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posted by janrinok on Friday December 19 2014, @06:19PM   Printer-friendly
from the for-richer-for-poorer dept.

After Uber's success, nearly every pitch made by starry-eyed technologists “in Silicon Valley seemed to morph overnight into an ‘Uber for X’ startup" with various companies described now as “Uber for massages,” “Uber for alcohol,” and “Uber for laundry and dry cleaning,” among many, many other things. The conventional narrative is this: enabled by smartphones, enterprising young businesses are using technology to connect a vast market willing to pay for convenience with small businesses or people seeking flexible work. Now Leo Marini writes that the Uber narrative ignores another vital ingredient, without which this new economy would fall apart: inequality.

"There are only two requirements for an on-demand service economy to work, and neither is an iPhone," says Marini. "First, the market being addressed needs to be big enough to scale—food, laundry, taxi rides. Without that, it’s just a concierge service for the rich rather than a disruptive paradigm shift, as a venture capitalist might say. Second, and perhaps more importantly, there needs to be a large enough labor class willing to work at wages that customers consider affordable and that the middlemen consider worthwhile for their profit margins." There is no denying the seductive nature of convenience—or the cold logic of businesses that create new jobs, whatever quality they may be concludes Marini. "All that modern technology has done is make it easier, through omnipresent smartphones, to amass a fleet of increasingly desperate jobseekers eager to take whatever work they can get."

 
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  • (Score: 2) by ikanreed on Friday December 19 2014, @06:28PM

    by ikanreed (3164) Subscriber Badge on Friday December 19 2014, @06:28PM (#127539) Journal

    Specialization of labor is a real thing. I can specialize in programming, and when someone pays me for programming work, it's not because they're richer than me. It's because it's more efficient for me to do it than them.

    If you treat "owning and driving a car" as a skill, that some don't want to invest in, Uber can work in a strictly hypothetical environment.

    Now reality intrudes and points out that there is inequality, and that Uber is more sustainable as a result. But at a higher hypothetical level, it's not necessary.

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  • (Score: 1, Interesting) by Anonymous Coward on Friday December 19 2014, @06:50PM

    by Anonymous Coward on Friday December 19 2014, @06:50PM (#127545)

    I saw this pop up in the queue. I have been thinking about it.

    I think he is onto something. But it may not be what people think it is.

    I think it might be a natural outcropping of our minimum wage laws and a end game of 'salary' for everyone. Stay with me dont get mad...

    In a natural employment market we typically are paid for a period of time and hopefully the right amount of work during that time or you are fired.

    In a distorted market though no one will pay bellow a particular amount (they legally can not). So we are moving to a more per task payment system on the low end (ie I dont care it takes you 30 hours to finish something, I will only pay a set amount). This market also exists throughout the whole strata of employment too. But on the low end you can get 'hey give me 5 bucks and I will take you somewhere' instead of 'I will take you somewhere and charge you 50 bucks per hour'. Which means it becomes not about labor cost but material cost plus some bit of profit.

    My point of it being of an outcropping of our min wage laws is that effectively these uber companies do not pay min wage at all. They pay per task labor is priced at 0. They can still exist along the whole strata of employment. Meaning low end jobs that the gov has effectively removed from our economy become viable again.

    Or I could be bonkers :)

    • (Score: 2) by strattitarius on Friday December 19 2014, @07:17PM

      by strattitarius (3191) on Friday December 19 2014, @07:17PM (#127552) Journal
      You are not bonkers. It is true that the minimum wage makes some services unprofitable for a traditional employer. What TFA and you both are getting at, I think, is that smartphones + internet = $60/month overhead for a self employed person.

      Self employment used to be very, very difficult. Getting your name out there, securing resources, legal fees, etc. Now you can sign up at Uber and the reality is that the only additional cost for an Uber driver (or any other similar service) is the extra car washes to keep the car nice. You already needed a car and phone, so your overhead is really a personal expense.

      I would compare to maid services. Merry Maids is actually quite expensive, based on when I looked into it a few years ago. This is because of overhead and they must pay the cleaner minimum wage. However, you can hire some random person to clean your whole house and pay $50 in cash, coming out to maybe $5/hr. Now there is a service, much like you used to have a phone book, that connects the supplier to the buyer without the need of a full blown company on the supplier's side.

      Is it ethical to pay people less than minimum wage to clean your house or drive you home? Is it ethical that a company is formed to connect suppliers and buyers, makes a profit, but the suppliers may not make minimum wage? Personally, I don't think it is but I realize that is a debatable topic.

      Babysitters.com is a another good example. Many people on there advertising services at less than minimum wage (some way over too - depends a lot on location).

