The Gig Economy Will Not Abolish Working 9 to 5

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Image source: Shutterstock

By Rory O’Farrell, OECD Economics Department.

There is little new about the ‘gig economy’. The word ‘gig’ originates from 1920s jazz musicians who played a small concert or ‘engagement’ at a venue. Dolly Parton may have sung about working 9 to 5, but her life was moving from one gig to another. We have always had plumbers, electricians, and lawyers who do temporary work, and are not paid by clients when they are idle. However, do new apps such as Uber or Deliveroo mean the end of the 9 to 5 job, and do these platforms need to be regulated?

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How the Gig Economy Pits Casual Labor Against Full-Timers

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Antoine Imbert | Flickr

Some people work in the gig economy because they want to, others because they have to. In a study of Uber and Lyft drivers, of which there are nearly a million in the U.S. alone, researcher Alex Rosenblat found that the interests of these two groups are different — and sometimes opposed (Harvard Business Review).

Here’s how that works: Only about 20 percent of drivers are full-time or near, but they handle a large proportion of rides taken. The majority of drivers, who are casual part-timers, give Uber flexibility, and the drivers are happy to get some spare cash. But the existence of this reserve pool gives the platform owner a buffer against the demands of the more dedicated workers. If the regulars ask for higher pay or better conditions, Uber can just tap into its reserve of extra workers. As Rosenblat puts it: “The availability of part-time earners reduces pressure on employers to create more sustainable earning opportunities.”

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Don’t Ditch Climate Deal, Hundreds of U.S. Firms Beg

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Anna Callil | Flickr

U.S. withdrawal from the Paris climate deal would be a disaster for American business — that’s according to a whole lot of actual business people (The New York Times).

“Failure to build a low-carbon economy puts American prosperity at risk,” hundreds of CEOs and investors told president-elect Donald Trump in a joint letter on Wednesday. The companies that signed the plea said they would meet the climate-related commitments they’ve made whether or not federal policy changes.

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The Hazards of Ubering While Black

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Ride-hailing services like Uber and Lyft have earned praise for serving minority neighborhoods that old-school taxis often shunned. Now a study for the National Bureau of Economic Research has found evidence that Uber and Lyft can also discriminate against African American riders and women (Bloomberg).

Professors at MIT, Stanford, and the University of Washington collected data in Seattle and Boston and found that black Uber users had to wait longer for rides and got cancelled more frequently. (Lyft drivers see riders’ names and pictures before they accept a fare, whereas Uber’s drivers don’t.) Women riders in Boston were given longer rides and higher fares than male riders headed to the same destination.

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On Uber, workers and regulation

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Regulation stifles innovation. Entrepreneurs must kowtow to bureaucrats. Regulators are always and can only be bad for innovation and customers. Ayn Rand had it right. Or did she?

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A British employment tribunal (basically a court) ruled that Uber drivers could not be treated as self-employed. Rather they should be treated as workers, a class which acquires certain employment rights, such as minimum wage and holiday pay, not present in the self-employed. The Court did not class them as employees, a status which would have conferred even more rights.

Picture of random British judges
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Diversity Happens One Hire at a Time

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Neetal Parekh | Flickr

Companies that realize they’re too homogeneous often complain that the pipeline is empty or the talent pool is depleted — or they find some other metaphor to excuse their inaction. In the end, if you want to diversify your team, you just have to start hiring people who are different from you, whoever you are.

Meetup’s founder Scott Heiferman realized this a few years ago and started taking steps to bring more women into the company’s top ranks. As Jessi Hempel lays out the story (Backchannel), there’s no magic formula or shortcut to achieving such a goal, though there are specific measures that seem to help — like promoting from within and reaching out to candidates who aren’t actively job-hunting.

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Price Transparency vs. Pricing Transparency

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Most consumer-facing companies strive for price transparency. Understandably, consumers want to know how much a good or service will cost before they make a purchase — but what about pricing transparency?

Not transparency over the final price, but transparency over the pricing process?


It’s important to separate the two, because companies can exhibit one or the other, or both, or neither. Companies can change their approach over time as well. Let’s take a look at some quick examples.

Price Transparency

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Is Driving for Uber a Job or a Gig?

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Bfishadow | Flickr

Uber is under new pressure to treat drivers as employees. The New York State Department of Labor ruled in two separate cases in August and September that two “deactivated” Uber drivers were eligible to receive unemployment benefits. Such payments typically only go to full-on employees rather than independent contractors (The New York Times). In some ways these are narrow rulings that “do not directly affect other drivers or extend to other protections normally accorded employees,” the Times explains. But they clearly represent a major challenge to every gig-economy company’s assertion that it its workers are contractors, not staff. Uber maintains that its drivers value the flexibility its model affords them more than anything else, and that flexibility will fade if the company is forced to follow overtime regulations, minimum-wage laws, and other employment rules. Since the unemployment benefits rulings are going to keep coming in piecemeal, and they often conflict with one another, the issue may ultimately only get resolved with new state or national legislation. Lawmakers could, for instance, establish a new labor classification of “dependent contractor” halfway between employee and independent contractor. Are we ready for the Uber Regulation Act of 2017?

Is Elon Musk spreading himself, and his companies’ money, too thin? As Tesla and Solar City prepare for a mid-November vote on their proposed merger, Technology Review asks whether Musk is building a “house of gigacards.” His ambitions are unprecedented: A moderately priced new electric car from Tesla is due next year. A gigantic battery factory in Nevada is under construction. And of course there’s talk of colonizing Mars. All these projects require massive amounts of cash, and it’s not entirely clear where Musk will get the money. Where Musk sees opportunity in how much of the U.S. market for electric cars and solar installations remains untapped, others see risk. The biggest risk of all, writes Peter Burrows, “is that Musk loses credibility by taking on so many huge challenges at once.”

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The Morality of Surge Pricing — II

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In part I of this morality tale I looked at some of the effects of Uber’s surge pricing. Uber raises prices when demand is high — Friday and Saturday nights, say, when a lot of people want to drink without worrying about driving or in the particular case I looked at, after the explosion in the Chelsea neighborhood of New York City (which did turn out to be a bomb, evidently) when a bunch of people in that neighborhood suddenly decided they very much wanted to be somewhere else.

When the price of a ride increases during a time of unusually high demand, there are two effects. Some drivers who might otherwise not drive will find it worthwhile to drive. And some riders who might otherwise have requested an Uber will choose not to. They will either postpone their trips or skip them altogether.

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The Morality of Surge Pricing

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When Uber puts surge pricing in place on a Saturday night, say, two things happen. The first is that some drivers who otherwise might sit at home enjoying life now find it worthwhile to spend time picking up people and taking them where they want to go. The second is that some people who want a ride decide to either delay their trip for a bit or find an alternative way (taxi, bus, walk, friend) to get to their planned destination. Some will decide to cancel their trip when they see the cost of getting an Uber.

These effects are particularly important when there is danger that people wish to flee. Last night in New York City there was an explosion in the Chelsea neighborhood. No one at the time knew for sure what the cause was or whether it was part of more general danger in the area. A lot of people wanted to get out of the area and get out quickly. Surge pricing encouraged drivers to face potential danger. It also signaled to potential passengers whose desire for a ride was not urgent to step aside and make room for those whose need was very urgent indeed. The beauty of prices is that these people do not have to know what is going on. The higher price sends them a message.

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