[bio4m]

As with Uber & AirBnb this seems to be trend of moving the people providing the actual service from employees to independent contractors. Its a situation where both the consumer and the contractors are less protected and taken care of.

I find this a step backwards; but it remains to be seen if this is just a harbinger of change or just a passing fad.

[slykat]

I have to agree. I think the "independent contractor" model has massive risk to the future of the US. Some of the biggest startups (Uber, Lyft, Airbnb, Homejoy, etc.) are building huge business models built on huge workforces of "independent workforces".

If the trend continues, this could mean a massive shift in the US's labor force from salaried jobs to independent contractors. A lot of folks in the Valley view this as a positive innovation, but I think this is a clear case where the free market is not going to work out what's best for our society.

Imagine a future world where companies like Uber are the norm. A majority of the workforce will face issues like: * No regulation on working hours (i.e. the industrial revolution v2) * Massive healthcare costs born on the taxpayer due to lack of employer provided healthcare (i.e. going past what we already see with corporations like Walmart) * Lack of retirement benefits for the workforce as they age (401k, pension, social security). People may argue that the government shouldn't force people to save, but what is likely to happen is that the taxpayer will bear the burden of supporting a lot of this population. * Lack of unemployment insurance which means that our labor force will largely be unprepared for the normal boom & bust cycle of our economy * Lack of worker's comp which means that employee's won't be shield from low probability high risk events

The scenario feels like a deja vu; during the Industrial revolution, we hit a point where technology progress was leading to inhumane working conditions for manufacturing workers. Eventually regulation caught up, but this was definitely not something that the free market sorted out on its own.

Are we really prepared to live in a society where independent contractors are the majority of our workforce and lack basic labor protections?

[arebop]

* working hours: but this time around, the market for piecework is much more competitive; just look at the lyft/uber drivers for example. * health care: realistically, health care costs for poor people are born by society in any case. The questions are about whether we should do it in a simple, centralized way (socialized medicine) or in more complex ways (employer-purchased insurance companies and laws that require hospitals to provide emergency care) * retirement: Pensions are already dead except for government workers. And it's the government that binds 401(k) plans to corporate employment; that can easily be changed. * insurance: the government already insures the population against risks such as disability and unemployment. We can do more of this or less...

No, our society is not prepared to handle this new way of coordinating labor. I'm sure the political process of agreeing about how to change will be pretty rocky. But the industrial revolution didn't wait for societies to prepare, and I don't see any fundamental reason to think we can't handle this.

[anigbrowl]

Another way to think about this is to analyze the service provider's own business model. Homejoy offers itself to its clients as a 'venue' where they can find qualified cleaning professionals, so the commission they take on their brokerage of cleaning services is a combination of costs, normal profits (essentailly your opportunity cost at market rates), and economic rent (of the brand).

[icebraining]

As an European, I find it funny to see tax-payer funded healthcare depicted as a great tragedy :)

In any case, I'm sure health insurance companies are pretty happy to know they have people volunteering to play the role in this reenactment of Baptists and Bootleggers.

[richsinn]

I think we're in the midst of something like the "Industrial Revolution", but can't quite see it yet. Only in hindsight, once the dust settles, will we be able to make sense of what's happening and changing. We're entering a new kind of economy at a macro scale that the world has not quite witnessed before.

But the changes are happening around us, and I think this "independent contractor" model will be a big force during this new "industrial revolution." Companies, empowered by technology, are trying to become more cost efficient, and in a short-sighted way, the single largest cost sheet for any company are its employees.

Personally, I think Capitalism as we know it will reach its limits once technology reaches a certain threshold of efficiency; we just don't need as many people working the same amount of hours anymore.[1] (isn't that the very definition of efficiency?) Then we as a society will need to figure out another way to live (new-style of feudalism? welfare state?). But until that new model comes in to play, and we're in the middle of this new "industrial revolution", the contractor model will be set to dominate.

[1] http://www.technologyreview.com/featuredstory/515926/how-tec...

[slykat]

Wow, I just typed out something similar, referenced the "Industrial Revolution", and was thinking along the exact same lines as you.