      I just rattled that off so it might seem a bit rambling.
      --
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      • (Score: 0) by Anonymous Coward on Friday December 19 2014, @07:42PM

        by Anonymous Coward on Friday December 19 2014, @07:42PM (#127562)

        > What TFA and you both are getting at, I think, is that smartphones + internet = $60/month overhead for a self employed person.

        As a freelancer who makes a buttload more than minimum wage equivalent, I have to point out that obamacare is a fucking game changer for this. Health insurance was prohibitively expensive for anyone who wanted to be self employed. Every single one of my former co-employees cited health insurance as their number one reason for not going it alone. Obviously there is a lot more to it than that, but it was a structural problem that is mostly fixed.

  • (Score: 2) by urza9814 on Friday December 19 2014, @07:11PM

    by urza9814 (3954) on Friday December 19 2014, @07:11PM (#127550) Journal

    All you're saying is that taxi services can exist without wealth inequality. Which is certainly true, because they've pretty much always existed in one form or another.

    TFA is being far more specific though. There are lots of taxi companies, they're focusing on the specific features that allow Uber to beat out the competition. And apparently one of the keys to their success is having fairly desperate drivers willing to work more and accept lower pay than the competition. People willing to put thousands of dollars of their own personal property on the line for a $20 fare. That doesn't happen without significant wealth inequality.

    • (Score: 2) by strattitarius on Friday December 19 2014, @07:21PM

      by strattitarius (3191) on Friday December 19 2014, @07:21PM (#127553) Journal
      Excellent point about how much they are putting on the line for a relatively small return.
      --
      Slashdot Beta Sucks. Soylent Alpha Rules. News at 11.
      • (Score: 2) by ikanreed on Friday December 19 2014, @08:32PM

        by ikanreed (3164) Subscriber Badge on Friday December 19 2014, @08:32PM (#127577) Journal

        Yeah, and it's pretty clear that the supply side of Uber is going to blow out sooner or later.

        Like when people get tired of scrubbing vomit out of their back seat, they're going to wonder if it's worth it.

        When it stops being yuppies enjoying a new experience, and starts being grouchy assholes taking the driver for granted, taking our their problems on them like any other retail employee. People are going to ask if they are maybe underpaid.

        When serious liabilities start adding up, they're going to wonder if it's worth the risk.

        Uber is fueled mostly by novelty. It won't die, but it'll start accumulating everything that makes people not like taxis.

    • (Score: 2) by TheRaven on Saturday December 20 2014, @09:05AM

      by TheRaven (270) on Saturday December 20 2014, @09:05AM (#127700) Journal
      One of my colleagues recently did a study comparing Uber's prices to a big data dump that someone had got of all taxi rides in Manhattan over a long period and found that Uber was typically slightly more expensive than a taxi. Their benefit is not price, it's convenience, and their business model comes from having a very scalable dispatcher service.

      Most taxi companies still use a human (aided by a computer for larger fleets) to handle dispatching, which means someone has to answer the phone and make decisions. This doesn't scale to a huge number of taxis, so you need multiple dispatchers and you need to pay them even when they're not really doing anything. Uber has a fully automated dispatcher, which can handle an enormous fleet. The cost of running their service is a few programmers and a couple of servers, but per taxi it's trivial.

      They also benefit from payments. Handling cash in large quantities is expensive. Uber doesn't take cash, and they have a sufficiently large volume of credit card transactions that they will get a better rate than smaller taxi companies.

      Finally, they benefit from convenience for the user. If you use Uber, then you've got a single app that lets you book a taxi wherever you are. No more having to hunt the number of a local taxi company when you travel, just step off the plane and you can have a cab waiting.

      --
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  • (Score: 0) by Anonymous Coward on Friday December 19 2014, @07:29PM

    by Anonymous Coward on Friday December 19 2014, @07:29PM (#127555)

    I think that intracity, same day package delivery might become a distinct service, with special, low rates. Maybe with 5 hour old pizza, delivered in a special container. It will be cheaper than current pizza delivery. DHL, or UPS could muscle into that business. This will work best in a dense city. I'd start out in New York City first.

    • (Score: 2) by hemocyanin on Friday December 19 2014, @08:13PM

      by hemocyanin (186) on Friday December 19 2014, @08:13PM (#127571) Journal

      Neal Stephenson said it pretty well. One of America's great talents:

      "High speed pizza delivery."

      See the first quote, especially the prelude to the list:
      http://en.wikiquote.org/wiki/Snow_Crash [wikiquote.org]

    • (Score: 1) by WillAdams on Friday December 19 2014, @08:19PM

      by WillAdams (1424) on Friday December 19 2014, @08:19PM (#127573)

      There used to be a local company which did this --- they also did intercity between Harrisburg, Pa, and Baltimore, Md and Washington, DC (maybe some other cities).

      Rising gas prices did them in --- for intracity, might be able to make it work w/ bicycles or electric vehicles.