Two days ago the BBC reported that the Supreme Court had ruled that Uber drivers are workers rather than being self-employed.
With what glad hosannas did the drivers greet the news of their liberation!
Er, no. As Sam Dumitriu writes in CapX,
Putting questions of legality to one side, it’s clear Uber’s business model works for drivers. If you don’t believe me, just ask them. Countless surveys have found that the majority of Uber drivers are happy with the status quo and would not sacrifice flexibility for greater security.
A survey carried out by Oxford University academics Carl Benedikt Frey and Thor Berger, in partnership with Uber, found that drivers reported higher levels of life satisfaction compared to other London workers, despite on average earning less. And, counter to the conventional wisdom, drivers typically worked full-time in other jobs before choosing to shift to Uber. Furthermore, more than four-fifths of drivers agreed with the statement: ‘Being able to choose my own hours is more important than having holiday pay and a guaranteed minimum wage’. They found that drivers would accept a move to fixed hours – but only if it came with a 25% pay rise.
Perhaps they had looked across the Atlantic and seen the results of California’s attempt to save gig economy workers from working in the gig economy:
In Uber’s home state of California, 70% of drivers backed Proposition 22, a ballot measure that created a carve-out for ridesharing services from the state’s tough laws on freelance work. The measure passed with 59% of the vote in November.
AB 5, the freelancer law which Prop 22 was responding to highlights how interventions designed to solve a problem in one market can have unintended consequences in others.
When it passed, Vox published an article: “Gig workers’ win in California is a victory for workers everywhere”. A month later they published another article: “Freelance journalists are mad about a new California law. Here’s what’s missing from the debate. The alternative to AB5 would be worse”. Two months later, Vox Media itself cut hundreds of freelance writing jobs in California.
It doesn’t say much for the economic organisation or the ethics of advanced, wealthy societies when they can only provide employment for an ever increasing number of people by paying them poor wages and giving them terrible terms and conditions.
As opposed to the wages and working conditions provided by the economic and ethical abilities of what, pete (February 21, 2021 at 6:22 pm) – communism, socialism, the Blair-created supreme court, the Californian state?
As for ‘ever-increasing’, well we’re not increasing that fast compared to the victorians, though I suppose we are compared to some communist regimes.
This is a small part of a much bigger matter.
The establishment, not just in Britain but just about everywhere, defines a right not as a limitation on government power, but as a material benefit either directly from government or provided by an employer at the command of government.
Of course piling on these benefits will lead to MASS UNEMPLOYMENT, but the establishment are addicted to “Social Reform” (they have been for a very long time), so they will just disregard that.
I am reminded of the words of the first President of an independent Ghana (the old Gold Coast) “Seek you first the POLITICAL kingdom, and then all other things will be given unto you”.
This philosophy that people should look to the government for their “basic needs”, the philosophy of just everywhere now, will lead eventually to mass starvation.
I repeat one can not reason with the establishment Collectivists – for example they regard Ireland in the late 1840s, which was crushed by the Poor Law Tax, as an example of “laissez faire”.
It’s been obvious for a long time, double underlined by the prorogation ruling, that the long march through the institutions has trampled through the Supreme Court. Although to be fair as Niall mentions, it was a Blair creation designed to be marched through.
I was pleased that the people of California acted (via their votes) to prevent the extermination of the “gig economy” they also (on the same day – November 3rd 2020) turned down a Property Tax increase that would have made Californian taxation (overall – all taxes put together) the worst burden in the nation, rather than almost-the-worst which it is now.
Yet Californian voters also voted for Joseph Biden (the vote in California included “vote harvesting” but I think that Joseph Biden actually won California – unlike several other States which he is supposed to have won and most certainly did NOT WIN), and for mostly Democrats in Congress.
In short what is left of the Californian economy will be destroyed by the Federal Government – which will also destroy the economy of other States.
“The Republican Party must be modern and embrace such things as Climate Change” – that has led to such things as TENS OF BILLIONS of Dollars being spent on wind turbines and solar cells in Texas.
The Texas energy market is about as “laissez faire” as Ireland in the late 1840s – i.e. it is NOT laissez faire at all.
I suspect that British economists have always been mostly useless.
The French “Liberal School” economists of the 19th century were much better.
J.B. Say poured praise on Adam Smith, but he understood what Smith did NOT understand – namely that the benefits of government spending do NOT balance out the costs of paying for it.
That was something that Sir Charles Trevelyan (the founder of the British Civil Service) never understood (hence his demented idea that Irish Property must pay for Irish Poverty – via taxation, not understanding that this would create a spiral effect of more and more poverty) and the British “Supreme Court” still does not understand.
