The gig economy model is exploitative and unsustainable

The Thinker by Rodin

I took my first Lyft ride the other day. I am pleased to say that the technology worked great! I picked up my luggage at baggage claim at Bradley International near Hartford, opened my Lyft app and within two minutes a driver was flagging me down and I was on my way home. I arrived home forty-five minutes later and just $55 poorer, but compared with taking a taxi I doubtlessly saved a bundle. In addition, my driver turned out to work part time for United Technologies configuring cloud services on Microsoft Azure for their customers. So we had lots to chat about and the drive went quickly. He fills his free hours driving people mostly to and from the airport and seemed happy to be a Lyft driver.

Until recently my daughter depended on Lyft and Uber to get around. She gave up her car a few years ago, convinced she didn’t need one in Washington’s far suburbs. If she needed to go somewhere, she’d either walk or use one of these services. Nonetheless, she snapped up the free car I offered her: my old 2005 Honda Civic Hybrid (now replaced by a Toyota Prius Prime). That was my reason for flying: I drove the car to Virginia to give it to her and took a United Airlines flight back. While normally my wife would pick me up at the airport, she recently had a knee replacement and couldn’t do it. So I experimented with Lyft, which I heard was the less evil of the two services. More to the point, it didn’t look like taking a taxi at Bradley was an option anymore. I didn’t see any I could flag down in Arrivals.

So it was a great experience until I thought about the model of Lyft and Uber in general. A lot of their drivers have too and have figured out that they are being exploited. Lyft and Uber are hardly alone using this model. In our new gig economy, the trick seems to be to create companies that find unique ways to exploit workers by making them not realize they are being exploited. In the case of Lyft and Uber, the first thing to do it not to label them employees. They are “independent contractors” who set their own hours and get paid fixed rates. One advantage to being a Lyft or Uber driver compared with being a Supershuttle driver is that they don’t have to rent a van from the company and probably aren’t working sixteen hours a day to keep paying Supershuttle’s franchise and leasing fees.

But they are getting ripped off. In the case of Lyft, they recently reduced payments to their “independent contractors”, which did not make them happy but did probably help lessen Lyft’s losses. Lyft went IPO last week but it’s bleeding money. Nonetheless, they aren’t too worried. Amazon used this strategy very profitably until their competition was either destroyed or bought out. Lyft is hoping for the same sort of success at this game. Its new shareholders don’t seem convinced yet as you can buy Lyft shares well below the $72/share price set at their launch.

These new companies exploit shamelessly and fight dirty. Customers tend to look the other way, basically because they don’t understand what’s going on. If you can save 30% or more with a Lyft ride compared to taking a taxi, you see a good deal plus in many cases they are faster and more convenient than a taxi. It’s clear to me though that these savings come principally from these “independent contractors”.

Taxi drivers are often independent contractors too. They usually aren’t employees. But they are regulated. Taxi commissions typically oversee these services and set rates that allow taxi drivers to earn a decent wage. In some cases they own their taxi, in some cases the taxi company owns them. But it’s a model that’s been working quite well because cities and towns have decided to make it work for both drivers and passengers.

Uber and Lyft decided to be disruptive, which was to just ignore these taxi commissions and brand their services as something other than what it is: a taxi service. The big difference is that their cars aren’t painted with the taxi company’s colors. You hop into one of these cars and hope that your driver won’t drive sexually assault you.

Doing background investigations on “independent contractors” of course raises costs. Hopefully both Lyft and Uber are at least doing cursory background investigations before offering contracts to these “independent contractors”. It’s more convenient to ignore these issues until it becomes too big a problem, and then hope to manage them.

But the real ones being exploited are not customers, but drivers. Basically they become drivers to get some quick cash to pay a few bills. What’s harder to see is the costs on their vehicles and how it eventually affects their bottom line. A car that was driven 10,000 miles a year that is now driven 30,000 miles a year will wear out more quickly and require more frequent maintenance. Neither Lyft nor Uber will pay for these expenses. You are supposed to figure that out as part of your business model, along with other things like withholding money for taxes and social security and Medicare, including the employer’s share. All these expenses plus the quick depreciation and higher maintenance costs on your car means that for most drivers, your effective wage per hour is below the minimum wage and you get all the hassles and costs of maintaining your car and paying taxes too.

