Uber | Grouchy Old Cripple

Have you been following the back story? Uber’s been in the news lately. It’s an easy thing for random people to earn money while working their own turf and their own hours. It’s a classic contractor arrangement, with the central station merely doing accounting and coordinating customers and contractors. So of course the government is looking for ways to forcibly convert the drivers into employees so as to properly “protect” them with mandated benefits and working conditions and controlled hours and all the other job-killing soul-sucking micromanagement.

Google on “Uber” and “Democrats” and a lot of news reports will come up.

Here, I’ll paste an editorial by WSJ Taranto.

What’s the Gig Deal?

The phony assumptions behind the left’s attack on Uber.

By James Taranto

July 27, 2015 12:54 p.m. ET
Uber and its competitors in the car-service-app business won a huge victory in New York last week when the city’s leftist mayor, Bill de Blasio, backed down from his plan to enact legislation severely curtailing the industry’s growth. In response, former Enron adviser Paul Krugman is uncharacteristically ambivalent.

On the one hand, he acknowledges in a brief New York Times blog post, Uber is a boon to consumers, who no longer need to brave the elements and compete among themselves for scarce taxicabs. On the other, Uber’s “workers supposedly are free contractors, not employees, exempting the company from most of the regulations designed to protect employee interests. And it’s the second aspect that brings us into divisive politics.”

Krugman rehearses his partisan caricatures—Republicans hate workers; Democrats love them—but nonetheless ends with a recognition that things aren’t quite that simple: “It’s surely possible to separate these two issues, to promote the use of new technology without prejudicing the interests of workers. But progressives need to work on doing that, and not let themselves get painted as enemies of innovation.”

Inevitable Democratic presidential nominee Hillary Clinton was similarly equivocal in a New York speech two weeks ago: “Meanwhile, many Americans are making extra money renting out a spare room, designing websites, selling products they design themselves at home, or even driving their own car. This ‘on demand’ or so-called ‘gig economy’ is creating exciting opportunities and unleashing innovation but it’s also raising hard questions about workplace protections and what a good job will look like in the future.”

But is it really? An analysis in today’s Wall Street Journal suggests the “gig economy” doesn’t amount to much. Reporters Josh Zumbrun and Anna Sussman mine the government’s data in search of “hard evidence” and come up empty:

Far from turning into a nation of gig workers, Americans are becoming slightly less likely to be self-employed, and less prone to hold multiple jobs. Official government data shows around 95% of those who report having jobs are accounted for on the formal payroll of U.S. employers, little changed from a decade ago. . . .

Many workers cobbling a living from tech platforms in the gig economy should be classified as self-employed. But the share of Americans who are self-employed and unincorporated has slowly declined over the past decade, to about 6.5% of workers today, down from as high as 7.7% in 2005 and as high as 8.5% in the mid-1990s, according to Labor Department figures. . . .

Some workers might have a primary job and do some TaskRabbit work on the weekend for extra cash, or sell artisanal greeting cards on Etsy as a hobby. But the share of people who hold multiple jobs is also in decline—only 4.8% of workers do, down from 5.5% in 2005 and 6.3% in 1995.

To be sure, the absence of such a trend in the overall national economy does not preclude the possibility that Krugman and Mrs. Clinton are correct about particular industries or localities. There’s no doubt Uber has had a disruptive effect on the taxi industry in New York. Has it come at the expense of workers?

It is hard to see how one could answer in the affirmative, unless one is ignorant of the way the city’s taxi business works—something we learned years ago from an article in the Atlantic Monthly, which the magazine summarized as follows: “In New York City, fares curse cabbies whose English is terrible and driving is worse. Cabbies curse taxi-fleet owners and a system that thrives on inexperience. As is often the case in New York, everyone is right to be angry.”

Alas, the article could not be found on the Atlantic’s website. But we tracked it down through the ProQuest database. It appeared on page 30 of the May 1994 issue, and the author is Sheryl Fragin. Here’s the key section:

What makes New York’s taxi industry fascinating and absurd is its free-market medallion system, which, despite freezing the number of cabs—as systems in other cities do—allows such liberal transfer rights that the street value of a medallion hit $182,000 last December. New Yorkers wanting to own a medallion–a simple aluminum hood ornament–will mortgage themselves to the teeth even before buying the car and covering the insurance, transfer, and broker fees that go with it.

