Governments don’t oppose gig economy jobs because of a concern for working conditions, they do it because “real employees” are the most heavily taxed people in the economy, and the more of them there are the more the government can milk them for their outrageous vote buying schemes. Employees are much easier to manage and control both by employers and bureaucracies than freelancers. Consequently, bureaucracies prefer them.
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Samizdata quote of the daySamizdata Illuminatus (Arkham, Massachusetts) · Civil liberty, Law & Regulation · Economics, Business & Globalization · Self ownership · Slogans & Quotations February 22nd, 2021 |
 25 comments to Samizdata quote of the day |
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Embarrassingly there is a typo in there, I meant to say “Consequently, bureaucracies prefer them”. Perhaps the Samizdata gods can edit out my error…. [now fixed]
I read the final sentence as meaning bureaucracies hate freelancers. Might be a typo but it doesn’t obscure what you’re trying to get across.
I read “consequently, bureaucracies hate them” to mean consequently, bureaucracies hate freelancers. It works just fine as written.
When we were fighting Hitlery,
The State sneaked in PAYE*
Way back in 1943,
And it has grown like a tree.
* Pay As You Earn, (PEE – AY – WHY – EEE) deduction of income tax and (certainly now) National Insurance Contributions (a social security tax).
Employees are much easier to control than ‘freelancers’?
Tell that to a poverty pay freelance delivery driver or agency warehouse worker who does all his work for one company and has zero employment rights, no right to any work at all and who can be dismissed at any moment and for no reason.
Such people are incredibly easy to control as they dare not do a single thing to annoy the company, even complaining about bullying or other illegal activities.
Mr Orr obviously doesn’t have a clue what he is writing about and I suggest his experience of freelancers is limited to a different section of the employment market than Uber drivers or millions of low paid Brits who are forced into exploitative pseudo self-employment.
By the way, the same applies to employees who are on zero hour contracts. A standard punishment for such staff, for offences like declining overtime, asking the company to comply with health and safety rules or having a day off sick, is to put them on zero hours for a few weeks as a warning not to repeat the behaviour. I’ve even known a case when a newly recruited zero hour contract worker did one week of work and then lost all his shifts as the business owner decided to give them to the daughter of a friend instead because her mum had enquired about holiday job availability.
Like the “Black Market” or “informal economy”, the “Gig Economy” is CREATED by governments.
The create the “Gig Economy” by the endless regulations and taxes they impose on conventional employment.
And when they impose these taxes and regulations on the “Gig Economy” (which they will) they will create MASS UNEMPLOYMENT.
They know this – they know it. Even that senile Puppet Biden knows it – just as he knows his 15 Dollar an hour Minimum Wage Law will create MASS UNEMPLOYMENT (but wait for the academic “economists” to be trotted out to deny that 1+1=2, which they will).
In local government there is something called the “Curley Effect” named after Mayor Curley of Boston more than a century ago.
Mayor Curley discovered something (although I suspect politicians have always known it) – the more poverty you CREATE the more (not the less) popular you become. This is because more people become dependent on your fake “compassion” (the dole, government housing and so on) – fake compassion because you are not financing it with your own money, on-the-contrary you financially gain by making the government bigger (in the name of helping the poor – the poverty you yourself created).
A vote early and vote often, crook like Mayor Curley (or Joseph Biden) knows all this – knows it in their bones. But the Witchdoctor “intellectuals” such as Gustav Von Schmoller or Richard Ely (or the “Nobel Prize winning economists” of our age) convince themselves that government spending and regulations are a “Good Thing” (T.M.) noble “Social Reform”.
By the way – do not get attached to Joseph Biden, he is going soon.
I know this because Tesco supermarket (thousands of miles away from the United States) is already pushing paperback books extolling the (totally fictional) virtues of the totalitarian K. Harris.
All hail “President” Harris.
When I was born (1965), San Francisco was perhaps he best city on Earth for ordinary people – now it is a Hell hole.
That is the legacy of people like Speaker Pelosi and soon “President” Harris.
By comparison they make old Mayor Curley of Boston look like a saint.
@pete
Tell that to a poverty pay freelance delivery driver or agency warehouse worker who does all his work for one company and has zero employment rights, no right to any work at all and who can be dismissed at any moment and for no reason.
Poor or low skill people are always going to have little power, because rights cost money, and if you skill isn’t valuable enough to generate enough money to pay for the basic set of rights set by the government then you don’t have a job. It is that simple: rights cost employers money, so are an automatic deduction from your paycheck that is hidden behind bureaucratic red tape. If the deduction is greater than your pay then you are out of a job.
Here in the United States they have a scheme called FICA which is similar to NI contributions in the UK. Roughly speaking, employees have a deduction from their paycheck of roughly 7.5% which is supposedly set aside for retirement (but is in fact stolen by the government). However, not shown on your paycheck is the fact that the employer “pays” 7.5% as well, so the total is 15%. The idea that the employer pays this is just a myth. I employ people and it is simply considered part of the cost of employment (along with other benefits like health insurance and so forth.) So my employee earns that money by their contribution, and it is deducted from their compensation, but hidden by a bureaucratic sleight of hand. Rights are really exactly the same as that, just less easy to monetize.
