>It's very possible that Uber/Lyft will decide that the overhead of being an employer is not worth the reduced revenue, it's not like they're making a lot of money in the first place.
Here's the thing... they're not making _any_ money in the first place. Every single segment of Uber's business is loss-making. So AB5 will uh, force a loss-making, VC-capital-burning, parasitic business to be slightly more loss-making at the cost of providing a living wage to drivers?
The whole situation is frankly absurd.
It’s not axiomatic that Uber is supposed to exist. I think it should, but that is a matter of opinion.
It’s like Walmart saying, “if we pay a living wage we’ll become unviable!” Well, maybe you should be. Maybe stuff shouldn’t be that cheap.
The point of labor laws is to force companies to conduct business in a way that doesn't infringe on the rights of employees. Making certain business practices financially unsound is the point.
Uber/Lyft have found a loophole that enables them to skirt by one of the "Riders Must Be At Least This Tall" measuring sticks, and the law basically says: No, you actually have to be this tall, sorry.
I don't see what the issue is.
It's a backwards way of going about it. Instead of forcing anyone who ever wants to hire a human being to pay for their health insurance, the government should be providing it for everyone.
If I want to hire teenagers on my street to mow the lawn or babysit the kids, should I be forced to pay them benefits as well?
The alternative is the way California is heading: instead of taking care of people's needs directly, it's regulation after regulation to lock everything up so that only entrenched corporations with the scale to afford all these benefits can afford to operate.
No, that kicks in once you have 50 or more of them and they work for you full time.
> The alternative is the way California is heading: instead of taking care of people's needs directly, it's regulation after regulation to lock everything up so that only entrenched corporations with the scale to afford all these benefits can afford to operate.
These companies spent almost 200 million for this proposition (highest in California history, and since it's California - highest in all of the states). They are not poor mom and pop shop.
> I don't see what the issue is.
The issue is that uber and lyft will likely shutdown in much of california.
I guess you can think that this isn't bad, if you want. But I can assure you that many of their drivers, and customers, do not agree with you.
> Making certain business practices financially unsound is the point.
Ok, fine. But most of their california drivers probably disagree with you that it would be good for them to be fired. Most of them probably do not want to be fired. Which will likely happen.
> I guess you can think that this isn't bad, if you want. But I can assure you that many of their drivers, and customers, do not agree with you.
I'm not sure about that:
https://www.cnet.com/news/uber-drivers-sue-they-say-company-coerced-them-to-support-prop-22/ https://www.cnet.com/news/uber-drivers-sue-they-say-company-... and who cares about the customers? Many of their customers wouldn't have problem if Uber was using a slave labor as long as price is low, and ultimately that's what it is about.
> who cares about the customers?
Well the customers do. Most people are customers are something.
And most people would say that the opinion of customers matter.
If your opinion is "I don't care about the opinion of people who buy things", I guess you can feel this way. But most of society and our legal system regarding businesses is targeted toward consumer welfare.
I think you might be conflating two related things. The unit economics of Uber/Lyft, in principle, work out. If there was no way for them to make a profit nobody have invested in them.
They're currently unprofitable in the same way that Amazon spent a decade being unprofitable; every cent was invested back into growing future revenue. It's a little different; if Uber flipped their switch and started taking a profit Lyft would swoop in and steal away market share. But the unit economics do work out, I'm claiming that once prop 22 fails there will be markets for which the unit economics will no longer work out at all.
This is what always surprises me on HN when talking big tech. Same level of arguments as an online news article.
Have you even read their latest releases? Ridehailing in US as a singular unit is insanely profitable. The take home is incredible.
Look up "hollywood accounting" - making money is bad, that means paying taxes - companies like uber make tax deductible losses.
https://thespinoff.co.nz/business/13-01-2020/uber-is-a-case-study-in-our-complicity-with-tax-avoidance/ https://thespinoff.co.nz/business/13-01-2020/uber-is-a-case-...
> No matter what you think of the morality of the existing setup, the failure of Prop 22 will force some large structural changes to how it operates.
No it won’t. Uber and Lyft will operate identical to how it is today. They will outsource the HR and employment issues to staffing agencies.
