company continues operations or some other competitor swallows the market.
  - nroets 7y ago
    There is also another reason: If Uber employs the driver and he/she acts unprofessionally, then it's a lot of work to fire him/her before they can hire someone else. (Uber does not want to drag passengers into any type of litigation) If Uber deals with many companies, they can just reduce demand at the company with the bad driver and increase demand at another one. The company with the bad driver can then retrench him, saying they need to cut someone. (Disclaimer, I know very little about Uber and the US and it may not work for them specifically. But the idea certainly applies to other companies)
  - gamblor956 7y ago
    The law allows for veil piercing in situations like that, meaning they could skip the temporary intermediaries and just treat Uber as the employer. Believe it or not, they did think of issues like this when drafting the law. Especially since almost all of these other issues brought up in the comments are decades old and already addressed by existing labor laws.
dangerface 7y ago
Seems fair to me no one wants to deal with the bureaucracy of employing people or being employed why not out source that to a third party? The main problem Americans seem to face with gig economy is the lack of health care but thats americas problem you can't blame employers or employees for it.
- kkarakk 7y ago
  Healthcare, Insurance, Repairs to machinery, Discrimination - There a TON of problems with the gig economy that are being "subsidized" by investors right now.
- mfer 7y ago
  Where I live the gig works make about or a little less than the minimum wage after expenses for vehicles. This doesn't include saving for retirement, healthcare, workmans comp, disability insurance, or a bunch of other things. Basically, even if healthcare were taken care of the amount they make would not be a living wage.
  - blackflame7000 7y ago
    Where did people get this idea that every job must supply a living wage?
    - fzeroracer 7y ago
      Why shouldn't every job supply a living wage? You realize what your proposing is a net societal negative, right? If a person has X amount in their savings and their job is not a living wage, then by definition they are likely going to have to rely on their savings to make up the wage differences. This is kind of a bad thing for capitalistic-based societies because you need people to consume, and if you have a large amount of people unable to consume then that negatively impacts the free market. It's also bad because it places stress on other parts of society. No healthcare means when you eventually get sick or injured the hospital has to take on those costs, which means people pay more while destroying the lives of said injured or sick person. People will have to make up the wage differential somehow, which also means that underclass of workers is more easily exploitable and/or pushed into illegal behaviors in order to survive.
throwaway_law 7y ago
Cost/Benefit. Uber doesn't want drivers classified as employees so they don't have to pay minimum wage, provide employee benefits, pay payroll taxes, or otherwise comply with the law vis-a-vis employees. Yet, it is one thing for Uber to hire drivers as contractors individually where Uber has full control over the terms, in other words no driver is in a position to negotiate their contract with Uber...it is an entirely different thing for the drivers to be organized and those organized drivers now be in a position to negotiate (almost like a union). I think the last thing Uber would do is assist the drivers in organizing...its not just the ability for them to negotiate with Uber collectively either, at that point said driver contracting firm(s) would then be in a position to launch their own ride-share app to compete, unlike say these Amazon driver firms would can't just launch an Amazon competitor.
- middleload 7y ago
  In my country, working as an Uber driver gets you a good salary. I think it's around 1000€ (minimum wage being less than 500€). Is it different in USA? Do they get less than minimum wage for 8 hours?
  - jakelazaroff 7y ago
    Depends on where. New York for example guarantees an hourly wage. But yes, in general they often make less than minimum wage: https://www.theguardian.com/technology/2018/mar/01/uber-lyft-driver-wages-median-report https://www.theguardian.com/technology/2018/mar/01/uber-lyft...
  - cj 7y ago
    According to one analysis [1], working for Uber pays $8.80-$11 per hour (after subtracting car related expenses). The federal minimum wage is $7.25/hr. But certain cities are much higher, for example New York City is $15.00. In San Francisco, it’s $15.59. Also worth mentioning that most of these averages are not taken from drivers working full-time (40 hours per week). So while they may be able to make near minimum wage on an hourly basis, they may not be able to achieve that hourly rate for a full 40 hours per week due to fluctuating demand for rides. [1] https://www.ridester.com/how-much-do-uber-drivers-make https://www.ridester.com/how-much-do-uber-drivers-make
phjesusthatguy3 7y ago
That's what they do now.
deleted 7y ago
[deleted]
dustinmoris 7y ago
Uber has no USP except the network effect. They are just a taxi company with an app essentially (givent that their self driving efforts havn't fruited at all yet). If they outsource the competency of drivers to an external provider then they are just a taxi company with an app and not even their own driver network, making them even more vulnerable to someone else coming with a better app and using the same driver provider. Customers are the fastest to migrate when price is the main factor and the barrier to switch to a different app is literally just a few clicks in the app store.
- jayparth 7y ago
  He's just talking about a legal reorganization. "Uber Drivers LLC" contracts the employees which is wholly owned by Uber. I don't see how this would actually help them though. Under the new law, Amazon Flex drivers are also categorized as full time employees and the child company would still bear the costs of that
  - apesti 7y ago
    They’re actually talking about Amazon’s delivery service partner program. It’s where Amazon helps people setup independently owned delivery businesses. https://logistics.amazon.com/ https://logistics.amazon.com/
    - sharkmerry 7y ago
      But in those instances, the company contracted by Amazon will now, no longer, be able to use contractors, they would be employees.
- buboard 7y ago
  don't most drivers already work for their competitor as well? they have no "driver network". It was actually one of the good parts of gig work.
- prostoalex 7y ago
  Somebody like WorkforceLogic, ManPower or other temp agency would just handle employment, background verification, compliance and 1099s, they're unlikely to start building apps around their own networks.
gamblor956 7y ago
Labor law jurisprudence allows for piercing the veil when a company outsources its primary revenue generating function.
dehrmann 7y ago
I've seen Uber or Lyft in-app receipts suggest the driver is actually an LLC.
buboard 7y ago
Drivers themselves will probably do that, so they can work for multiple riding companies
mattmcknight 7y ago
So perhaps each Uber Driver could be given the tools to form their own LLC, where they are an employee of that LLC, and that LLC contracts with Uber and potentially other gig services. It could be completely automated for them.
- mvid 7y ago
  Even if it is automated, that is an $800 out of pocket expense every year for LLC fees, and more complex accounting requirements. It's not worth the effort unless you are making significant money or are serious about your business

