[newbie912]

These mistakes and the ending advice are pretty distracting tangents to a fundamental flaw: The business model can't afford employee overhead at even poverty salary levels. Everything else is just noise.

The best take away is yet another damning piece of evidence against the "gig" economy.

[Tade0]

To me this article indirectly implied that everything would've been okay if only the workers shouldered the risks of this business.

[scarface74]

The problem isn’t the “gig” economy. Having flexible part time work hours can work for some people if they want some extra money and they aren’t the primary bread winner.

Also $12-$14 hour is a livable wage in rural America, for full time hours, if you didn’t have to worry about health care.

The biggest issue with the gig economy is our insane health insurance system where the only way you can get affordable insurance is through your job.

But expecting college students to work for that amount is crazy.

[Fomite]

"...if you didn’t have to worry about health care" Also known as That Thing Everyone Will Need To Worry About Eventually.

[Ntrails]

>That Thing Everyone Will Need To Worry About Eventually

(in USA #1)

I never have, and do not ever expect to have to, worry about it, because Euro

[Fomite]

Everyone will have to worry about healthcare eventually, even Europeans. You might not have to pay for it, but that's different from being able to ignore it.

Also, if a scenario is about a U.S. company, and pay in USD, talking about America seems reasonable.

[scarface74]

It works out okay if you’re married and one spouse has insurance.

[jjeaff]

Health Care isn't really affordable through your job. The company is paying a large amount for it, rather than paying you that money in salary.

But you can make decent money in rural America, if you have a family, and still qualify for subsidies through the aca.

[th3iedkid]

>The biggest issue with the gig economy is our insane health insurance system where the only way you can get affordable insurance is through your job.

Are there good books/papers that have good research on this?

[scarface74]

The difference between contract work and being an employee is that you have to pay “self employment tax” - the half of Medicare that your employee pays (2.8%) and social security (6.2%).

The usual difference between part time and full time employment is subsidized health insurance, paid time off, and sometimes a 401K employment match.

At least with the ACA, everyone can get insurance, whether everyone can afford insurance is a different issue.

For people like IT workers in the right market, whether to go contract vs. full time is just a numbers question - can you make enough to compensate for having to pay self employment taxes, health insurance, and unpaid time off.

For people on the other end of the spectrum - those who are getting paid much less and have to pay thier health insurance - it sucks.

The people hit hardest are for some reason some of the same ones who support candidates who want to get rid of the ACA.

[votepaunchy]

The employer and employee each pay 1.45% into Medicare (and OASDI 6.2%) at these salaries.

[scarface74]

Self Employment taxes is one reason I never considered doing side work. Taxes would total almost 50- (Federal 28%, state 6%, SSA 12.4%, Medicare 2.8%).

Now, between the tax cut that makes our marginal tax rate 24%, and that my primary job puts me over the social security maximum, my total taxes would be 32.8%. But I still have a magic number that no one has been willing to reach to make side work worth it for me.

[icedchai]

The nice thing about side work is you can write tons of stuff off as “business expenses.” Your actual taxes are a lot less than you think because of all these write offs.

[paxys]

Worst of all, they required college degrees and offered employees $11-$12 per hour?

[mud_dauber]

Exactly. I could push a broom at Home Depot for that much.

[StudentStuff]

You'd need to be in a large city for Home Depot to pay that, and even then in places like Austin and especially Boise, many people make less than that per hour. $10 an hour after a bachelors degree isn't uncommon in economically depressed parts of the US.

[Spooky23]

I drove by a Home Depot near Utica, NY advertising $15/hr a few months ago.

Utica isn’t exactly a big city or prosperous place.

[Xeronate]

No you don't. I'm from a small town in Ohio and my first job was at Home Depot for $12 an hour 6 years ago.

[zenexer]

Minimum wage is around $12 here in MA, if I recall correctly. There’s been talk of increasing it to $15.

[cannonedhamster]

It just became $11 in 2017 and that's only for non-service workers. Tipped workers still only make $3.75 and STILL have to pay taxes as if they were fully compensated. Tipping needs to go.

[cannonedhamster]

I have literally worked putting paper into boxes for $13/hour. Granted that was decent money, but it definitely made me a lot more loyal and willing to look the other way when the company needed a favor.

[dabockster]

> The business model can't afford employee overhead at even poverty salary levels.

And on 1099 too. You've managed to play so much financial hop scotch that you've gotten out of paying FICA taxes and labor premiums, and you still can't sustain your business?

Just wow.

[traek]

Did you read the article? A big part of their financial problems was that the virtual assistants were full employees, not 1099/contractors.

[duxup]

Yeah it's all "omg full time employees" than you read $15 an hour ... oh yeah that's not that much of a cost there.

I don't care how many bad charts they put up, their employee costs were pretty low either way I think. They just couldn't float the boat through a storm fundamentally.

[dabockster]

And why full time? Why not part time? Were they paying out benefits?

[jessaustin]

That wouldn't be "poverty" in the rural South and Midwest, but one does wonder how much recruiting Zirtual would have done in those regions...

[driverdan]

$11-12/hr is poverty everywhere in the US.

[gnicholas]

$12/hr is about $24k/yr, which appears to be double the poverty level for one person: https://aspe.hhs.gov/poverty-guidelines

Not saying $24k is a lot of money, just pointing out how low the poverty line actually is in government regulations.

[rayiner]

I don’t think you realize how cheap most of the US is. If you get 40 hours a week, that’s $2,100 per month. You can rent a 2BR in Des Moines for $700 per month; split that with a roommate and your rent is $350. That probably leaves about $1,300-1,400 which is totally doable for a single person. (I spent less than that after rent while I was in law school, and I went out all the time, etc.)

[TylerE]

At some point an adult doesn't want a roommate.

[jjeaff]

Usually the adult exchanges a roommate for a spouse, who also works to help pay the rent.

[chii]

> Usually the adult exchanges a roommate for a spouse, who also works to help pay the rent.

and then, a child comes along.

[epicureanideal]

Is that how it usually works? That's not what my wife says... oh.

[perl4ever]

When I got my first job after I got my CS degree in 2007, my rent was under $400 without a roommate and my base pay was about $18/hr. I thought that was pretty good, because it was a real hourly rate, with a significant bonus for overtime.

[paxys]

Well at some point an adult has to stop making entry level wages at a startup as well.

[throwawayboye]

Then you need to go to the ER and suddenly you owe $25,000. Oops.

[StudentStuff]

Austin may be skewing your perspective due to the recent run up in rent, I know more than one person who lives on $11/hr. Most don't live on the coasts or in a major city though! Housing is really cheap in some parts of the US, though it isn't a great life to earn that little after getting a college degree.