That’s why most drivers lease their cars, paying about $80 for the day shift (typically 5:00 A.M. to 5:00 P.M.) or $90 for the overnight. Figuring in another $20 for gas, the driver is at least $100 in the hole the second he leaves the garage. Every fare and tip above that is his, but the driver often doesn’t start earning for himself until his eighth hour in the car. Some days there’s almost no profit at all, especially when things go wrong. “Like last night—my cab broke down and I had to call guys to come pick me up,” says a driver from Ghana who asked that his name not be used. “I couldn’t even make the lease.”

Fragin notes that it was not always thus. Before the Taxi and Limousine Commission permitted leasing, “drivers earned a percentage of their daily receipts. Gas and repair costs were covered by the garage, as were health benefits and vacations”:

Once leasing caught on, in the early eighties, the picture changed dramatically. . . . No longer did . . . owners bear much responsibility for drivers. There was no more unemployment and Social Security to cover, no more risk to share. If a driver had a bad night, management still got the fee up front. Vacations were gone, and it became nearly impossible to find a driver with health insurance.

Things haven’t changed much in the intervening two decades. “For nearly 15 years, taxi workers in New York City . . . have been building a union,” the AFL-CIO bragged in a May 2012 press release. But the National Taxi Workers Alliance didn’t have much to brag about:

Each yellow cab taxi driver in New York City has been classified by the city as an independent operator—a status that excludes them from coverage by most U.S. labor laws and that means their union cannot appeal to the National Labor Relations Board for recognition of its right to represent workers. . . .

Being a cab driver in New York City is hard. Workers are often on the streets for 14 or 16 hours a day, six, sometimes seven days a week in what the U.S. Department of Labor labels one of the country’s most dangerous professions.
Taxi workers buy fuel themselves and pay high lease rates for vehicles—sometimes more than $60,000 over the usable life of a car worth $30,000. Most taxi workers also must lease medallions, which are the permits required for cabbies to pick up passengers who hail them on the streets of New York City. Garage companies charge drivers a 5 percent fee on every credit card transaction. And as independent contractors, the taxi workers are on their own to buy health insurance.

“All the risk is ours,” said NTWA member and taxi worker Jamil Hussain. “If gas prices rise, we earn less. If it’s a slow day, we earn less. But the company gets its money no matter what!”

Given that New York City cabdrivers have labored for some three decades under the sort of conditions progressives claim to deplore, it is difficult to credit the claim that the effort to suppress Uber is a product of concern for workers’ well-being. The mayor himself framed his proposal as an effort to limit traffic congestion, although, as the New York Times noted, “Mr. de Blasio has seldom fretted about congestion in his public life.”

That Times story also pointed out that when de Blasio ran for mayor in 2013, he “took in hundreds of thousands of dollars from the taxi industry.” Dick Dadey of Citizens Union told the paper: “When one interest group who happens also to be a campaign contributor is favored over another, it’s quite reasonable to question the motivation behind the policy change.”
And as Fragin observed back in 1994, medallion holders are “a formidable political lobby.” It’s not hard to see why they would want to be rid of Uber: The more cars available for hire—the more options consumers have—the less that asset is worth. “The price of an individual New York yellow-taxi medallion fell about 19% last year, to about $810,000 in December from $1 million at the start of 2014,” the Journal reported in January.

Here we must point out a serious error in Fragin’s otherwise excellent piece: It is rather absurd to describe the taxi-medallion system as “free-market.” True, the pricing, trading and use of medallions is largely unconstrained. But they have no value apart from their scarcity, which is artificially created by government decree. The mayor’s proposal was about protecting capital, not helping labor. That’s “progress” for you.

Reply ↓

5 comments on “Uber”

Ron in Ohio on August 3, 2015 at 11:50 am said:

Well Denny ya’ finally did it – Ya’ had to go and reveal just how you have become the “SRF©” of your critics. Now you’ll never get any peace. The next thing ya’ know they’ll be criticizing your “wealth” as ill gotten gains by a serial air polluter who massively contributed to “Global-Warming” with your many Saturday morning trips.

Reply ↓
TalkinHorse on August 3, 2015 at 4:59 pm said:

Have you been following the back story? Uber’s been in the news lately. It’s an easy thing for random people to earn money while working their own turf and their own hours. It’s a classic contractor arrangement, with the central station merely doing accounting and coordinating customers and contractors. So of course the government is looking for ways to forcibly convert the drivers into employees so as to properly “protect” them with mandated benefits and working conditions and controlled hours and all the other job-killing soul-sucking micromanagement.