lr 7y ago

Then that makes them too much (or exactly like) a taxi outfit, which would not go down too well.

DanielBMarkham 7y ago

This is an important point, as many times these laws claim to do one thing and end up doing another. Does this fix a problem? Or does it keep the old problem, just in a new configuration, and add barriers to entry for new participants?

Nasrudith 7y ago
I think the answer may be "yes" effectively if it leads to establishing companies of contractors but not without side effects in themselves - like most regulations really. If gig economies lead to working with companies instead of individuals that would lead to two distinct branches. * A self established one would give more regulatory surface for things like training and background check requirements. Not as easy to sign up before any added regulations. Constituents would get more of a pure cut. The barriers to entry would make their labor slightly more valuable. * A traditional company which hires employees. They would have a middleman to make signing up easier but likely less flexibility - which doesn't matter as much to fulltimers anyway. It likely result in a less flexible market with more barriers to entry but it would solve some problems and act as a framework to add more solutions and problems for better or worse. It could be abused to create cartels again or responsibly handle externalities without unduly privileging - it depends on how the tool is used. Second order effects are likely a labor pool that cannot rise and fall as quickly which would stabilize prices for the labor supply and turn instability into a company liability as they may be left with a choice of paying for idle labor for availability and meeting demand for sure or risking being unable to fulfill demand. That said I wouldn't be surprised if widespread roll out of these sorts of laws caused a gig economy bubble to burst - especially given how many are doing a VC dumping strategy of losing money on transactions. I don't really have strong feelings as to what would be the best nor consider myself above an amateur commentator.

Aeolun 7y ago

Does it matter who the employees are employed by? All rules for an employer apply just as well for the employing company as they would for Amazon if they employed them directly.

quaquaqua1 7y ago
It does matter. Here's why: Uber agrees to pay X rate currently to drivers. A law is passed that makes X rate even more unprofitable. Uber then engages the services of an external company which provides labor at a lower rate, fires all of the current Uber drivers, and encourages them to work for the new external company. The external company, if sued, does not have the resources that Uber has, and simply goes bankrupt. The drivers are encouraged to work for yet another new company. This process continues for a while as ride quality and driver satisfaction all suffers. Uber gets to lengthen the runway a bit longer, and either a miracle happens and the company continues operations or some other competitor swallows the market.
- nroets 7y ago
  There is also another reason: If Uber employs the driver and he/she acts unprofessionally, then it's a lot of work to fire him/her before they can hire someone else. (Uber does not want to drag passengers into any type of litigation) If Uber deals with many companies, they can just reduce demand at the company with the bad driver and increase demand at another one. The company with the bad driver can then retrench him, saying they need to cut someone. (Disclaimer, I know very little about Uber and the US and it may not work for them specifically. But the idea certainly applies to other companies)
- gamblor956 7y ago
  The law allows for veil piercing in situations like that, meaning they could skip the temporary intermediaries and just treat Uber as the employer. Believe it or not, they did think of issues like this when drafting the law. Especially since almost all of these other issues brought up in the comments are decades old and already addressed by existing labor laws.

dangerface 7y ago

Seems fair to me no one wants to deal with the bureaucracy of employing people or being employed why not out source that to a third party? The main problem Americans seem to face with gig economy is the lack of health care but thats americas problem you can't blame employers or employees for it.