Drivers will simply have to be “employed” by one of these agencies and then go about driving the same way they are now. These agencies will likely allow their “employees” to drive for whatever companies the agencies have agreements with during their shift and call everything over minimum wage “incentive pay”.
Uber, Lyft etc will contract these staffing agencies and pay them per ride instead of the drivers and the agencies will passthru that income minus their cut.
You can't defeat a structural problem with staffing agencies. If the drivers are the employee of anybody, they don't get to choose when they work, or how often, or where. Some of the drivers need that, so they lose work. The riders in the areas or times served by those drivers can no longer get rides, or have to pay more, and then more people drive drunk and lower income people pay more for transportation.
If the employer has to provide benefits, those costs have to be passed on to the riders, even if there are drivers who don't need those benefits, e.g. because they get them through a spouse or a second job. Then costs increase even more and there aren't as many riders, which means there aren't as many drivers and even more lose their jobs.
How is a staffing agency supposed to solve any of that?
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> If the drivers are the employee of anybody, they don't get to choose when they work, or how often, or where. Some of the drivers need that, so they lose work.
There's nothing about having a staffing company involved that forces drivers not to pick when they work or how often or where. When you're a contractor, your contracting company cannot enforce those things, however, when you're an employee, you absolutely can have those things -- or not -- at the discretion of your employer subject to the terms of your employment relationship.
All having a staffing agency involved does is force a minimum wage, and an employer-employee relationship. They, the staffing company, take on fares from Uber and disperse them across their drivers. They pool the fares to provide a minimum wage and benefits, and then anything else above that gets distributed to the driver who created the specific revenue as "incentive pay" in exactly the way the parent suggested. Or as profit sharing proportional to work performed.
There's nothing crazy or unprecedented about this.
tl;dr: The company contracting you cannot tell you when and how to work, an employer can -- but does not have to.
> It seems likely that this will cause ride-sharing not to be economically feasible in rural areas where per-driver utilization is low.
Or they will have to make allowances for areas that have very low supply and/or supply that is very dispersed. For example, charging for some/all of the the time/distance from the driver's origination point to the pickup point. That will necessarily make ride sharing more expensive in those places, but that's because providing rides in those places is more expensive.
Another option that might work in tandem is to allow drivers to log in as a sort of "if the offer is good enough I'll take it" sort of tier, and then you might get a lot more people in rural areas signed in in that state, and while any one potential driver might reject, a lot more eyes might see it that wouldn't bother to have been looking before, and that might make cheaper rides more likely as closer people are logged in as potential drivers. It's worth noting something like this might also have kept Uber/Lyft from having to classify the drivers as employees in the first place, since as I understand it choice of work is a big part of why they didn't qualify as contractors.
> It's also possible they'll decide they won't want to dilute their brands by offering a service which makes you wait 7 minutes for a ride.
7 minutes is actually on the lowest end I've seen where I live, and that's in a metro area of ~250k people. Usually it seems to be around 15-20 minutes. Maybe it's just particularly slow around here, but my guess is that you don't get under 10 minute pickup times on average anywhere except for major cities.
> Or they will have to make allowances for areas that have very low supply and/or supply that is very dispersed. For example, charging for some/all of the the time/distance from the driver's origination point to the pickup point. That will necessarily make ride sharing more expensive in those places, but that's because providing rides in those places is more expensive.
Yeah, definitely. I agree that to make it work they'll have to raise prices. My guess is that they'll have to raise prices by so much that riders decide to just drive themselves. If drivers must be paid minimum wage that might raise the cost of a ride by enough that in some locations there is no clearing price.
> Another option that might work in tandem is to allow drivers to log in as a sort of "if the offer is good enough I'll take it" sort of tier
AB5 is strict enough that this will not save Uber. You are an employee unless "The person performs work that is outside the usual course of the hiring entity’s business." Though, they did experiment with this model [1] and I wonder why they decided not to pursue it. If they had allowed drivers to set their own prices that might have been enough to prevent AB5 from being passed.
> 7 minutes is actually on the lowest end I've seen where I live, and that's in a metro area of ~250k people. Usually it seems to be around 15-20 minutes.