Government mandated benefits are NOT costless – and, in this case, the cost will be higher UNEMPLOYMENT.
Adjusted for time and inflation, McDonalds, convenience stores, gas stations – most of the market for unskilled, inexperienced wage workers – pay better per hour than when I was in high school. Or college. Or ten years ago.
The $15 minimum wage movement knows it will raise unemployment. But it will also establish a new floor for what is an acceptable livelihood. Once established, we’ll have far fewer people working, but welfare levels will be determined by this new paradigm – that the floor ought to be based on what someone could make at 40 hours @ $15/hour.
It has nothing to do with “fair wages” and everything to do with setting “poverty levels.”
“The past is a foreign country – they do things differently there”.
We today think of France as a Big Government country (which it is now) – but for much of the 19th century, although it had a heavy military burden and inheritance laws that destroyed farms (or led to people killing some of their babies – to avoid to prevent the farm being divided) France was seen as the example of freedom – liberty.
Indeed whether a British or American person choose to further their education in France or Germany (it was fashionable to study in one or the other, very rarely both, to broaden one’s experience) said a lot about them.
One could tell if a British or American person was pro liberty or pro bigger government (pro “Social Reform”), by whether they cited French or German economists.
To some extent this went back before the 19th century – to the cult of Frederick the Great of Prussia in the 18th century (for example his system of state education – which was not done in France till the late 19th century).
For example, A.L. Perry, the main free market American economist of the 19th century, looked to such French economists as Bastiat – whereas the Collectivist American Richard Ely (the founder of the Orwellian named “Academic Freedom” campaign – which he intended to use as a weapon to force out people who did not share his Collectivist opinions, although, in his lifetime, he FAILED in that as even his American Economics Association refused to ban pro liberty thinkers, leading to Richard Ely resigning in evil frustration) looked to German “Historicist” (Historical School) thinkers such as Gustav Von Schmoller.
See Carl Menger’s “The Errors of Historicism” (1883).
Someone like Gustav Von Schmoller (or Richard Ely – the mentor of both “Teddy” Roosevelt and Woodrow Wilson) denied ECONOMIC LAW – holding that the state could give lots of nice benefits to the people at no net cost, the “rich” (and “business”) could be taxed to help-the-poor, without the economy being made smaller (and the poor made WORSE off) as a result.
So Schmoller and Ely would support the Supreme Court decision – whereas A.L. Perry or Bastiat (or the Say family) would have been horrified by the economic side of it.
Even the French government pension scheme of 1910 was voluntary (people did not have to pay – so it was not a tax), and France had no functioning income tax before the 1st World War – whereas Prussia had a “Progressive” (i.e. Graduated) income tax, before Britain did.
So then explain why so many Uber drivers seem to like the arrangement. Try asking one actually, I chat to them all the time.
Uber’s plan to appeal this case is the most clear example I can think of of kamikaze litigation. They could not possibly have gained from this litigation and I have to wonder who has been taken for a ride her, Uber by their lawyers, Uber’s shareholders by their management or Uber’s financiers by their shareholders and so on. The reason I say this is that Uber, having lost at the court of first instance, an Employment Tribunal, could not appeal against the facts found in relation to those drivers who brought the claims. All they achieved by appealing was to give the courts a chance to legislate from the bench by redefining scenarios according to statutes dating from 1996 on, setting out who is a worker and ending up with a precedent that amounts to judicial legislation to restrict freedom of contract (I’m not saying that the politicians don’t want this, it’s easier and a lot faster if judges do it as they do a ‘better’ job of it, making it easier to apply).
Uber could only have overturned the findings of the Employment Tribunal if the Tribunal had made an error of law, by coming to a finding where the law was materially mis-applied (and the original judgment showed how they thought that using lots of lawyerspeak and unrealistic legal devices was a substitute for reality on the ground).
All the Uber have achieved is to poison the well for themselves and other ‘gig’ economy companies, as this precedent will have application across the UK. Had they left it at the Employment Tribunal, it would only have related to those workers and those on like contracts with them.
This is a company that said it might never make a profit yet its costs appear to be to develop an app and running its routing software, holding a Private Hire operator’s licence, getting drivers onboard and taking money from customers (and resolving disputes), spending billions and billions of dollars in the process. Is Uber a means for hired managers to get share options and salaries from the investors’ capital, and not much more in the long run? I am intrigued at the point of investing in a company that says it might never make a profit. Can anyone explain this to me?
Perhaps that is the explanation you seek.
It would be much easier to explain legal reasoning to people if more people understood the difference between, and significance of, factual findings versus legal findings.