[yummyfajitas]

It's clearly a harbinger of change. The cost of hiring a cleaning service is X+Y, where X is labor and Y is overhead (including insurance, etc). Customers seem to be demonstrating that they are willing to take some risks in order to get services with reduced Y, and workers are demonstrating that they are willing to take some risks in return for money and flexibility.

The only way this is a passing fad is if customer or employee risk aversion suddenly drastically increases. I don't see any compelling reason why it would.

[toomuchtodo]

> and workers are demonstrating that they are willing to take some risks in return for money and flexibility.

Workers are only willing to do this because, as you read in the article, the only other choice is to be unemployed. They are not choosing this voluntarily.

[rzt]

Also, the companies are deflecting costs back onto taxpayers by ensuring that many of their workers will need to depend on government services for health care, housing and food assistance, etc. Sure, some of these taskrabbits/ubers/lyfters/whatever are making a real wage at this stuff, but many of them are also minimally employed –– and trying hard to get work as they can get it.

In so many ways, we are all subsidizing these companies.

[toomuchtodo]

I'm sorry you're getting downvoted; you're absolutely correct.

[rzt]

I can't rely directly to yummyfajitas, but here is a NYT article that summarizes the issue[1]:

"“They may be able to paint someone’s shed this week,” says Dr. Standing, a professor of developmental studies at the University of London. “But they don’t know what will happen next week.”

He views peer marketplaces as part of a larger global phenomenon, in which labor brokers encourage people to work on contingency without basic employment benefits or protections. The companies essentially channel one-off tasks to the fastest taker or lowest bidder, he says, pitting workers against one another in a kind of labor elimination match.

The flexible timetables of project work are a trade-off for regular employment income and benefits. Retailers, restaurant chains and other employers may require more rigid work schedules than piecemeal gigs, or, worse, keep their workers guessing from week to week about which hours they will work. But many of those employers also offer workers benefits like disability pay or commuter discounts.

Uber, Lyft and TaskRabbit, for instance, do not regard the workers who provide services to their users as employees. The companies say they are simply arenas, like eBays for gigs. They require their service providers to work as independent contractors and, as such, the workers don’t qualify for employee benefits like health insurance, payroll deductions for Social Security or unemployment benefits."

http://www.nytimes.com/2014/08/17/technology/in-the-sharing-...

[toomuchtodo]

I think we're seeing the result of this not working out, between Uber and Lyft, Homejoy's article, and TaskRabbit moving away from an auction marketplace.

[yummyfajitas]

I'm confused. Are you trying to assert that if homejoy did not exist, these workers would be receiving higher wages and would not need government services?

Or perhaps that if the government services you describe (e.g., free money if you don't work) did not exist, workers would have a stronger bargaining position to request higher rates from homejoy?

Could you clarify your counterfactual?

[rzt]

Neither of those situations you provide above.

As noted in the article I link and quote further down the thread, these companies utilize an often-desperate workforce that will take whatever they can get to work. These companies keep their workers as independent contractors without any benefits. Sometimes that is fine, especially if someone is working as a Taskrabbit during his/her weekend to make some extra money. But the reality is that many of these people are relying on these services for nearly all their income and then leaning heavily on government support to make up the difference (i.e. what keeps a roof over their head or food in their stomach).

I am not making a case for any wholesale policy change on the part of these new services. I am just stating that there is baggage here and that maybe it would be better if benefits were offered through these jobs to their workers/contractors so that the customer pays for the complete cost of the service and that business model, instead of taxpayers.

And I am no economist or expert in the matter ––– all I know is either from news articles or anecdotes. Maybe I'm wrong.

[grinnbearit]

The value the customer gets from the labour should be higher than the cost the employer pays to labour, otherwise no labour will be bought or sold.

If the price of a persons labour is insufficient for their living needs the only option is to draw it from society (welfare/charity) or have them suffer. Trying to pass that on to the customers or the employers of labour directly will result in unemployment.

[yummyfajitas]

For the programs you describe to be a subsidy for Homejoy/Taskrabbit, then those companies need to actually be benefiting from them. From your description, it seems to be a subsidy for the workers, not Homejoy/Taskrabbet.

[coryrc]

Like everyone else.

