Gig business predates the internet. Aside from traditional forms of self-employment such as plumbing, ad-hoc service offerings have long been found in the Yellow Pages and newspaper classifieds, and later replaced by Craigslist and Backpage. Low-cost broadband has enabled the proliferation of computer-based gig platforms like Mechanical Turk, Fiverr, and Elance, which offer almost anyone extra pocket change. But once smartphones took off, anywhere could be an office and anything could be turned into a gig — and thus the gig economy was born.
Perhaps it was a combination of technological progress and widespread financial anxiety after the 2008 recession, but the outlook was grim, people needed money, and many didn’t have the freedom to be picky about how to make it. This was the era when the phrase “sharing economy” was popularized – it was sold in an instant. antidote to excessive consumption but freedom from possession belied the more disturbing commodification of any skill or asset. Of all the companies, no company has gone further or stopped more than Uber to take advantage of this climate.
Uber became notorious to enter new markets by rail without approval from regulators. He cemented his reputation as a corporate ne’er-do-well through a Byzantine scandal to avoid regulatory scrutiny, over several small ones user privacy and minimally useful additional fees as well as, in its infancy, domestic reputation sexual harassment and discrimination. Previously, the company used its deep reserves of venture capital to subsidize its journeys, eating away at the traditional taxi industry in a given market. ultimately increases prices and try to minimize the driver’s pay after reaching a dominant position. Those resources were used aggressively to recruit drivers with sign-up bonuses and convince them they could be their own boss.
Self-employment has a liberating scent, but Uber has effectively turned a traditionally employee-based industry into a contractor-based one. This meant that one of the first victims of the ride-sharing boom was taxi medallions. For decades, taxi drivers in many places saw these licenses as retirement plans because they could sell them to new entrants when it was time to hang up their flat caps. But the value of the medallions has plummeted, largely due to the influx of ride-sharing services. in the last decade or so – for example, in New York the value of the medallion It fell from about $1 million in 2014 to $100,000 in 2021. This equates to reduced earnings, and many find it difficult to repay the large loans they took out to purchase the medallion.
Some jurisdictions have attempted to compensate for this collapse in medallion value. Quebec pledged C$250 million in 2018 compensate taxi drivers. Other regulators, notably in Australia, have imposed per-fare fares on ride-sharing services as part of the effort. change taxi licenses and compensation to medallion holders. In each of these cases, taxpayers and drivers, not rideshare companies, bore the brunt of the impact on medallion holders.
At first it was just taxi drivers that suffered, but over the years compensation for this new class of non-employee software drivers dried up. Uber in 2017 He paid 20 million dollars Settling Federal Trade Commission allegations that it used false promises of potential earnings to entice drivers to join its platform. Late last year, Uber and Lyft settled It has to pay 328 million dollars After the state launched an investigation into wage theft of New York drivers. The settlement also guaranteed a minimum hourly rate for drivers outside of New York City, where drivers are already subject to minimum rates under Taxi and Limousine Commission regulations.
Many rideshare drivers seek to be recognized as employees, not contractors, so they can have consistent hourly wages, overtime pay and benefits — efforts similar to those of Uber and rival Lyft they fought against. Ministry of Labor in January issued a final rule It aims to make it harder for gig economy companies to classify workers as independent contractors rather than employees. The EU also weighs a temporary contract reclassifying millions of program workers as employees.
Of course, the partial erosion of the labor market of an entire industry was not always the ultimate goal. At one point, Uber wanted to get rid of drivers entirely and reduce labor costs to zero. He planned to do this by creating a fleet of self-driving cars and flying taxis.
“The reason Uber is expensive is because you’re not just paying for the car, you’re paying for the other friend in the car,” said former CEO Travis Kalanick He said in 2014, a day after Uber suggested drivers could earn $90,000 a year on the platform. “When you don’t have another friend in the car, the cost of taking an Uber anywhere is cheaper than owning a vehicle. So there’s the magic, you basically drive the cost below the cost of ownership for everyone, and then car ownership disappears.”
Uber’s big automation plans didn’t go as planned. The company sold its product under current CEO Dara Khosrowshahi self-driving car and flying taxi units At the end of 2020.
Uber’s success has also had secondary effects: despite a business model best described as “burning money until a monopoly is established”, many startups have been born that take their cues from Uber or openly present themselves as “monopolies”. “Uber for X.” Of course, you can find better and cheaper places to stay than a hotel room on Airbnb or Vrbo. But studies have shown that such companies hurt housing affordability and affordability in some markets, as many landlords and real estate developers prefer more affordable short-term rentals instead of offering units for long-term rent or sale. Airbnb has faced many other challenges over the years a series of lawsuits a mass shooting in a rented house.
Increasingly, this becomes the plan. Goods and services are exchanged by third parties, assisted by a semi-automated platform rather than a human. The platform’s algorithm creates the thinnest veil between choice and control for workers performing the same work as the industry it replaces, but this veil allows the platform to avoid traditional pesky things like legal liability and labor laws. Meanwhile, customers with fewer alternatives are now trapped by these once cheap platforms that come to collect their fees. Dazzled by the promise of innovation, regulators made or signed a deal with the devil. It is others who pay the costs.
Note Engadget’s 20th Anniversarywe’ve been revisiting products and services that have changed the industry since March 2, 2004.