These companies are prominent examples of this trend but they are hardly alone. Employers basically don’t want to employ: it’s costly, limits their ability to move quickly to market conditions and requires a lot of hassle. Amazon reluctantly raised wages for its warehouse workers to $15/hour, but it still hires lots of “independent contractors” who work for much less. Even my driver’s erstwhile day employer, United Technologies, is trying him out at part time wages and substandard benefits. He works from home and has to wait two more months before he is allowed to actually come into the office.

I don’t think this gig economy is sustainable. It endures until these “independent contractors” say enough and demand a fairer deal, which is hard to do if you have no union hall. Hopefully they will get a decent deal, but that will raises costs overall and make their whole business model less profitable.

But maybe it won’t matter. Like Amazon they hope that they will have gotten rid of the competition by then by hanging on as long as possible. This success though depends on cutting competition off at the kneecaps and exploiting people as long as possible. In the case of Lyft and Uber, so far it’s been decimating taxi companies. If ultimately it doesn’t work, they go out of business, leaving of course their “independent contractors” hanging.

In the case of Uber and Lyft, it’s clear this will happen eventually anyhow. The plan is to introduce fleets of automated cars as soon as the technology matures. And these “independent contractors” will be left holding the bag with cars with high mileage, lots of costs and no job.

Test-driving the Bolt, the Prius Prime and the Camry Hybrid

The Thinker by Rodin

Introduction

It’s rare for me to buy a car. The last time I bought one was in 2004. My 2005 Honda Civic Hybrid is still moving me around, just not as nicely as it used to. Moving to Massachusetts has challenged it. Here the roads are bumpy and this time of year the potholes are plentiful and dangerous. I recently took it in to replace its rear struts, but driving around is still a bumpy and noisy experience. While I could probably drive it another ten years, it’s past its prime. It’s time for new car.

Back in 2004, hybrids were a new technology. Today they are old news. As I noted, electric cars are where it’s at these days, or at least where the hype is. Not all of us though can afford a Tesla Model S.

Our friend Mary came to visit us in her Tesla Model S recently, a car so large that it barely fit into our garage and only because its mirrors could retract fully inside the car. The Model S is currently something of a gold standard for electric cars. But even with the many Tesla superchargers between you and your destination, it’s hardly convenient. At best, a pit stop takes 45 minutes or so for an 80% charge. This time of the year when temperatures are cold, all electric cars lose range. Her trip that might have taken 8-9 hours in a car with a gasoline engine extended to 11-12 hours in her Tesla, which included two recharging stops.

While I like the idea of an electric car, it remains an iffy proposition as a touring car. Still, I wanted to get an idea if I even wanted one, which is why I ended up at our local Chevy dealership to test drive the Chevrolet Bolt Premium.

Chevy Bolt test drive

Back in 2004, I noted that driving the Prius seemed so futuristic. The technology certainly has changed since then, since the Prius’s dashboard now seems sort of sedate. The Chevy Bolt has an electronic dashboard behind the wheel and a separate monitor between seats for most of the other stuff. Screens change dynamically with the press of a button. These days even ordinary cars have this stuff, but to me it’s all new. I like simple displays for minimal distractions.

With the Bolt’s theoretical range of about 240 miles fully charged, during our cold weather test drive the predicted range was about a third less than that. This makes the Bolt impractical as a touring car. It can’t use Tesla’s superchargers. In the best situation you will have to wait about an hour for an 80% charge. This assumes there is no line at the charging station and a warm battery. But if you are looking for a commuting car, it’s a good choice, since most of the time you will charge it at home. But so are arguably electric cars with less range like the now-discontinued Volt.

Driving the Bolt otherwise surprised me. You expect it to be quiet and it was. Electric motors make little noise compared to pistons pounding inside an engine. It can achieve 60mph in less than seven seconds, so it’s Bolt name is particularly apt. Its high stance made it easy for me to get in and out. It feels more like a mini-SUV than a hatchback. The seats go way back and the steering wheel telescopes. It feels narrow but it’s no narrower than my Honda Civic. It doesn’t absorb bumps particularly well and perhaps due to its high stance it feels a bit hard to control at times. And the seats are not very ergonomic.