The solution is for these low skilled people to get higher levels of skills, which they have to do the same way we all did, but sucking it up and dealing with crap for a while, acquire the skills and move on to jobs where they have more power.
The choice is often not between a job with great rights or a job with shitty rights, it is between a job and no job, and you can negotiate what your compensation is (including rights) to determine where you lie on the scale between the two. Employee rights are very much like the minimum wage. While they might increase the income on the margin for a few, their basic effect is to put people out of work and onto the dole.
And the plain fact of the matter is that these poor lost souls who you are trying to save, these poor oppressed uber drivers, I have talked to many uber drivers them in my usage of the service, and not one of them wanted to be an employee type person, they all loved the freedom uber offered them, and that includes a couple of guys who, while driving me, subjected me to a radio show spouting the most far left BS I have ever heard. So maybe before you seek to save their souls, you might want to ask them if they want saving.
Now if you want to tell me that the core problem is that the public school system is graduating kids with almost no valuable skills, or that Universities are running a con game where they promise kids that their $300k “History of Art” degree will get them more than a gig at Starbucks, then I’ll heartily agree with you. Both these institutions desperately need radical reform, and are at the root of most of the crappiness in Western societies. The idea that the problem is capitalism is such a lie. It is in fact the government sector that is the problem as evidenced by the fact that that, for example, that a poor ghetto kid graduates high school without being able to read above third grade level, send an email that isn’t full of grammar errors, calculate the change from $5 when purchasing something costing $3.78, and, perhaps most importantly, doesn’t understand that the government doesn’t have any money that it didn’t take from productive activities in the private sector. Capitalism, free markets, compensates for this shocking, dreary failure, by producing so many jobs that even that massively under-skilled ghetto kid can make a living.
Why so many people find this so hard to understand is baffling.
In addition, forcing freelancers into employee status often means forcing them to join a union. Which increases union dues. Which mostly go to contributions to the politicians who passed the laws ending the ‘gig’ economy.
Oddly many of the best paid people in the world operate under exactly the same criteria. George Clooney would have near zero income if Hollywood decided they didn’t like him (and recently we’ve seen quite a few actors find this out the hard way).
Many of the worlds sports stars are actually paid with an even less fair and haphazard system — prize money. On the face of it, that seems like it would break pretty much every employment rule ever written.
The gig system itself is not the problem, because only morons would suggest that Hollywood must employ every person in a film as a permanent employee or that golfers should be all paid the same wage.
Your beef is with the “poverty pay’ that you elided in, as if the two things are linked inextricably. But they are not.
The only solution to poor pay is full employment. Nothing else will drive wages up in a sustainable fashion. And every law and regulation that limits employment therefore suppresses the pay of the people who you claim to care for.
Of course “poverty pay” cannot be cured anyway. Someone, somewhere, will always earn the least. We can’t all live like kings. Even in Communism — albeit under that system most people are on poverty pay.
As a lawyer, no matter if it was when I was a sole practitioner, a law firm employee, or an insurer employee, I was one stupid loss or one impolitic remark away from losing the gig. Every day. Could be dismissed on the spot at any time (or simply not retained by anyone ever again.)
Only difference (in the US) is the mandated provision of insurance to employees. But you get paid either partially in insurance plus wages, or just in more wages. There’s no free lunch.
In an ideal (imaginary) world everyone has a secure employment, paying high wages and health-retirement and unemployment benefits. You CANNOT create this imaginary world by coercion (by decree or legislation).
Fraser:
You make a very good point about deductions from wages.
Apart from income tax, we have employee’s national insurance, but we also have employer’s national insurance on top. As you say, from the point of view of the employer, national insurance is just one extra tax they have to pay every month.
If income tax is 20%, employee’s NI is 11% and employer’s NI is 13% (as far as I recall), so the total payroll deduction (after allowances) would be in the order of 44%. That is in effect the “tax rate” on an employee, although he does not know it.
Employer’s NI is listed on the payslip, but I don’t think many people look at it, or if they do, somehow think that the employer pays it. He does not, except in the technical sense that he has to remit it to HMRC. But the reality is that the 44% deduction is part of the employer’s cost of hiring that worker. If he did not have to pay the state, the money could be paid instead to the person who earned it, the worker. Not many ordinary workers realise that they are really paying over 40% of their income in tax. Such is the cost of Big Government.
See also, agency workers on the railway lines. When safe systems are compromised, they are encouraged to speak up but they don’t because they will be dismissed. It’s a real problem.
As for the quote – this is the perfect argument for doing away with PAYE. When people have to write the cheque they see just how much they are being ripped off by and might start to think again about tax.
Surely, much of the bullying in an organisation will be conducted by its (trending to ‘woke’) ‘Human Resources’ department – that’s the one that investigates bullying – run by a collection of vegans who are so self consciously kind to all other life forms on the planet.
