This tells you all you need to know. Those companies need to be shut down.
I prefer they be made to suffer the indignity of paying workers a fair wage.
They need to be out competed with less predatory offerings.
Which is about to become trivially possible at a fraction of their startup costs over the next few years.
I cannot recommend enough to people worried about the future of AI on economics to read the essay "The Nature of the Firm" from the 30s and think about what happens when AI drives transactional costs to zero.
The enshittification of corporations right now is like the black plague preceding the Renaissance.
It's hard to ethically compete with those who break the law.
Not really. Do you have any idea the margins they have, and how much of those cover what will end up being unnecessary overhead in about two years?
Do you think companies trying to appease quarterly focused investors are going to make wise long term competitive decisions?
Do you think companies focused on maximizing net revenue for executives and shareholders are going to be more competitive to shoppers than ones that pass on savings? Do you think they'll be more attractive to suppliers than ones that pass on revenue?
Thin intermediaries are going to be much more competitive as transactional costs decrease. The reasons why the other has historically been more advantageous is predicated on factors that are quickly changing.
I often see lay people online offer up an almost learned helplessness worship of corporations and executives as if some powerful and majestic creatures like they are dragons from fantasy. And having consulted for many of them, there's way more ineptitude than you'd realize, it's just insulated within high transactional costs in operations and marketing (and why I'm recommending the essay from nearly a century ago which effectively won its author the Nobel in economics outlining the direct relationship between those costs and the need for large corporations).
So what you are saying is some software developer needs to make a slightly different copy of all these food apps that passes the money to the restaurant and the driver while only keeping a fair amount for themselves rather than ripping off everybody along the way to pay the shareholders.
Pretty much. Especially if by "some software developer" you mean "multiple layers of coding AI leveraging more generalized open source projects serving as a foundation for more tailored domain specific software."
Is there a name for that way of thinking?
What do you mean by the transactional cost is not zero yet? The literal price of a bank transfer in my country is already zero (and near-instanteneous). And you can initiate one with a QR code or text message, both of which are very common.
But people still primarily go to aggregators for food delivery. Why? Because network effect: 80% of restaurants are there, so if you're not 100% sure where you want to buy you're food, you go there. Even if that ends up being 20% more expensive than going to www.websiteofrestaurant.com
Transactional costs in the 1930s Nobel recognized paper is different from a bank fee.
It's things like searching for where to buy food from or finding an employee or training them up, etc.
I see, thanks for the explainer.
what happens when AI drives transactional costs to zero.
Oh, oh, I know this one - record profits and C-suite bonuses!
Lol, I mean it really says something about gig economy when concepts such as "minimum wage" threaten to flat out kill their industry
If your business can't afford to pay its workers a living wage without going bust-- then it deserves to go bust.
But if they get the $18/hr, there's no need to tip, right? Right?
Tipping culture needs to end anyway. Pay the employees properly.
My social anxiety increased to an all time high when I visited the US. The pressure to tip is real.
The problem is that those receiving the tips will continue to expect them no matter how high their wage is. Some would even argue that they get overall lower income if the increase in base wage eliminates tipping.
Tipped employees make WAY more than minimum wage
My 18 year old with her first job made $130 in 4 hours this week. Minimum wage will never keep up with tipped wages, which is the exact reason that people choose tipped jobs.
MANDATORY tipping should end. Tipping on top of fair wages can and does still exist in most of the world.
It's a step forward at least. Tipping culture is terrible but think what good press one of these apps would get with "tips included in delivery fee" or whatever perfect marketing slogan they can come up with.
Can’t afford the new minimum wage, but they can afford the lawyers and the lawsuit.
Lawsuit is a one time expense, paying fair wages would cost them forever
It is not that they can't afford, they will rise the prices and because of that they will lose lots of customers, so they will contract and as result the absolute amount of profits will be reduced.
My sincere hope is for NY to respond with two words: "get fucked"
“Fair wages‽ We’ll fight this by spending hundreds of millions on a sure-to-fail legal defense of worker exploitation rather than spending far less money by paying our employees fairly!”
— Capitalists
"But then our customers are going to eat more service fees because our shareholders can't take the L"
It is sounds almost like a dystopian utopia. And it comes to prove that having such big and influential corporations is only good for their shareholders.
I think the whole subscription model get its birth from the constant desire of those corps to grow infinitely, while leaving the normal people to truly struggle to meet their ends with ever growing expenses.
This is the definition of late stage capitalism. Growth cannot be infinite, but capitalism demands infinite growth unless restrained or check put in place. Ergo, workers are resources to be exploited to the utmost limits of what is possible. Not moral, possible.
If they have to live on foodstamps good that means you are not overpaying. Clearly the model works because they haven't gone elsewhere yet. /s
$18 an hour in expensive as hell New York City and they have the nerve to sue. That’s bold.
Just think of it as a “service fee”.
I am all for "gig apps" being required to pay minimum wage.
But the minimum wage in New York is $15 as far as I can tell. Why are delivery apps seemingly being required to pay a different minimum wage? I am not aware of any other case where the minimum wage depends on the profession.
I find this kind of policy very troubling. Would anyone be ok with accountants having a $25 minimum wage and teachers having $17 minimum wage?
My guess is it's to offset the lack of other benefits-- health care being a huge one-- that you lose when you sign up to be a gig worker, not a full-time worker.
And we already have different minimum wages for at least one industry: servers at restaurants. The economy isn't going to collapse if we put gig workers in their own category, too.
The article answers your question.
Unlike most jobs, contract jobs are taxed more and require the worker to pay the out of pocket to operate. In the case of food delivery workers, this means the gas or electricity to run their vehicle and the maintenance costs for said vehicle.
$18/hour is just barely a living wage in NYC. Actual living wage for an adult with 0 children in NYC is about $25.50/hour:
https://livingwage.mit.edu/counties/36061
On top of that you have the challenges specific to these jobs. If you’re on bike, that’s hard work and limits the hours you can do without risking injury. If you’re driving (which is maybe practical in outer boroughs) you’re shouldering all the costs of the vehicle working for a delivery app. Either way that’s way too little after taxes per month, even at $18/hr.
That dam government getting in the way of them making nice extra fat profits! They're paying them a pittance, is that not enough for them 🙄
I honestly think that the delivery boys do not exists on salary, but on tips.
This is a most excellent place for technology news and articles.
