Uber and the third job model

In My Humble Opinion
1

There’s a brilliant article in the current* New Yorker* that’s nominally about Uber and its contractor/employee struggles, but it’s really about job models. Unfortunately, it’s behind a paywall, so you’ll either have to look at a copy or wait about a week for it to emerge to Freelandia. (It’s one page; read it at the newsstand or doctor’s office.)

The gist is that even the California judge who ruled in favor of the Uber driver said the decision was trying to pound a square peg into one of two round holes, and neither was a good fit. The author points out the problem of dividing jobs between traditional full-time, with benefits, and “contractor,” with a paycheck that doesn’t even handle tax deductions, and how this increasingly no longer fits the real world of employment.

I’m neither here nor there on Uber, other than my expressed opinion that it’s going to have to get a lot more employer-like while taxi companies are going to have to absorb a lot of Uber’s advances if either or both is to survive. But there are other threads for that, so let’s not go too far down that road.

The solution the author puts forth is a “third option” for employment, one that accommodates flexible working schedules and fewer than “full time” hours, but preserves the social safety net we have heretofore reserved for those full-time employees. This is squarely in my wheelhouse, and I am thrilled to see someone with high visibility finally pointing out that our notions of employment are locked to a postwar model - full-time, secure, benefitted jobs for all those who want them, and piddly part-time no-benefit, no-guarantees jobs for all the housewives.

We desperately need a more flexible notion of employment, not just for nouveau-jobs like Uber and TaskRabbit, but for every field. We need to stop focusing on phantom “full time jobs for everyone” that already don’t quite exist and are getting rarer and rarer. We need an employment model that combines flexibility, living wages and that “social net.” And we need to stop throwing uncounted billions at useless welfare - from “temporary” propping up of individuals who may never find a self-supporting job under our current system, to corporate propping up to “preserve [traditional full-time] jobs,” to lavish “job building” programs and subsidies focused on building a world of 1955 GM plants.

Heartening to see a clear statement of the problem and solution from such a high-visibility position.

2

Is this the article?

3

Yes, and thank you! Damn, my web-fu doesn’t usually fail like that. I searched several times and then tried to open the current issue, which told me I had to subscribe. (I do, but in that dead-trees format.)

It’s all good setup, but the last paragraph is the meat.

4

My dead trees subscription includes the electronic version at no extra cost.

5

Yeah, mine does, too, but I didn’t want to post a link most users couldn’t get to. I’m logged in only on the device I read the e-edition on, which isn’t this main workstation, for that reason.

I hates it when a link runs me into the nasssssty paywallses, I do.

6

Why do we need super flexible jobs rather than work towards building real full time jobs? I know it’s often a better deal for employers but should that be our goal?

7

Short answer? Because those jobs don’t exist.

Between population increase and manufacturing efficiency increases (more or less == automation), the real number of full-time job slots is somewhere between static and shrinking, and it’s only going to tilt towards the latter in the near future. That’s why we’ve become so much of a “service economy” in recent decades - since there are far fewer jobs manufacturing and producing anything, we’ve filled the gap by flipping each others’ burgers, giving massages and “life coaching.”

Wasting money in at least two directions (corporate/industry subsidies, and “job building” programs) trying to create full time jobs is both economically idiotic and blind to the reality of the 21st century. The stubborn adherence of government and business-support entities in trying to create a 1950s GM factory job for “everyone who wants one” needs to be redirected to more sensible ends… which is a flexible employment scheme that doesn’t demean and impoverish everyone who doesn’t clock in 40 a week with assurance those weeks will never end.

8

Seems like giving up to me. Why can’t service industry jobs be full time? Oh yes, employers want flexibility. Germany seems to be creating jobs in a healthy manufacturing industry but America can’t because farming it out to China is so much easier.

Flexible jobs is just code for shitty, part time, no benefits jobs imho but I’ll follow this thread and see if I’m convinced otherwise.

9

That’s exactly what it means. After all, most employees can’t determine the flex time.
What it means you have to drop everything (child care, hobby, appointment, classes) b/c your boss called you in. Starbucks and various department stores are starting to do this. It the computer that makes the determination, it looks at things like weather, foot traffic, event planning. A lot of time, people don’t know if they will be working until that day.

10

It’s not giving up if the battle is lost, and I think it is. Work it through, using the vaunted postwar era as the baseline (which seems to be the case for most job and economic proposals).

Our population is double that of 1950, and women are no longer limited to a narrow range of jobs, increasing the effective employable-adult pool.