kkarakk 7y ago
Healthcare, Insurance, Repairs to machinery, Discrimination - There a TON of problems with the gig economy that are being "subsidized" by investors right now.
mfer 7y ago
Where I live the gig works make about or a little less than the minimum wage after expenses for vehicles. This doesn't include saving for retirement, healthcare, workmans comp, disability insurance, or a bunch of other things. Basically, even if healthcare were taken care of the amount they make would not be a living wage.
- blackflame7000 7y ago
  Where did people get this idea that every job must supply a living wage?
  - fzeroracer 7y ago
    Why shouldn't every job supply a living wage? You realize what your proposing is a net societal negative, right? If a person has X amount in their savings and their job is not a living wage, then by definition they are likely going to have to rely on their savings to make up the wage differences. This is kind of a bad thing for capitalistic-based societies because you need people to consume, and if you have a large amount of people unable to consume then that negatively impacts the free market. It's also bad because it places stress on other parts of society. No healthcare means when you eventually get sick or injured the hospital has to take on those costs, which means people pay more while destroying the lives of said injured or sick person. People will have to make up the wage differential somehow, which also means that underclass of workers is more easily exploitable and/or pushed into illegal behaviors in order to survive.

throwaway_law 7y ago

Cost/Benefit. Uber doesn't want drivers classified as employees so they don't have to pay minimum wage, provide employee benefits, pay payroll taxes, or otherwise comply with the law vis-a-vis employees. Yet, it is one thing for Uber to hire drivers as contractors individually where Uber has full control over the terms, in other words no driver is in a position to negotiate their contract with Uber...it is an entirely different thing for the drivers to be organized and those organized drivers now be in a position to negotiate (almost like a union). I think the last thing Uber would do is assist the drivers in organizing...its not just the ability for them to negotiate with Uber collectively either, at that point said driver contracting firm(s) would then be in a position to launch their own ride-share app to compete, unlike say these Amazon driver firms would can't just launch an Amazon competitor.

middleload 7y ago
In my country, working as an Uber driver gets you a good salary. I think it's around 1000€ (minimum wage being less than 500€). Is it different in USA? Do they get less than minimum wage for 8 hours?
- jakelazaroff 7y ago
  Depends on where. New York for example guarantees an hourly wage. But yes, in general they often make less than minimum wage: https://www.theguardian.com/technology/2018/mar/01/uber-lyft-driver-wages-median-report https://www.theguardian.com/technology/2018/mar/01/uber-lyft...
- cj 7y ago
  According to one analysis [1], working for Uber pays $8.80-$11 per hour (after subtracting car related expenses). The federal minimum wage is $7.25/hr. But certain cities are much higher, for example New York City is $15.00. In San Francisco, it’s $15.59. Also worth mentioning that most of these averages are not taken from drivers working full-time (40 hours per week). So while they may be able to make near minimum wage on an hourly basis, they may not be able to achieve that hourly rate for a full 40 hours per week due to fluctuating demand for rides. [1] https://www.ridester.com/how-much-do-uber-drivers-make https://www.ridester.com/how-much-do-uber-drivers-make

phjesusthatguy3 7y ago

That's what they do now.

deleted 7y ago

[deleted]

dustinmoris 7y ago

Uber has no USP except the network effect. They are just a taxi company with an app essentially (givent that their self driving efforts havn't fruited at all yet). If they outsource the competency of drivers to an external provider then they are just a taxi company with an app and not even their own driver network, making them even more vulnerable to someone else coming with a better app and using the same driver provider. Customers are the fastest to migrate when price is the main factor and the barrier to switch to a different app is literally just a few clicks in the app store.

jayparth 7y ago
He's just talking about a legal reorganization. "Uber Drivers LLC" contracts the employees which is wholly owned by Uber. I don't see how this would actually help them though. Under the new law, Amazon Flex drivers are also categorized as full time employees and the child company would still bear the costs of that
- apesti 7y ago
  They’re actually talking about Amazon’s delivery service partner program. It’s where Amazon helps people setup independently owned delivery businesses. https://logistics.amazon.com/ https://logistics.amazon.com/
  - sharkmerry 7y ago
    But in those instances, the company contracted by Amazon will now, no longer, be able to use contractors, they would be employees.
buboard 7y ago
don't most drivers already work for their competitor as well? they have no "driver network". It was actually one of the good parts of gig work.
prostoalex 7y ago
Somebody like WorkforceLogic, ManPower or other temp agency would just handle employment, background verification, compliance and 1099s, they're unlikely to start building apps around their own networks.

gamblor956 7y ago

Labor law jurisprudence allows for piercing the veil when a company outsources its primary revenue generating function.

dehrmann 7y ago

I've seen Uber or Lyft in-app receipts suggest the driver is actually an LLC.

buboard 7y ago

Drivers themselves will probably do that, so they can work for multiple riding companies

mattmcknight 7y ago

So perhaps each Uber Driver could be given the tools to form their own LLC, where they are an employee of that LLC, and that LLC contracts with Uber and potentially other gig services. It could be completely automated for them.

mvid 7y ago
Even if it is automated, that is an $800 out of pocket expense every year for LLC fees, and more complex accounting requirements. It's not worth the effort unless you are making significant money or are serious about your business