@Chester Draws
We can’t all live like kings.
In days of old King Arthur had his magician Merlin by his side to do magical works. In my pocket I have a magical black stone. Shiny, looks like polished obsidian. Inside it it has an orchestra, that, with the wave of my hand I can conjure up any music that has ever been written. With a different wave I can read almost every book ever written. With a different wave I can conjure a spirit that disembodies me and allows me to talk and see someone at the other end of the world. Like a secretary in a 1960s office, it reminds me when I need to be somewhere, and what I need to do. With a tap tap tap, I can conjure the great spirit Amazon, and almost anything imaginable will be delivered to my door. Oh that Aladdin had such a device. It makes his silly lamp look like a cheap card trick.
King Arthur, well if he nicked himself on a dirty nail, some evil spirit might infect him and he would die. But not me. I take a magic pill and all will be well. King Arthur is on his third wife, the first two died giving birth to the heirs, and the children died too. Now, we use all sorts of conjurers tricks and this never happens.
King Arthur rides on a horse or a carriage, slow, uncomfortable and dangerous. I ride in a magic carriage which is quick, safe and comfortable. Sometimes I drive it on my own, sometimes I take a public version called the bus, but both are massively better.
I could go on and on. But most of the people we call “poor” in the west today, live substantially better lives in many ways than the Kings of old. So, I disagree. I think not only can we live as kings, 99% of us do.
I think that’s not quite right. In California, at least, the main advocate of AB5 was a former union organizer who was quite upfront in telling freelancers who objected to being “protected” that they didn’t have real jobs anyway. I take it that the motive was to get people into jobs that could be unionized, providing more leverage against businesses and more money from union dues that could be spent on enriching union officials and/or subsidizing pro-union legislation. If it injured independent contractors by depriving many of them of work, well, those are not the sort of people unions want in the work force anyway; it’s just part of the general pattern where unions produce gains for union members by depriving everyone else of work.
I left California not long after AB5 went into effect, and felt relieved at escaping it. But given the new administration’s support for the Pro Act (a federal version of AB5), California may have come after me.
Jacob: I can’t call your imaginary world an ideal one, even ironically. I’ve been self-employed since 2002, working for a number of organizational clients (currently five). My earnings haven’t been as much as I could wish, but I’ve never wanted to look for a different line of work where I could become an employee; for one thing the flexibility of scheduling is invaluable, and for another I’ve been working from home since long before COVID introduced large numbers of people to the experience. A world where everyone is an employee is a world where people have less independence; I should prefer to move in the other direction.
And in that same ideal world, everyone shows up on time every day, works hard, follows all the rules including safety ones, and never wastes or steals.
If you have to pay the same to useless or dishonest employees, and they have “job security”, guess what you’ll get more of? Not just bad employees, but demoralised good employees who see that working hard is a mug’s game.
(Speaking as an entirely at will employee who could have always been summarily fired on a whim by any of my 12 employers over the last 35 years.)
Fraser Orr, you don’t have to go back to King Arthur. The current Queen’s father will do. Or she herself in her childhood.
The current Queen’s father didn’t have the Merlin used as part of the example, though.
Chester Draws writes: Oddly many of the best paid people in the world operate under exactly the same criteria.
CD refers to Hollywood; it is worth noting that until the 60s or thereabouts, under the “studio system”, a lot of actors and actresses were in long-running contracts and were more like employees than free agents. And the same applied, for example, to football players in the UK. Until the early 60s, footballers who would today earn a fortune were paid a relatively lowly sum, fixed, etc.
As Frazer Orr says, the choice at base is between having a job and no job. The more jobs there are, and the more that people develop and build skills, the more their marginal productivity and attractiveness to employers/consumers increases. Unionising staff, with closed shops, and a guild approach, benefits incumbents and damages others, and worsens the plight of consumers.
nweismuller, they wished they had Merlin. Two years before the current Queen was born, the President of the United States’ son died from a blister on his heel.
Truly, an ordinary Western resident on welfare lives a life of safety and idleness of which the Caesars could only dream.
1. What employment ‘right’s? I am aware of no particular ‘rights’ at the lowest level of the employee chain. I did low-level retail – last minute scheduling, fireable at will, no insurance other than the minimum Workman’s Compensation scheme.
2. The lower you are on the economic ladder, the more interchangeable you are. That means its easier for you to move from place to place and company to company. If you lose this job you’ll have another one paying the same within a week.
3. If you’re working gig, why are you only working through one app/company? Why are you not driving for Uber *and* Lyft? What is stopping you?
4. Is it your contention that rather than be working, these people would be BETTER off if they sat at home and collected unemployment forever?
Dear Mr Orr
One striking point about the lockup has been its impact on small businesses, particularly in the hospitality industry. A great many of them will not be in business when the dust settles, if we are ever let out of our homes again.
Remember, under the Conservatives, an Englishman’s home is his prison.
DP