News Feb 8, 2024 at 9:00 am

Billion-Dollar Corporations Blame Their Own Poor Business Decisions on Underpaid Gig Workers

Another day, another example of corporations reframing their decision to hoard profits as a failure of progressive policy. HK

Comments

1

I'm confused as to why customers should not bear the cost of the services they request.

2

There are two prevailing theories here.

Theory 1: The council's new regulations increased costs in a business model that already has tight margins so the companies chose to pass those costs on to consumers rather than subsidize them with revenue from other locations with less regulations. The increased costs has dampened consumer demand leading to less orders and thus less revenue for drivers and the company.

Theory 2: The company is retaliating against Seattle by imposing an arbitrary fee that hurts both their drivers and themselves (they are making less in Seattle as well due to loss of business) to be petty.

One is based on economics the other is based on political ideology.

3

The apps can only charge a certain markup or fees for delivery convenience, they aren't making millions on ads or other revenue streams to fund the increased costs, so of course they have to be passed on to the consumer. Uber just posted their first ever profit since their IPO, calling them billion dollar corporations ignores the fact they've largely been loss making. Of course the cost has to be passed to the customer, and of course there's going to be less work available for delivery drivers when a $14 subtotal now has an extra third of that tacked on in additional fees. You can tell DoorDash is getting fewer orders because their tip suggestions are partially based on local demand and they've fallen through the floor lately.

4

How on earth did we let capitalists convince us A cynic might say the politicians are benefitting just as much by carrying this banner for the gig worker when the old boring way of doing stuff was a better bet - restaurant employment with minimum wage and worker protections.

BTW, even before fees skyrocketed, I never considered myself so important to need someone to bring me fast food. It’s a waste of gas, packaging, cars on the road and money!

5

I was going to order some food from a Mediterranean spot near me on UberEats last week. Nothing crazy - chicken shawarma with rice & salad and a gyro. Total for the food was $32. After all of the bullshit taxes, fees, even before I would've added on a tip, it was suddenly $52. Who the fuck can afford an extra $20 in fees plus whatever stupid expected tip on top of that? I deleted the order and decided I'd make dinner with whatever I had in the house instead.

Han Han, people ARE ordering less now because of the fees. Which, in turn, hurts the drivers. It doesn't take a PhD in economics to put two and two together to come to that conclusion.

7

@2 How about a little of both? The city council tried its best to do the right thing. Kudos to them. But the inescapable truth is that restaurant food delivery is intrinsically not a very lucrative proposition. I especially don't see how, outside of a mass quarantine event, to make it profitable for the restaurants, the workers, AND a third party delivery app. Even two of those three is a stretch. Ordinarily there just isn't much money in it.

My sympathies are 100% with the workers but they should probably start looking for something else (and I suspect most are). If I owned stock in one of those apps, I'd sell it now.

8

Actually, the drivers themselves said it's backfiring. I suggest watching local news reports before posting spin Hannah.

9

@2 haha, forsooth.

But which is it?

11

These gig companies are parasites - the gig workers should simply be classified as employees, full stop. Tech tried this before with perma contractors - those folks finally got wise, sued their companies, and were rightly compensated as a result (as well as killing the concept of the perma temp).

It would also be nice if a supposedly pro labor / pro climate activist publication would call for an end to an obviously terrible business model for folks / the environment / local businesses.

12

@7/9 It's definitely a bit of both but what you think weighs more heavily probably depends on where you are starting from ideologically. Of course Hannah and TS will see this as being 99% the latter whereas I tend to think these companies could care less what Seattle is doing and what happened this is more about economics. The fact this city is getting some blowback is just an unexpected benefit for the companies.