Google on “Uber” and “Democrats” and a lot of news reports will come up.

Here, I’ll paste an editorial by WSJ Taranto.

What’s the Gig Deal?

The phony assumptions behind the left’s attack on Uber.

By James Taranto

July 27, 2015 12:54 p.m. ET
Uber and its competitors in the car-service-app business won a huge victory in New York last week when the city’s leftist mayor, Bill de Blasio, backed down from his plan to enact legislation severely curtailing the industry’s growth. In response, former Enron adviser Paul Krugman is uncharacteristically ambivalent.

On the one hand, he acknowledges in a brief New York Times blog post, Uber is a boon to consumers, who no longer need to brave the elements and compete among themselves for scarce taxicabs. On the other, Uber’s “workers supposedly are free contractors, not employees, exempting the company from most of the regulations designed to protect employee interests. And it’s the second aspect that brings us into divisive politics.”

Krugman rehearses his partisan caricatures—Republicans hate workers; Democrats love them—but nonetheless ends with a recognition that things aren’t quite that simple: “It’s surely possible to separate these two issues, to promote the use of new technology without prejudicing the interests of workers. But progressives need to work on doing that, and not let themselves get painted as enemies of innovation.”

Inevitable Democratic presidential nominee Hillary Clinton was similarly equivocal in a New York speech two weeks ago: “Meanwhile, many Americans are making extra money renting out a spare room, designing websites, selling products they design themselves at home, or even driving their own car. This ‘on demand’ or so-called ‘gig economy’ is creating exciting opportunities and unleashing innovation but it’s also raising hard questions about workplace protections and what a good job will look like in the future.”

But is it really? An analysis in today’s Wall Street Journal suggests the “gig economy” doesn’t amount to much. Reporters Josh Zumbrun and Anna Sussman mine the government’s data in search of “hard evidence” and come up empty:

Far from turning into a nation of gig workers, Americans are becoming slightly less likely to be self-employed, and less prone to hold multiple jobs. Official government data shows around 95% of those who report having jobs are accounted for on the formal payroll of U.S. employers, little changed from a decade ago. . . .

Many workers cobbling a living from tech platforms in the gig economy should be classified as self-employed. But the share of Americans who are self-employed and unincorporated has slowly declined over the past decade, to about 6.5% of workers today, down from as high as 7.7% in 2005 and as high as 8.5% in the mid-1990s, according to Labor Department figures. . . .

Some workers might have a primary job and do some TaskRabbit work on the weekend for extra cash, or sell artisanal greeting cards on Etsy as a hobby. But the share of people who hold multiple jobs is also in decline—only 4.8% of workers do, down from 5.5% in 2005 and 6.3% in 1995.

To be sure, the absence of such a trend in the overall national economy does not preclude the possibility that Krugman and Mrs. Clinton are correct about particular industries or localities. There’s no doubt Uber has had a disruptive effect on the taxi industry in New York. Has it come at the expense of workers?

It is hard to see how one could answer in the affirmative, unless one is ignorant of the way the city’s taxi business works—something we learned years ago from an article in the Atlantic Monthly, which the magazine summarized as follows: “In New York City, fares curse cabbies whose English is terrible and driving is worse. Cabbies curse taxi-fleet owners and a system that thrives on inexperience. As is often the case in New York, everyone is right to be angry.”

Alas, the article could not be found on the Atlantic’s website. But we tracked it down through the ProQuest database. It appeared on page 30 of the May 1994 issue, and the author is Sheryl Fragin. Here’s the key section:

What makes New York’s taxi industry fascinating and absurd is its free-market medallion system, which, despite freezing the number of cabs—as systems in other cities do—allows such liberal transfer rights that the street value of a medallion hit $182,000 last December. New Yorkers wanting to own a medallion–a simple aluminum hood ornament–will mortgage themselves to the teeth even before buying the car and covering the insurance, transfer, and broker fees that go with it.

That’s why most drivers lease their cars, paying about $80 for the day shift (typically 5:00 A.M. to 5:00 P.M.) or $90 for the overnight. Figuring in another $20 for gas, the driver is at least $100 in the hole the second he leaves the garage. Every fare and tip above that is his, but the driver often doesn’t start earning for himself until his eighth hour in the car. Some days there’s almost no profit at all, especially when things go wrong. “Like last night—my cab broke down and I had to call guys to come pick me up,” says a driver from Ghana who asked that his name not be used. “I couldn’t even make the lease.”