We are not the industrial provider to the world we were in the 1950s - we had competition by 1970 and quite a few superiors by 2000.

Production efficiency in nearly every industry has increased by multiples. We simply don’t need 500 men on an assembly-line shift to turn out Mustangs any more. Ditto for almost every kind of manufacturing and subsidiary tasks like packaging and shipping.

Outsourcing production may have exacerbated this problem, but it didn’t cause it, and suddenly dragging back every production job wouldn’t be much of a solution, because we aren’t going to start paying US-wage costs for our toys and baubles (or heavy machinery).

It’s not the postwar boom any more and hasn’t been for at least 35 years. It’s time to stop thinking in terms of those “GM jobs” that simply don’t exist any more, not in numbers to give “everyone who wants one” one of them. And the trends above are progressive, if anything.

Because we can only give each other so many massages. The growth of the service sector was a convenient thing to camouflage and absorb the loss of jobs elsewhere, but it’s reached its limit. Masseurs, fry cooks and consultants don’t generate enough wealth to sustain an economy.

Many employers want certain kinds of flexibility that benefit them, because right now, it’s as you say:

…and that’s what has to change. The worker choice of “full time, or live below the poverty line” and employer choice of “part time, because that slashes my employee costs” are both bullshit. Bullshit adored by the “let’s keep trying to invent full time jobs for everyone” crowd.

Germany isn’t the US. It’s not very useful to point to a completely different culture and economy and say, “Well, THEY can do it, so…”

Our jobs aren’t in Germany, or China. They’re gone, the victim of a doubled population and the technological progress we so adore. It’s time to face that and quit trying to get the DeLorean back to 1955 again.

11

And in case my answer above doesn’t make it clear, this is what has to change.

It should not be a choice between full-time and poverty, between part-time and security, between family/personal imperatives and available work time. My intent wasn’t to start yet another thread to bitch about how “good” jobs are hard to find and part-time/flex jobs are employer rape. Both of those are true.

The point of the article I quoted, and my comments, is that it’s time to create a better model for employment - one that addresses reality, not Back to the Future.

12

I’m not sure there is such a need for a “third job model.” The employee model already handles part-time employees, and typically it handles them by providing the government benefits of an employee (unemployment, social security, etc.) but not requiring the provision of employer benefits (health insurance, retirement, etc.)

Now, I’m not saying that this arrangement is good. I’m just saying that we don’t need a major shift.

What do we need? A re-vamp of the laws regarding taxable compensation and income tax deductions. Here’s an example:

  1. Employee is paid $100,000, including 10,000 health insurance. Employment and income tax both apply to only $90,000 of income.
  2. Employee is paid $100,000, with health insurance he provides himself. Because of the 10% AGI limitation on medical expenses, he gets no (or minimal) deduction for his after-tax health insurance. Thus, employment and income tax apply to $100,000 of income.
  3. Self-employed person is paid $100,000. He pays his own health insurance. He gets a special deduction for self-employed health insurance. Employment tax applies to all $100,000. Income tax applies to only about $83,000 (a deduction is allowed for the health insurance and for half of his employment taxes).

This is insane! Why is the taxability/deduction for your health insurance subject to who provides it?! Why are the people with the worst situation, the ones who are employees without benefits? Seriously?

What we need to do, in my opinion, is eliminate employer-provided health altogether. Everyone buys their plan through the exchange. Then, you have one of these scenarios:

  1. An employer can pay for your health insurance directly, and all payments are a pre-tax deduction from payroll. This way it’s YOUR health insurance and you can take it with you if you leave the employer. And because it isn’t the employer’s plan, there’s no problem if you have one employer contributing or ten employers.
  2. An employee can pay for the health insurance directly. If so, you will get a tax deduction/credit which equalizes the situation with people in #1 - not only does it reduce your taxable income, but it offsets the employment taxes withheld from your.
  3. A self-employed person gets the same thing - health insurance reduces both income tax and employment tax equivalents.

At the end of the year, part of the tax return will reconcile total insurance expense, total insurance contributions and then adjust the total employment tax and income tax.
Someone who fits into two more of these categories during a year still has no issues; it’s all just math on that reconciliation. The final reconciliation of income/insurance will be set up to correct both employment and income tax to be equivalent regardless of the source of the income.

