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Gig work existed before the internet. In addition to traditional forms of self-employment such as plumbing, offers for temporary services have long been found in the Yellow Pages and newspaper job ads, with Craigslist and Backpage later replacing them. Low-cost broadband internet has popularized computer-based gig platforms such as Mechanical Turk, Fiverr, and Elance, making it possible for anyone to earn extra cash. However, with the proliferation of smartphones, everywhere could become an office and everything could become a gig, giving rise to the gig economy.
Perhaps it was a combination of advances in technology and widespread economic uncertainty from the 2008 recession, but the outlook was bleak, people needed money, and many didn’t have a choice. This was the same era when the term “sharing economy” was rapidly gaining popularity. antidote But freedom from ownership made the commoditization of all skills and assets less worrying. Of all the companies that have tried to take advantage of this situation, none has gone further and persevered as much as Uber.
Uber became infamous For entering a new market without regulatory approval. Through a Byzantine scandal for avoiding regulatory scrutiny, several smaller scandals over surcharges that minimized user privacy or profits, and an internal reputation for sexual harassment and discrimination in its early days, the company solidified its reputation as . Early on, the company used deep venture capital to subsidize its rides and cannibalize the traditional taxi industry in certain markets. eventually raise the price And once drivers reach a dominant position, they try to keep their salaries to a minimum. Those same reserves were spent aggressively recruiting drivers with sign-up bonuses and convincing them they could be their own bosses.
There’s something liberating about being self-employed, but Uber has effectively turned a traditionally employee-based industry into a contract-based industry. This meant that one of his first victims of the ride-sharing boom was the taxi medallion. For decades, taxi drivers in many areas have effectively viewed these licenses as a retirement plan. Because when it’s time to hang up your flat cap, you can sell your license to a newbie. But the value of medallions has plummeted over the past decade or so, largely due to the influx of ride-sharing services. For example, in New York, medallion value It has fallen from about $1 million in 2014 to $100,000 in 2021. This has been paralleled by a decline in income, with many struggling to repay the huge loans they took out to purchase their medallions.
Some jurisdictions are trying to compensate for the collapse in medallion value.Quebec received CAD 250 million in 2018 compensate the taxi driver. Other regulators, most notably Australia, have applied per-ride fees to ride-sharing services as part of their efforts to: replace taxi license and Compensate medallion holders. In each case, the brunt of the impact on medallion holders was felt by taxpayers and passengers, not by rideshare companies.
Initially, only taxi drivers were hurting, but as the years went by, the rewards for this new class of non-employee app drivers also dried up. Uber paid $20 million in 2017 to settle allegations from the Federal Trade Commission that it used false promises of potential earnings to induce drivers to join its platform. Late last year, Uber and Lyft agreed to pay New York drivers $328 million after the state conducted a wage theft investigation. The settlement also guaranteed a minimum hourly wage for drivers outside of New York City, since minimum rates were already available under Taxi and Limousine Commission rules.
Additionally, many rideshare drivers want to be recognized as employees rather than contractors in order to receive consistent hourly wages, overtime pay and benefits, an effort opposed by Uber, rival Lyft and others. are doing. In January, the Department of Labor announced a final rule aimed at making it more difficult for gig economy companies to classify workers as independent contractors rather than employees. The EU also tentative contract Reclassifying millions of app workers as employees.
Of course, partial erosion of industry-wide labor markets was not necessarily the end goal. At one point, Uber wanted to eliminate labor costs by eliminating drivers altogether. The company planned to do this by deploying a fleet of self-driving cars and flying taxis.
“The reason Uber is so expensive is because you’re not just paying for the car, you’re also paying for the other passengers in the car,” said former CEO Travis Kalanick. said in 2014, a day after Uber suggested drivers could earn $90,000 a year on the platform. “If there are no other passengers in the car, the cost of taking an Uber anywhere is cheaper than owning a car. So the magic there is that it basically keeps the cost below the cost of ownership for everyone. As a result, you will lose ownership of the car.”
But Uber’s grand automation plans didn’t go as planned. The company sold its self-driving car and flying taxi divisions at the end of 2020 under current CEO Dara Khosrowshahi.
Uber’s success also had second-order effects. Despite a business model best described as “lighting up money until a monopoly is established,” a slew of startups have sprung up, either taking cues from Uber or explicitly marketing themselves. . “Uber of X” Sure, you might be able to find nicer accommodations on Airbnb or Vrbo for cheaper than a hotel.but research has shown These companies are increasing housing affordability and availability in some markets, as many landlords and real estate developers choose more profitable short-term rentals instead of offering long-term rentals or units for sale. It is pointed out that it is damaging the sex. Airbnb has faced many other issues over the years, ranging from a series of lawsuits to lawsuits. Shooting incident at rental house.
Increasingly, this is becoming the blueprint. Goods and services are exchanged by third parties and facilitated by semi-automated platforms rather than humans. The platform’s algorithms create the thinnest surface of choice and control for workers who perform the same labor in the industries it has come to replace, but that surface allows the platform to legally Traditionally thorny things like liability and labor laws can be avoided. Meanwhile, customers with fewer alternatives find themselves hooked to these once-cheap platforms that now come to collect membership fees. Blinded by the promise of innovation, regulators have turned upside down and made deals with the devil. Others are paying the costs.
to celebrate Engadget 20th anniversaryLet’s take a look back at the products and services that have changed the industry since March 2, 2004.