> "Under the contractor model, Lee says, the leaders at Luxe hadn’t been able to schedule workers for unpopular hours like late nights on Friday and Saturday; they could only bribe them to come online with higher rates of pay, as Uber does with surge pricing."
Seriously? If someone is working Friday nights or Saturday nights, he SHOULD have higher pay. What it is with CEOs that they feel they are entitled to their worker's entire existence?
To me, that always smacks of profit margins that are so razor thin the business is having trouble staying afloat.
In this case it may just be poor wording. It doesn't say that they cared that they had to pay more, just that it was required to get people to work, which seems reasonable as you said.
Are you suggesting this to be the norm across industries? Like, the folks working the registers at Target on Friday night? What about Monday night? Or Wednesday night? How does that differ?
It should be the norm across industries. I don't know if this is done or not in retail, but it is common enough in manufacturing (even in non-union shops). It event has a name; it's called a shift differential, and it can be quite lucrative for the employee. Especially if they can work a normal 40-hour week and pick up a night shift on Saturday or Sunday. That one additional shift, with the shift differential and overtime could be the equivalent of two and a half or three normal days.
Though it sounds like on the Federal level, the employee must work a majority of their hours within a particular time period to qualify:
Night shift differential means the differential paid for work performed when the majority of a prevailing rate employee's regularly scheduled nonovertime hours fall between 3 p.m. and 8 a.m. It is computed as a percentage of the employee's rate of basic pay.
Well, it's not entirely irrational that a society might decide that having to work in a way contrary to the natural diurnal cycle deserves higher pay. (Yes, I am suggesting that perhaps our society's obsession with having things like retail stores available 24/7 might not be healthy.)
That's reasonable, but we're talking about more than just 24/7 retail here. Even in the days before the 24 hour grocery store, restaurants and bars were open on Friday and Saturday nights (and most evenings, for that matter), and I don't believe those folks received higher pay.
Don't get me wrong, I think the U.S. 24/7 retail economy is bonkers, but I'm not sure it's reasonable to just bless 9-5 as the official time of economic activity. In the 1990s, I ran a climbing gym, and typically worked 3pm-11pm (or some variation of that) Monday through Friday. I kinda liked that schedule, as it allowed me to be more productive with "life" stuff because I could accomplish things before I went to work.
Just because something has always worked one way doesn't mean it always will continue to work that way.
If a business is having trouble staffing during certain time periods then it's a pretty clear indicator that they might need to offer more to entice people to work those hours. It seems like a pretty clear example of the free market in action.
Just so we are on the same page...when you say "working late" do you mean "working more than 8 hours on a given day" or "simply working outside of the 9am-5pm timeframe?"
I'm talking crazy inconvenient shifts. That can mean different things depending on the location and job but pretty much Dracula hours and double/triple shifts fall into this.
Come on, there is that whole "If you do what you love it's never going to work" meme permeating this (online) community and others. With the proverbial and tangential American dream meme it's no wonder some leaders are going to enforce it (especially if they are hungry, if they are foolish).
It works for some, but not for everyone. And not for their entire life.
"Under the contractor model, Lee says, the leaders at Luxe hadn’t been able to schedule workers for unpopular hours like late nights on Friday and Saturday; they could only bribe them to come online with higher rates of pay, as Uber does with surge pricing."
That's not bribery; that's simple supply and demand.
Structurally identical: "The leaders at [insert startup here] hadn't been able to employ engineers for free, they could only bribe them with high rates of pay"
You're right, but there is a large group of people who refuse to believe that employment is a functioning market like any other where a resource is bought and sold according to factors including scarcity, difficulty, and pleasantness. For these people, it is easier to describe employment negotiations in terms of exploitation, 'taking advantage', bribery, and power, than to acknowledge it is essentially the same as a business to business negotiation.
I don't see those two ideas as incompatible in the least. Negotiation is all about power dynamics. A functioning market is amoral, whether something is a simple transaction or exploitation can only be judged in context. As technology continues enabling the replacement of labor with capital, the free market worshippers would be well-advised to come to terms with that nuance.