Tada! We’ve eliminated stupid group health regulations and stupid HRA plans. We’ve eliminated the Obamacare mandates that encourage employers to make you a contractor or keep you under 30 hours a week. We’ve made it easy for every employer to pay into your insurance. We’ve made sure that everyone gets the same final tax benefit for health insurance regardless of their method of paying it. And if we make FSA/HSA payments equivalent to health insurance payments, we equalize those benefits too.

It’s so f’ing simple! :smack:

13

We’re repeating history - just like we did when we decided that the financial services sector didn’t need as much regulation.

Employers would love to have a pool of employees who would work as needed without benefits. Employees would love to be able to work flexible, perhaps shorter, schedules with full benefits. Many people would like to work full schedules with full benefits. All these desires conflict.

For drivers, the fact that regulated drivers rarely rip people off or kill them doesn’t imply that crooks or incompetents won’t get into the pool when you allow unregulated drivers. Things will go on fine by chance for some years, and then there will be a disaster, without insurance, and the calls for regulation will resume.
Do we want to forget everything we know about regulation until a family or celebrity gets killed, or do we want to regulate now? And yeah, Uber thinks regulation is a big pain.

14

Do we really need another thread about Uber and regulation? That wasn’t my point, nor the quoted article’s. Uber is a useful case for that middle ground of employment that conforms to neither employee nor contractor, and a seed for thinking about a different employment model.

15

Because demand is very uneven for what needs to be done–this is both across the hours of a day, across the days of a week, across the weeks of a season, across the seasons of a year. Let’s take fast food restaurants: there are peaks at breakfast time, around the noon hour, and in the evening. For there to be the full time jobs you suggest then if you staff for peak demand then there are going to be large numbers of employees doing nothing say at 3 pm.

As to question of benefits then there are strong arguments for these benefits either being provided by the government (health insurance) or bought separately by the employee–that the only compensation that any employee should receive is cash.

16

I hear you, but I’m not convinced.

Having spent some time in different types of economies, I think there really is something special about the formal economy that fosters economic growth. It promotes organizations investing in their workers. It makes it efficient to collect tax revenues. It creates stability that allows for long-term planning. And it keep balance between public and private sector jobs that discourages cronyism.

We can’t get back to the old days, but I’m not convinced the system is fundamentally broken, and where it is broken in not convinced that it’s the employment model that is wrong.

17

Well, no, not really. I don’t see anything except where you’re rearranged the same pieces on the same game board, getting in a few angry whacks at healthcare along the way.

I’m willing to posit that there is no solution beginning, “Well, just do this…” that leads to a workable alternative. (If it actually leads to an alternative at all.) In other words, there *is *no simple solution, whether it’s “creating more jobs” or “taking healthcare out of the employer equation” or even boosting minimum wage.

The kind of changes I’m thinking about will have profound effects on employment law, wages, benefits, etc., but I’m not sure that addressing those effects leads to any real change.

Let’s start with your very first sentence:

A “third model” would make no distinction between full-time and part-time. At all. Except for net income to the employee, proportional to hours actually worked. Your whole proposal assumes we retain the dichotomy and somehow try to balance it, just as we’ve been hacking at for… a very long time.

We still haven’t gotten away from the idea that only full-time, permanent positions are “real” jobs and worth benefits, respect or consideration; corollary: part-time jobs are second-class/second-rate and have deservedly lesser qualities.

That idea is bullshit. Time to call it that and move forward.

18

And how does erasing the class system for full-time, part-time, “contract” and “temp” jobs contravene any of that?

Why should “employer investment” be only in its full-time, permanent ranks, and every other class treated as some kind of business asset that can be treated indifferently and with much lesser consideration? Especially as that “beloved class” is getting smaller and more exclusive by the decade?

19

Maybe I wasn’t clear about my idea. If health insurance benefits are moved away from the employer and the tax deduction/benefit is equalized, then we have eliminated the distinction between full time and part time. A full time employee receives no benefits that the part-time employee doesn’t also receive. An employee with one employer receives no benefits that an employee with multiple employers doesn’t receive.

If you’re not coming to that the conclusion from what I wrote, I could try to describe it differently, but I’m not sure where the misunderstanding is coming from.

20

There’s no question that healthcare benefits are at the core of the problem (but also that they are not the entire problem). Surowiecki states that as a bedrock part of the problem - that only full-time employees are entitled to the “social safety net” and anyone who works less, or differently, is pretty well screwed even with ACA.

It’s not just about how many hours someone works. It’s about making the benefits of employment proportional and universal, because we are no longer a nation of union GM employees and housewives.