Yeah, absolutely :) Sorry, I should have been more specific! In major cities it's usually something like 2-3 minutes, I would not be surprised if it becomes 7 minutes once prop 22 fails. Wait times in places which are not major cities will increase by even more.
[1] https://www.theverge.com/2020/1/21/21075062/uber-test-california-drivers-set-prices-bidding-ab5-law-gig-workers https://www.theverge.com/2020/1/21/21075062/uber-test-califo...
> The failure of Prop 22 will cause a massive disruption of an existing marketplace
Wait… I thought Uber was in FAVOR of disruption? Will we see a "Venture funded firms against disruption" PAC next?
> ride-sharing
> many drivers will be forced, by AB5, to stop driving.
If it's "ride sharing" then the drivers were going that way in any case, so a lack of paying passengers won't stop them.
If a lack of paying passengers will stop them then they're not "ride sharing"; they're a taxi service, and deserve the associated legal protections.
The stunning success of Uber/Lyft shows that there's a massive segment of consumers who were not satisfied by traditional taxi services and prefer the alternative Uber/Lyft offer. There's also a large contingent of drivers willing to become drivers under the current model. All of them seem to disagree with you on your opinion that things were fine, actually, just the way they were before Lyft/Uber arrived.
I agree with the argument I think you're implying: there's a minimum level of protection that everyone should be afforded. Though your assumption that your employer must be the source of those protections seems unwarranted. If people deserve healthcare then surely unemployed people also deserve healthcare. If people deserve a minimum standard of living, some kind of minimum wage, then surely even the unemployed deserve that minimum standard. And once even the unemployed have these protections, what does it matter whether you're an employee or a contractor?
Why not attack the problem from that direction?
> Why not attack the problem from that direction?
This is the workers' rights version of a gadgetbahn. I am arguing for universal healthcare and for central government to cover things like medical leave and childcare. As and when that's actually implemented, I might support some relaxation of the standards for when people are considered as employees (though I suspect Uber probably wouldn't care whether these people were classified as contractors if it didn't mean they were on the hook for healthcare and benefits). In the meantime, the laws that we currently have are that employers are required to provide these things; Uber needs to step up and fulfil their legal obligations.
Well... Taxi drivers are just small private businesses that are loosely associated, in practice.
Making drivers that take contracts from Uber employees of Uber is so unreasonable, that even in London black cab drivers aren't treated the same way.
This may buttress your point: in Denmark there are very strict labor laws and a very old taxi medallion cartel. Taxi drivers must be guaranteed a base pay, be insured, certified, so on and so forth. At any given time dozens of taxis can be seen queuing up for their right to a ride with no one taking them. Those drivers are all being guaranteed a very high rate and they all drive Mercedes Benz.
We had Uber for a short period and consumers loved it. The taxi medallion cartel got together and pressured the Danish government to push on Uber. The government complied with hefty fines. Uber left.
Now things are back to what they were: hundreds of taxis idling somewhere in Denmark to protect the cartel and no one taking taxis because it's literally 50 dollars for a 15 minute ride. It sucks. Everybody hates it except the taxi services. I really hope this isn't what happens in the States.
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So how are they still in business. Do they survive by overcharging the few customers they get. One benifit I see is with lower maintenance cost.
overcharging the remaining customers and government or similar work: If you are in an old peoples' home, refugee camp, etc, no public transport available and you need to see the dentist, government or health insurance will pay for the taxi. (at least that is the situation in Germany)
They cornered the market and there are plenty of situations where a taxi is more or less necessary.
Uber got kicked out of Israel as well - the taxi driver cartel wouldn't have it.
On the other hand, Japan has amazing taxis and they're everywhere all the time, AND extremely affordable. Japan also has very strict labor laws, and becoming a driver is not the easiest thing in the world.
I don't think it is. If an employer sends a memo to all staff that says "If this law stands, we cannot continue as a business in California, and this could mean disruption to employment." It's not directing anyone to vote for anything, just informing them that hey, this will be very bad if it becomes law. It's up to the employees if they want to vote for or against the measure.