Except it isn't like every other market because most people don't have a choice not to work, whereas they do have a choice not to buy a TV, phone, bigger house, etc.
Employers will exploit this fact and take advantage of people desperate to keep their job.
The market value of your time and energy is not well-defined, while the company has aggregated data so they can better price the value of '1 hour on Friday night' versus '1 hour on Tuesday afternoon'. This information asymmetry is not present when I go to the grocery store, especially with apps that can compare the price of an apple at Safeway vs Market Basket.
In technical terms, there should exist an intersection between your marginal propensity to spend and your marginal utility of leisure (i.e. not working). But if you can't determine your fair 'value' when working shitty hours, then your 'calculations' can't be correct.
Yes. But they do not have a choice not to work. That means that capitalists can collude to drive wages down to unhealthy levels. Even Adam Smith warned us against this and advised the state step in to help the worker.
Right, and to get a worker to fill that demand, you can do a few different things. Yes, you could pay them more to incentivize them to work.... Or you give them something else valuable instead of more money... e.g. A regular job with the benefits of employment.
Just because the extra incentive the company supplies isn't money doesn't mean they aren't still operating in the world of supply and demand.
Sure, that's fine, it's just the article prose struck me as particularly bogus. And if it's based on a quote from the Luxe CEO, that leads me to question his assumptions, priorities, and values.
The biggest issue seems to be control over the work delivered. All of the Uber for X want their service to be a pleasant experience for the customer which is ~98% guaranteed to hit 5 stars or the local equivalent. This generally requires some degree of operational control over the workers. Aside from the (formidable!) difficulties [+] of actually structuring a business to have operational control, that tilts the relationship very, very heavily from "could possibly be an independent contractor" to "presumptively an employee."
Given that one is going to lose a fight with the IRS or local labor department over classification -- and one will, eventually, if you're doing things like e.g. giving the employees checklists or training them on the "company standard" -- might as well bite the bullet early.
[ + ] Many people employed in startups are young and may, how to put this gently, not have experience giving them an appreciation that members of the class which Stanford sources most engineering grads from are not perfectly representative of all Americans in all ways which matter towards employer/employee relationships.
So you are saying, the driver is an employee of the passenger? I definitely control the work delivered when I'm riding. I dictate where to pick me up, and the exact destination. Sometimes I even demand a specific route. And to top it all off, I give the guy a rating.
Uber does none of those things. They don't even tell the driver when to switch the app on and off. So I guess, your point is, that Uber doesn't have much risk that drivers be categorized as employees?
EDIT: I WAS KIDDING GUYS! Except my point about Uber. They really don't seem a bit like an employer to me. Particularly w/regard to control over drivers work. Bigger question, why does anyone think it would be an advantage to drivers to become employees and get lower pay?
Not a lawyer but I'm obligated to be at least partially conversant with this by dint of once being a consultant and now being an employer:
The driver is clearly not an employee of the passenger. A driver given the instruction that they must comply with the passenger's preferences (as opposed to exercising their judgement as an independent business) may well become an employee of the entity enforcing that instruction.
It will probably be remarked upon in litigation over Uber that Uber will terminate their relationship with drivers who fall below a particular cutoff, specifically tells drivers this, and often specifically instructs them in ways to ensure this doesn't happen to them. These do not feel like insignificant facts to me.
I'd ask Grellas to handicap Uber's risk of being reclassified prior to asking me to do it, since he is an expert on this subject and I am not, but even from my lay view of the situation it looks like some of the Uber for Xs are at markedly more risk than others. Uber feels markedly less risky than firms which e.g. develop in-app checklists for heading off particular ops problems.
The individual pays the cost. Today Uber drivers get like 80% of the fare. If Uber needed to pay benefits, give vacation time, etc, the pay rate would be much lower. That would all come out of the 80%. Just like how contract programmers bill a higher rate and get no benefits. Calling someone an employee doesn't suddenly create new money.
I can't imagine uber drivers would prefer a lower rate of pay, but hey, I guess that's what all these advocates of making them employees want us to believe.
Or maybe it raises the question, who is driving all this PR anyway? I can't see it as a grassroots thing from Uber drivers.