[bmm6o]

That's the way the market is moving, but that doesn't mean we have to like it or accept it. Society is not some race to the bottom to be the last person to starve to death in the gutter. A lot of hard-won labor victories (overtime, breaks, termination rights, FMLA, etc) are being lost here and we don't have to accept it. I know regulation and unionization are dirty words here, but they are some of the very few weapons to fight this trend.

[toomuchtodo]

Are you saying that everyone in the country hates their job, is barely scraping by, and only does it because they have no other choice?

[thenmar]

I don't think customers are always informed of that risk though, especially when a company is simply ignoring regulations that the customer assumes are being followed.

[yummyfajitas]

Perhaps Homejoy should put this on their site in order to make sure customers are informed:

“THE COMPANY DOES NOT PROVIDE CLEANING SERVICES, AND THE COMPANY IS NOT A CLEANING SERVICE PROVIDER. . . . THE COMPANY OFFERS INFORMATION AND A METHOD TO OBTAIN SUCH THIRD PARTY CLEANING SERVICES, BUT DOES NOT AND DOES NOT INTEND TO PROVIDE CLEANING SERVICES OR ACT IN ANY WAY AS A CLEANING SERVICE PROVIDER, AND HAS NO RESPONSIBILITY OR LIABILITY FOR ANY CLEANING SERVICES PROVIDED TO YOU BY SUCH THIRD PARTIES.”

[judk]

Which is contradicted by their home page, which says "Get your place cleaned" and "we will come back and re-clean it"

[ryanobjc]

this is a good point, and while TOS may 'legally' protect a company via so-called 'consent' the reality is people often have a different idea of what they THOUGHT they were getting in to and what legally the company claims they can get away with.

This is the kind of things that eventually lead to class action suits, but settling this via the courts takes years.

[ebiester]

It seems more true that workers have signalled that they are desperate. This is doubly true with workers with only a high school education and those who are minorities.

We have some major structural employment issues going on.

[yummyfajitas]

You realize that "structural employment issues" refers to the either a) an inability for buyers and sellers to find each other or b) a bunch of sellers have no willing buyers at any price?

Homejoy is resolving those structural issues by making it easier for buyers and sellers to find each other.

[scarmig]

The ever-growing group b) isn't helped by Homejoy etc. No matter how low their price or how low the search costs get, they still have no purchasers. Their labor has either zero or negative marginal product.

That's a structural issue: just as aging pulls people out of the labor pool, the increased substitutability of capital for labor is pulling out working-age adults from the pool of workers who are realistically able to work. Homejoy etc. does help the people at the margins of this pool who wouldn't otherwise be affordable to employ (e.g. due to overhead costs), but it doesn't obviate the basic structural trends happening.

[yummyfajitas]

Why do you believe group (b) is growing? Is the number of people who are disabled and unable to clean a home or do any other useful work increasing?

[elif]

I don't see either the user or contractor as "less protected" In fact, my experience with homejoy has been the opposite.

When I gave a rating of literally "Meh. 5/10" for a decent but not impressive cleaning job, they went nuts--found me a new cleaner, offered discounts, said they would work with the cleaner to make sure she learned lessons, etc. way more than i would have done if i were hiring her directly.

On the other side, if a cleaner thought my house was disgusting or hated my cats or something, I presume it would be easier for him to decline the job than if he were an employee of a service with contracts and reputations.

Of course there are no guarantees about how they will dish out that $7M insurance fund but based on my experience with them, I have a feeling HJ would err on the side of paying more and maintaining their reputation.

[typomatic]

> I presume it would be easier for him to decline the job than if he were an employee of a service with contracts and reputations.

Do you have any reason to believe that outside of a need to avoid cognitive dissonance? I ask because it is well-known that for some services (e.g. Uber) refusing open contracts will result in penalties or termination of the agreement with the service.

[DanBC]

When you say "5/10" you mean "decent but not impressive".

When most people give "5/10" they mean "terrible, but did not shit of the coffee table".

Did they check with you what you meant by 5/10?

[serve_yay]

Just continuing the practice of hollowing everything out, making everything a little cheaper and a little worse at a time. Turning employees into contractors, etc.

Fast food is too expensive for this person. That doesn't strike me as an awesome situation.