But at about a third of the price of a Model S, the Bolt feels something close to a bargain. Of course, it doesn’t pollute, unless you charge it from non-green sources. We have solar panels and get our remainder from wind power, so that’s not an issue. It would go a huge way toward making us carbon neutral. And arguably because it is all-electric, it is less complex. I could expect to save 50% or more on maintenance costs, and the cost per mile to drive an electric car will almost certainly save us 50% or more off the cost of gasoline. While there are other electric cars out there, at the moment it’s really the only practical electric car out there for the masses.

Toyota Prius Prime test drive

We also test-drove the Toyota Prius Prime, a plugin hybrid that can drive about fifty miles on electricity, but only if you don’t go too fast. It averages 50mpg in hybrid mode. It was reasonably easy to get in and out of but it helped to elevate the seat, which can only be done manually. The Prius Prime felt extremely solid with great steering control, and reasonably quiet too. Like the Bolt, it doubles as a hatchback. However its rear window with the line in the middle takes some getting used to and is arguably annoying.

Toyota Camry Hybrid test drive

We used to own a Toyota Camry. Today’s hybrid version averages 47mpg and packs a lot more technology into a fairly compact space. Driving it was quiet and comfortable. It too can drive some miles at lower speeds in pure electric mode, but its battery uses electricity that comes from the engine or regenerative braking. It’s not a hatchback, which is something of a drawback but does have a huge trunk and second row seats that fold back that allow you to transport some larger objects. The Camry remains an affordable car with a premium feel to it. You feel comfortable and kind of pampered, which contrasts with the practical Prius Prime. Its displays though feel a bit too packed with information and there are many little switches that can be hard to finger. Its monitor in the center is a bit small but functional. It’s got all the lumbar support you could want with motors to easily elevate or change the position of the seats. It is quite quiet and handles bumpy roads quite nicely.

Decisions, decisions…

There are other factors nudging us. There are sizable federal and some state tax credits available. The full $7500 federal tax credit for the Bolt expires at the end of the month. With that and a $1500 Massachusetts rebate, we can effectively get a Chevy Bolt Premium with all the convenience packages and the fast charging option for $26,565. It does mean that for long distance driving beyond 200 miles or so we’ll be driving my wife’s Subaru with its annoying manual stick. If we were to buy it, we’d also want to invest in a 240-volt car charger, probably with dual outlets on the assumption my wife would eventually have an electric car too.

All this amounts to a good dilemma, but still a dilemma. Dilemmas indicate who you really are. Am I the eco-green person I think I am? I that case I should buy the Bolt. Am I the practical guy that wants great efficiency in a car but still want to tour in it? Then I should get the Prius Prime. Do I want pretty good mileage car but a bit of pampering? Then I should get the Toyota Camry Hybrid, or some others in this market like the Toyota Avalon Hybrid, a large car which a remarkable 42mpg and one of the highest scores I’ve seen in Consumer Reports magazine: 98 out of 100 points.

I do need to either decide soon or risk some federal tax credits expiring.

The best in life is yet to be: an essay on healthy mortality

The Thinker by Rodin

Another birthday has come and gone. Since this one did not end in a zero, it did not deserve particular attention. But since I am in my sixties now, most of my life is firmly in the past. I’ll be fortunate if only two-thirds of it is in my past. Aside from a nice dinner of meatloaf and seeing If Beale Street could talk at a local arts cinema, it was like any other day.

Something I find curious about aging is that the one thing that bothered me about it growing up – death – doesn’t particularly bother me anymore. Death should be less of an abstraction at my age. We had our next-door neighbor die about a year ago. Both my parents are dead; my father curiously died three years ago on my birthday. My daughter slips into her thirties this year. We are on on our fourth set of cats. Living in a 55+ community, with most of my fellow residents older than me, it appears that advancing age doesn’t seem to bother them either. The oldest is 93 and he still gets around and enjoys life.

I’m trying to figure out why this is. It could be because I am in reasonably good health and have an excellent chance of enjoying another twenty years or more in good health. Part of it could be because we are both retired and don’t have the hassle of working or worrying about money anymore. But I’m also coming to think that a lot of it is due to not being religious. In my early twenties it’s fair to say I wasn’t religious, but I was still under a religious hangover. In my case, it was a Roman Catholic hangover. It clouded my thinking about death.