> Calling someone an employee doesn't suddenly create new money.
But not calling them employees somehow magically creates money out of thin air to be labelled "profit" for Uber, without any detrimental effects to the rest of society?
There's no intrinsic reason Uber's take is fixed at 20% - maybe their business can only viably employ humans (with all of their attendant needs like health insurance) with a smaller take.
It would be likely for drivers pay to be cut in half, if Uber had to pay them as employees (just based on comparable differences between paying contractors and employees in other fields). Their taxes would also go up since they could no longer deduct the cost of their car and other expenses from their income.
Even if you pared Uber's take back to 10%, or 0%, it wouldn't cover the costs of making them employees. And it's the drivers that would take the hit.
Uber provides a tremendous lead-gen service for drivers. Everyone here who's tried to run a business knows that finding customers is the central challenge of a business. Uber completely handles that challenge for drivers, for a risk-free 20%. That's a pretty good deal.
Maybe they were talking about net[1], or maybe they have a large number of short trips? From memory (from talking with drivers), the formula is:
driverDollars = (fareDollars - 1)*0.8
If a driver is mostly taking people one or two blocks, the fares are going to be in the $3-5 range. That means the $1 "safe ride fee" (or whatever it's called) is already 20-30% of the fare, so Uber's total take on short rides is closer to 50%. It's one of the reasons drivers don't like short rides.
[1] edit: By net I mean after driving expenses, not after Uber's take.
I just talked with a driver. He said the 80% is correct, gross. Because everyone is a contractor the government takes another 30% on top of it. Plus they have to pay their own insurance, repair, gas, etc. so after everything is said and done, he makes about $13/hr. (This is inside San Francisco.)
Some precedent here: Microsoft famously lost a lawsuit regarding contractors vs full-timers in Washington state. You simply can't treat contractors like employees in the state of Washington - you have to make a very clear distinction.
Now, 20 days ago, Homejoy closed down, and I said what I am quoting below:
> the balance of power between the tech company and the "1099 contractors"
That hits the nail on the head. A 1099 contractor (a.k.a. freelancer) has to cut some 30%-40% off their wage to support things like self-insurance, etc (or add yea much). If you're "working" for a gig provider, you're not a 1099 employee by the inherent nature of the thing. Granted, you're not in a normal employer-employee relationship, but neither are you a skilled freelancer contracting your labor out on wages you yourself set and negotiated.
While I fully support the idea of TaskRabbit, Lyft, Uber, Homejoy et al, certain realities have to be faced squarely: they are not being real about the nature of their business. They really are something like employers, with something like employees.
Cheung is likely correct that a third legal category needs to be created (neither 1099 freelancer nor true employee), but in the absence of that, it seems profoundly more ethical to consider the workers employees.
This is kind of interesting. Seems like a lot of trade-offs on both sides that are both good and bad for the person and the company.
Makes sense for companies to want to be in the position to say certain tasks must be done while controlling quality. Makes sense for people to want benefits and steady work/pay.
It doesn't bother me one way or the other how workers get hired, as temps, contractors or permanents. As a worker, I see advantages and disadvantages in all.
Never the less, here it's stated that companies are taking contractors or independents internally as employees in order to have more control over service and presentation. That's something to strive for. As a consumer of good and services, one tends to prefer the one providing better services.
Yet, Japan, which is very service oriented and super customer focused to the extreme, has seen its temp workforce take over. So, it does not seem, in Japan at least that you need permanent employees to get exceptional service. Something does not jibe.
At least in my country, there can be pretty big differences between being a temp and being an "independent contractor".
If you work for a temp agency and they send you to a warehouse, you'll have managers/trainers a few steps away, you'll get paid by the hour, and you won't have to spend your own money.
On the other hand, if you're an "independent contractor" for a parcel delivery company you'll be working alone, you'll get paid by the parcel, and you'll be paying for your own vehicle and fuel and whatnot.
The different environments make a big difference in terms of things like whether an employee can make a loss/less than minimum wage, how much it's in their interests to cut corners, and how long it takes for someone to spot if they're struggling and give them help.
This pops out at me and raises an argument I frequently had with managers when I worked in restaurants.