Fragin notes that it was not always thus. Before the Taxi and Limousine Commission permitted leasing, “drivers earned a percentage of their daily receipts. Gas and repair costs were covered by the garage, as were health benefits and vacations”:

Once leasing caught on, in the early eighties, the picture changed dramatically. . . . No longer did . . . owners bear much responsibility for drivers. There was no more unemployment and Social Security to cover, no more risk to share. If a driver had a bad night, management still got the fee up front. Vacations were gone, and it became nearly impossible to find a driver with health insurance.

Things haven’t changed much in the intervening two decades. “For nearly 15 years, taxi workers in New York City . . . have been building a union,” the AFL-CIO bragged in a May 2012 press release. But the National Taxi Workers Alliance didn’t have much to brag about:

Each yellow cab taxi driver in New York City has been classified by the city as an independent operator—a status that excludes them from coverage by most U.S. labor laws and that means their union cannot appeal to the National Labor Relations Board for recognition of its right to represent workers. . . .

Being a cab driver in New York City is hard. Workers are often on the streets for 14 or 16 hours a day, six, sometimes seven days a week in what the U.S. Department of Labor labels one of the country’s most dangerous professions.
Taxi workers buy fuel themselves and pay high lease rates for vehicles—sometimes more than $60,000 over the usable life of a car worth $30,000. Most taxi workers also must lease medallions, which are the permits required for cabbies to pick up passengers who hail them on the streets of New York City. Garage companies charge drivers a 5 percent fee on every credit card transaction. And as independent contractors, the taxi workers are on their own to buy health insurance.

“All the risk is ours,” said NTWA member and taxi worker Jamil Hussain. “If gas prices rise, we earn less. If it’s a slow day, we earn less. But the company gets its money no matter what!”

Given that New York City cabdrivers have labored for some three decades under the sort of conditions progressives claim to deplore, it is difficult to credit the claim that the effort to suppress Uber is a product of concern for workers’ well-being. The mayor himself framed his proposal as an effort to limit traffic congestion, although, as the New York Times noted, “Mr. de Blasio has seldom fretted about congestion in his public life.”

That Times story also pointed out that when de Blasio ran for mayor in 2013, he “took in hundreds of thousands of dollars from the taxi industry.” Dick Dadey of Citizens Union told the paper: “When one interest group who happens also to be a campaign contributor is favored over another, it’s quite reasonable to question the motivation behind the policy change.”
And as Fragin observed back in 1994, medallion holders are “a formidable political lobby.” It’s not hard to see why they would want to be rid of Uber: The more cars available for hire—the more options consumers have—the less that asset is worth. “The price of an individual New York yellow-taxi medallion fell about 19% last year, to about $810,000 in December from $1 million at the start of 2014,” the Journal reported in January.

Here we must point out a serious error in Fragin’s otherwise excellent piece: It is rather absurd to describe the taxi-medallion system as “free-market.” True, the pricing, trading and use of medallions is largely unconstrained. But they have no value apart from their scarcity, which is artificially created by government decree. The mayor’s proposal was about protecting capital, not helping labor. That’s “progress” for you.

Reply ↓
- Denny Wilson on August 3, 2015 at 7:15 pm said:
  
  Every time I see Krugman the first thing I think of is Enron. He was their head economist and I should take anything he writes seriously?
  
  Reply ↓
  - TalkinHorse on August 4, 2015 at 12:03 am said:
    
    When Taranto cites Krugman, he invariably refers to him as “former Enron adviser Paul Krugman”, followed by an evisceration of Krugman’s latest pearls of wisdom. In this case, he graciously acknowledges that Krugman almost made a sensible comment about a fragment of the issue at hand.
    
    Anyway, Google on Uber and Democrats to see how Democrats have recognized Uber as an enemy of the people and are going into attack mode.
    
    Reply ↓
    - Denny Wilson on August 4, 2015 at 8:36 am said:
      
      Krugman has stated over and over that the only reason Obamanomics didn’t work was that the stimulus wasn’t large enough. In his opinion, we should have wasted two trillion dollars instead on one trillion. He’s a broken record stating failed Keynesian policies. Over the last 60 years what economic policies were the most successful? Reagonomics which led to the largest peace time expansion of the 20th Century, yannow, what Bush 41 labeled Voodoo economics.
      
      Reply ↓

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