It's very similar to the arguments around the min wage increases and the climate act. Government in our part of the world (and TS) seem to think businesses have endless amounts of money and they will just absorb new taxes and regulations but in reality we have seen time and again that these are passed through to consumers. For all their bitching about it there is nothing government can do to curtail this. Heck the soda tax legislation actually says in the preamble its not meant to be passed to consumers and yet that is exactly what happened. The legislature from the city council on up should start being honest and say we are going to tax/regulate this and it will probably results in higher costs (and there will be some employees who lose out) but we think its worth it because x, y and z and make their case rather than roll this out and act shocked and outraged when the inevitable happens.

13

@11. I mean clearly it's not a terrible model for those who earn their living from it, the customers who utilize or need it, and the businesses who have increased volume (and were kept alive during COVID) and expanded their footprints because of it. The business model is a tight margin business since there's only so much in markup and fees consumers will be willing to pay where it no longer offsets the convenience. DoorDash has literally never made a profit since going public, so the idea that they'd simply be able to absorb and eat PayUp added cost without passing it on to the customer is a silly one.

14

fred meyer stopped delivering to my address altogether since this happened, pretty sure they used instacart shoppers. i use amazon fresh delivery for groceries now.
so i guess you could also say this policy is benefiting amazon, the stranger's besties.

15

@11 That perma-contractor never went away. Those first workers benefited but everyone else went back to business as usual but another layer of bureaucracy. Shell companies were created to get around the 90 days off after working a year so there would be no disruptions for the corporation. I worked for one for Microsoft for a couple of years. I interviewed with Microsoft employees and didn’t meet my “boss” until 6 months later. He simply hired an admin company to do the admin work like paying my check so all he had to do was collect his percentage. So all that lawsuit did was create a middleman who did little or nothing and the worker got screwed.

16

The whole gig economy is based on people who can’t afford servants being waited on anyway by badly paid workers. It won’t work if the drivers etc. get paid like employees because their customers are not willing to pay what employees actually cost.

Go pick up your own damn groceries.

17

What 16 said. Granted, there are those that rely on home delivery, but for the vast majority, not so much.

And I would be curious to know when does a company get to pass along local fees/taxes to those local customers, according to Ms. Krieg?

18

@16 that's not true, the premise behind gig work was to provide a way for people who want to earn some extra money in their spare time or when they are doing something anyway (e.g. driving to the airport) a platform to connect them with others willing to pay for that service at a reduced rate. Initially, it was not intended to take the place of full time employment, the fact that this is where we are at now says more about the failure of the economy as a whole then it does about the value proposition of gig work. I know TS would never acknowledge this in any way but not every job is designed to provide a "living wage".

19

@16, @18: You’re both right. Gig work started on the premise of part-time odd jobs, but has morphed into an unsustainable sub-economy of underpaid quasi-full-time workers. Neither these employees nor their employers have been making enough money to sustain their sub-economy.

@17: Of course, as you know, the answer is never. As @12 recounted, “Heck the soda tax legislation actually says in the preamble it’s not meant to be passed to consumers and yet that is exactly what happened.” I recall the angry, printed signs at the deli I used to frequent on Union Street, loudly explaining that every last penny of Seattle’s soda tax was being passed along to the customer. (The entire soda-tax fiasco went like a libertarian satire of liberal social engineering: the tax didn’t change behaviors, and the tax money was ultimately pirated by then-Mayor Durkan for her own pet projects.)

20

I'm a great believer in actually going to my favorite restaurant (there's an I, Anonymous article on this), sitting down and eating. When I eat at home, I cook at home. There is no way an Uber Eats fee per meal could ever compete with an SUV load of Costco extra large size cartons neatly stocking my pantry.

Yes, there are some people who depend on delivery (although how they ever survived before apps, the gig economy or even the Internet, I'll never figure). But one can have groceries delivered. And I'd venture a guess that the delivery surcharge per calorie is much less than the DoorDash fee per burger and side order of fries.

21

So a new law was passed without any thought that it might cause the workers it was designed to help become unemployed? The Stranger never considers that there is a cost to any tax. What do you think will happen when someone making a million dollars a year tax passes? My guess is employees moving to Bellevue and even less money for downtown Seattle businesses.