>Managers will have to make sure workers are taking breaks.
I almost never wanted to take a break while working for an hourly wage. I realize I am an exception, and I do not intend to raise issue with the requirement that breaks be offered, but I do find it odd that it is someone's job to ensure that I do not do something I want to do, and that my employer would prefer I do.
When working hourly, breaks tend to entail time spent in an unappealing space, without much time to do anything worthwhile, and not getting paid to do so.
Particularly with waiting tables, even a 30 minute break in a slow time would probably lose me 1-3 tables which could translate to anywhere from $3-$30. At an hourly rate, that's a decent chunk.
If anything I'd prefer to work a shift that is simply a half hour shorter, so I could actually go home and do things I'd like to do, rather than sit in a dingy breakroom while losing money.
I feel like Silicon Valley tends to think they can save money by skipping out on whatever big businesses have always done, until they find out later that it was a bad idea, and businesses did things that way for a reason. It's what happens, I think, when 20-somethings think they know what they're doing over experienced people with 20-something years of experience in the business world.
You have to imagine that those with 20 years of experience in the business world inherited their practices from the people above them. This means people are prone to getting trapped in a certain mindset and a way of doing things, because that is just "the way it has always been done". Whether or not SV is improving on these traditional practices is certainly up for debate, but you can't fault them for breaking from the mold and trying something different. That is where innovation comes from.
Yup, especially considering that new technologies emerge that break old assumptions about how things work. "The way it always has been done" works until it doesn't.
It's often rooted in just saving overhead in the the slimmer startup days by experimenting with shortcuts and "innovations".
Big business processes and techniques often take big business capital and big business experience. But as demonstrated by the success of many startups that avoid traditional processes in those early days, the processes are not strictly necessary.
Avoiding them may prove brilliantly competitive, or may prove to be some organizational debt that gets carried forward. Either way, the early days of a startup are very sensitive, and a little savings can make a world of difference.
I would argue that both type of thinking have their places. Some assumptions are no longer valid because of how the society has changed. There are innovations like internet, mobile etc. in the last 15 or so years that have had high impact on society. It is really hard to get the correct rationale behind practices, which can then be evaluated. Startups help in trying stuff and innovate. On the other hand, economic stability that allows these startups to actually spend this cash comes due to these established practices.
Nothing wrong with experimenting. But if they're going to experiment they should research first why some practice is in place. Maybe someone smarter has already done the experiment.
But yeah, there's a lot of the attitude of we'll just do everything different. That's just wrongheaded, stubborn and immature.
That said, age is only a small part of the issue. I'm older and there's still a lot more that I don't know than there is that I do know. I don't expect that fact to change in a fundamental way: there will always be far more that I don't know.
The problem is that Silicon Valley people are arrogant and don't listen. They call the rest of the country "the paper belt" and think that regulators are just stupid, without taking time to understand why the regulations exist in the first place.
Also, there are a lot of older, man-child VCs who aren't 20-somethings and ought to know better.
Much of the youth/inexperience image that Silicon Valley wants to project is out of an intention to create plausible deniability when these companies do wrong. (The same with "Aspie chic"; Evan Spiegel is a lot of things, but I don't think that he has Asperger's, and I wish these people would stop using a real disease that they don't have to justify assholish behavior.) In comparison, if you're 55 and your company is at the center of a sexual harassment scandal, you can't use the "I didn't know any better" excuse or the "I was crushing code 20 hours per day, but I'll create a token 'Chief Cultural Officer' position and pretend to have solved this" justification.
Please, this is just click bait. The startups cited in this article are just series A companies bleeding money. A very unsubstantiated article. It's the same thing as when that one Uber driver in California was declared an Employee, there was a slew of news articles saying it was uber's downfall. But if you actually read the coverage of the case, you'd see that that court case applied to that driver and that driver alone and has not really had any repercussions through now. Then again I guess Time.com isn't the go to place for tech journalism, but still it's just not good journalism to speculate like they do in this article.
Seriously? If someone is working Friday nights or Saturday nights, he SHOULD have higher pay. What it is with CEOs that they feel they are entitled to their worker's entire existence?