[LINK] "A Secret of Uber's Success: Struggling Workers"

[rfmcdonald]

Katie Benner's Bloomberg View article suggesting that Uber and like on-demand, on-line services reflect a weak labour market with desperate workers. It's worth noting that when I linked to this article briefly last night, a commenter on my Livejournal noted that "taxis are typically a "when libertarians are right" market artificially constrained by government regulations. Medallions -- the legal right to pick up passengers -- may go for hundreds of thousands of dollars, for a service that most adult Americans with a GPS unit can provide. [. . .] So yeah, Uber et al. may be riding on high unemployment, but there's also a distorted market that's just ripe for disruption. Prices can undercut taxis from bringing supply and demand closer together, not just from exploiting unused labor.

Thoughts?

To become ubiquitous, these companies need lots and lots of cheap contract laborers to serve customers who want them to be available at the push of a smartphone button. But there's a big vulnerability in all of these business models: They wouldn’t work if they had to offer full-time jobs with substantial benefits, and the reliance on contract workers to sustain this burgeoning market has become controversial. Kevin Roose recently noted in New York magazine that an emerging "1099 economy" explains how it's "possible for a cash-flush tech start-up to have homeless workers."

The popular on-call car service, Uber, for example, needs hordes of drivers if it wants to make taxis obsolete and largely eliminate the use of personal cars, presumptions that underpin the company's $18 billion stock market valuation. Nasty battles for drivers between Uber and one of its competitors, Lyft, further hammer home that point.

People are attracted to on-demand gigs because more solid full-time work is still hard to come by in a U.S. economy that has rebounded for everyone but average workers. Should the job market eventually strengthen, workers will have more options and may choose jobs that give them more benefits and more financial control over their lives.

[. . .]

Since the recession began, U.S. unemployment has fallen from a peak of about 10 percent to 6.1 percent. Even so, Brookings Economist Gary Burtless says that an additional two million or so people have been out of work for so long that they've stopped looking for work. And University of Chicago economist Steven Davis says that job fluidity (econo-speak for workers' ability to move from job to job) is stagnant. All of this depresses wages and locks many younger and less educated workers out of full-time positions.

[. . .]

Cash-strapped middle-class Americans are in a better position to work for an employment-on-demand company, since they’re more likely to own a smartphone and a car than the ranks of the perpetually unemployed or adults who are born into generational poverty. But some companies are finding creative ways to expand their labor pools.

Uber, for example, rents smartphones to its workers. It also offers them discounted auto loans and lease agreements to help them secure cars. When Uber announced those financing deals last year, its chief executive, Travis Kalanick told Bloomberg News: “The demand is there, but if we don’t get the cars on the road -- if we don’t help our partners and drivers get cars on the road -- then it just doesn’t matter. We’re just not going to be able to grow.”