In 2010 I posted an article about how a lot of Americans probably could not be profitably hired as W-2 workers at the then-prevailing minimum wage (but not so many that SSDI and other welfare programs couldn’t take up the slack). BLS data on labor force participation seems to confirm that 2010 hypothesis. Last month I posted an article about how employment litigation could be a great career path for young people because the new minimum wages would create more W-2 unemployment than SSDI and other welfare programs could handle and a lot of Americans would be driven to take 1099 jobs where the net income was lower than the statutory minimum wage. It turns out that the litigation was already happening! “California Says Uber Driver Is Employee, Not a Contractor” is a New York Times story regarding a Uber driver who boosted her earnings by roughly 60 percent via an ex-post facto examination of her job. (If the $4152 she was reimbursed was for expenses, she earned $6848 before suing and about $11,000 on top of expenses after suing.)
[Separately, I am still waiting to meet an Uber driver who knows how to press the “Auto” button on a car’s climate control system and set the temperature within 5 degrees of 70. If it is cold out it is typical to find that the driver has set the temperature to 90 degrees and the fan to “high” while perhaps leaving one or more zones entirely off. If hot, the driver has set the temperature to 60 degrees but with the fan blowing unconditionally on “high” regardless of the interior temperature. I am convinced that if the automakers allowed Uber drivers to set -15 or +130 there would be a massive die-off of Uber drivers due to hypothermia and heat stroke.]
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It was a slick business model – take a cap. intensive business, offload all the entry costs and cap. investment to “contractors”, skim off the top, take more VC money, roll out to the world. Will be interesting how that one plays out.
Thanks for your Uber driver description. That’s the same driver we have had in so many cities – Boston, Seattle, San Francisco. Climate control remains a mystery for some reason. Interestingly the midwest locations like Chicago have very different drivers.