22

These gig companies have zero overhead. They just set up servers to track orders and process payments. It would be better if a person staked out an area to deliver independently and got businesses to use them for deliveries. The business takes the order and texts the independent gig worker(s) delivery instructions with the gig worker taking part of the profit. If I were a gig worker and enjoyed the work I would be asking other drivers to form a local company.

23

Home cooked meals are so much less expensive and better for you.

24

Passing increased fees to customers?
Wow. I’m shocked.
I mean who could have predicted that?

25

Let me get this straight - Hannah excoriates KING 5 for having talked to ONLY two workers - so what does Hannah do? Talk to ONLY two workers (or is it three - hard to parse). Way to really give it to the MSM there ,TS, you really showed them their bias.... /s

26

@18 - I agree as to the initial idea behind gig work, and there are still people who drive/deliver/whatever for a few extra bucks. I disagree as to your argument as to the "failure of the economy" tho. We have the lowest unemployment I have ever seen in my life (and I am far from young) and the minimum wage is higher than it's ever been. As far as I can tell from anything I have seen or read, anyone who wants a job can have one now. There's no reason one has to depend on gig work to get by. And as others have said, a regular job comes with the protections that employees generally have.

The idea that you can "be your own boss" and not have to take orders from the Man is the flip side of the idea that we're all rich enough to have our app-based staff chauffeur us around, bring us our food, etc. even though we're really just ordinary non-wealthy types. No one is forced to buy into either side of that. At the end of the day, we're seeing that the business model that is supposed to provide both of those amazing modern advances is just not tenable - there is not enough money in things like food delivery to support it.

27

@26 I don't dispute that there are plenty of jobs around for whoever wants one, what I mean by a failure of the economy is a failure to provide the oft talked about "living wage" jobs. As I noted above not every job is designed to provide a living wage. The fact people are taking these gig jobs and using it for that indicates they either lack the skills to obtain a job that provides that level of pay or those jobs are harder to come by. These gig jobs have a place in the economy as you noted for those who want to be be their own boss or make extra money however they also shift many costs onto taxpayers since they often do not come with health care or retirement benefits. It's an issue that is not often talked about but it impacts all of us.

28

@26 or they don’t want to put in the effort a real job requires. You know… being on time… working an 8 hour shift. Adulting.

29

We use Door Dash must less now that the old/socialist City Council 'fixed' it

We also use less Uber/Lyft when the old/socialist City Council 'fixed' those services too. Now Uber is 3X more expensive than in Los Angeles--crazy.

Uber drivers have told me that demand has dropped a lot.

30

The article (and the, obviously, dumber subset of the drivers who agree) contradict themself - “If your business relies on severely underpaying your workers, that is not an acceptable business model.” - well duh! If it's not an acceptable business model, there isn't going to be a business and you're not going to have a job! So, the fee that makes the business model non-viable does cost you your job, which - based on revealed preference of working it - you wanted before.

I just cancelled DashPass after looking at the new fees... made one order in 2024 so far, compared to ~one per week in 2023, and not planning to make any more in February so far. And if I do I sure as hell won't tip like I used to - why would I, you have the minimum wage now. Saving lots of money by cooking, and I am a privileged tech worker :)

The real minimum wage is always zero, enjoy...

31

Oh and I can echo @29 - I used to take many more ubers in Seattle. Ubers are still ok priced in Bellevue (last time I checked), so when I'm on the East Side I take them, but in Seattle I only do it when I'm drinking, or maybe going to the airport.

And I am what stranger would call "rich". I did grow up poor so I guess I still have this thing where I look at the price and cannot accept it even though I can easily afford it. Wait for the next bust when the normal tech/etc. crowd stops being price-insensitive.

32

Geeks are gods, and gods don't like being questioned.


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