With a few exceptions, religion does much more to make us anxious about death than provide a balm to address it. It does seem ironic because if you check off the right checkboxes and have true faith, then eternal life is something of a given, albeit in a different state. And we are promised that in this case our next eternal and spiritual life will be a lot happier than this one.

For many of us, life is more chore than blessing. I don’t have to step far from my home to see it. During the recent arctic blast, two homeless people died of hypothermia in a tent behind a McDonalds restaurant in Greenfield, a town twenty-five miles north of us. The local homeless shelters could not accommodate the overflow crowds. I can see the homeless wandering downtown or holding cardboard signs at some prominent intersections. As miserable as life appears to be for them though, they still cling to it. For retired people like me without much in the way of worries about descending into poverty, life at this stage is exactly what I wanted out of life and finally received. It feels like a blessing. And it is, at least partly. I was able to hang onto a good paying job with benefits long enough to reach a good retirement, and there were no intervening medical complications to strip it all away.

No wonder so many retired people are happy with their lives. Death is unavoidable but so is life. And life is often very complex to navigate, and gets more complex everyday. In my early twenties, my real angst was likely not about some inevitable future death, but whether I could pay the rent next month. It was likely that the latter fed the former.

It used to be that life was a much more miserable experience. Retirement was virtually unheard of. Many of us lived with massive pain and discomfort we could do little to remedy. Most of us died long before we were at a retirement age, often painfully and violently. If we reached old age, we depended on our offspring to tend to us when our bodies grew frail. Medicine though only became useful in the last hundred years. Social safety nets did not exist then; living in general was precarious and scary. Retirement was a luxury for the truly rich, if they survived long enough to enjoy it. Now most of us will reach retirement age and increasingly most of us can enjoy it.

In those darker and scarier times, religion promised not only salvation but also something more important: eternal comfort in some future afterlife, which was naturally appealing because for most of us life was trial and tribulation. These days though many of us can have that comfort right now, or at least when we reach retirement age. Is it any surprise then that in countries with high standards of living that religion seems to be fading away? It’s not just Western Europe; it’s happening here in the United States too, albeit more slowly. It’s fading faster in places that are more prosperous. Hence you find more atheists in New Jersey, and fewer in Deep South Alabama. Prosperity may be what kills off religion.

My devout Catholic mother went to her grave scared out of her mind. Part of it was because her condition was quite debilitating: her case of Progressive Supranuclear Palsy is similar to Parkinson’s disease. In general, it’s a bad way to go. Michael J. Fox isn’t happy about his diagnosis. Robin Williams made what seemed to him the logical choice and hung himself rather than go through a miserable decline. But my mother was also uncertain about whether she would make it into heaven. She alluded to many mistakes she had made in her life, as if any of us get through life without making mistakes. I think what really terrified her was not finding going to hell, but the idea of utter nothingness, which you have to assume happens to you after death if there is no afterlife. It terrified her probably because her Catholic faith had kept her thinking about it, at least until she couldn’t not think about it anymore.

And yet as I noted before, no one worries about their state of nothingness before they were conceived. So logically it’s kind of silly to worry about what you are after death, if anything. I do suspect though that with the right education a lot of us can learn to deal with death in a much more … what’s the word … healthier way. We can choose to be terrified of it, or not. But death cannot be escaped.

I think that’s where my head is right now. Whether my soul survives after death or not doesn’t particularly bother me. For me, what works is to be present in my own life every day, and to do things that I find interesting and meaningful every day. With death the lights may go out or not, but I do take some comfort that I am immortal in a way. Because of Albert Einstein, we know that space-time is real, and that time is an illusion. My mom is still alive somewhere in the space-time matrix. I just lack the ability to slide through space-time like a tape recorder to see her again. Some mediums though claim they can do this.

Given that space-time is a fact and that religion requires faith, knowing that space-time exists tells me that I am immortal in a way, as I am part of space-time which is effectively immortal. It is a sort of faith for the faithless. And I didn’t need Jesus Christ to find it. I needed to understand the implications of what Albert Einstein was telling us.