When you’ve lost the facts, you’ve usually lost.
(There would be an emoticon right here of a guy giving a thumbs-up if I knew how to do emoticons.)
Bobby, sadly our emoticon/smilie/emoji plugin that added buttons to add them in comments stopped working & could not find another.
I worked for a taxi firm in Romford five years ago creating software for them. The firm was opposed to Uber but it was interesting that many of the firms drivers (all freelancers) used Uber to work a few more hours as well as their main driving job and bring in extra money. How would that work under the new regime? Does the new laws affect freelance drivers who don’t work for Uber?
I’d take issue with those who claim the past (1960s? 1970s?) was a golden age for workers. Gig work has always been around, but it didn’t used to be called that.
Back in the mid-1980s, I took a job with a motorcycle dispatch company. (For those of a certain age, I always say that I took Norman Tebbitt at his word, and got on my bike and found work.) I worked for the same company every day but, like Uber drivers, I was classified self-employed. The bad news as a result of that was I didn’t get holiday pay or sick pay; the good news was I was able to work whatever hours I wanted to.
That job got me off the dole queue and, although I’ve long since given it up, I still regard taking it as probably the best decision I’ve ever made.
@pete
It doesn’t say much for the economic organisation or the ethics of advanced, wealthy societies when they can only provide employment for an ever increasing number of people by paying them poor wages and giving them terrible terms and conditions.
It doesn’t say much for the economic organization or ethics of advanced, wealthy societies that we force people into ridiculous fixed and inflexible work hours, force them into offices with massive commuting costs (which recent events have proved largely unnecessary), give them little time to live their lives outside of their work hours, and make it impossible for them to increase their income much more than a couple of percent a year if they are a good boy/good girl and suck up to the right people.
You seem to suggest that the typical work conditions that “real employees” have are nirvana. They are not, they are life destroying, soul sucking hells. And I personally am very glad I walked away from that world many years ago.
Like Perry said, talk to a few Uber drivers (or other workers in the gig economy) they generally very much like that way of working.
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 hate them.
@Perry de Havilland (London)
Bobby, sadly our emoticon/smilie/emoji plugin that added buttons to add them in comments stopped working & could not find another.
If you run windows (10 or above) then press the Windows key with the ; key it will pop up an emoji keyboard. I imagine Mac’s have a similar feature.
😊😂🤣❤😍😒👌😘 Lots of options available to express the full range of human emotions 🎉✨🌹🎁👏 Built into the operating system so works on all applications.
It is hard to exaggerate how much I loathe Vox.
BTW, I recently read Joel Kotkin’s book, The New Feudalism. It has its strengths and correctly identifies a few issues that squeeze the masses (zoning laws, creeping credentialism, certain taxes and the Green agenda) but he has, in my view, a naive view about trade unions and the “good old days” when everyone worked in big firms, etc. His treatment of the “gig economy” is cartoonishly bad. No mention, for instance, of how NY cab medallions were going for hundreds of thousands of dollars pre-Uber, of how taxi services in London could be spotty and expensive, etc.
Whenever I hear a politician such as Boris J. or anyone else wax lyrical about tech, I remember that far too many of them are willing to cave to Luddism and shit all over disruptive entrepreneurs. Sure, there are issues of putting businesses on a level playing field for tax, etc, but I notice how the push is always to harmonise towards the most highly taxed, bureaucratic level, hardly ever the other way around.
Also, re. above, “provide employment” is not what “societies” do.
Individuals do that, either individually or by banding together cooperatively into companies.
And it is not “provided” as a service to the worker, but to get work done. Payment is not the reason jobs are offered; it is the reason jobs are taken, and it will and should be offered to the extent necessary to achieve that.
“People living in the most expensive real estate markets in the world don’t make enough money, and you can tell because they’re driving in their spare time” … is not a failure of “advanced, wealthy societies” so much as proof that they prefer that to moving someplace it’s cheaper to live.
“Living in a really hopping city with all your friends” is an expensive consumption good, just not one you get an itemized bill for to make it clear you’re paying to consume thatI.
I assure people who don’t want to live in the Bay Area or London that they can have very nice prospects in, say, the Midwest or … whatever the Brit equivalent is. IDK, Manchester or something?
The weird thing to me is that so many people are willing to claim with a straight face that legally classifying Uber drivers as employees would be a “victory” for Uber drivers. It is obvious to anyone who has given the question an instant’s thought that Uber cannot allow its drivers to work whatever hours they wish whenever they wish and also guarantee a minimum wage. It’s evident that the drivers themselves prefer the flexibility.
If you have the government mindset, then “procure government permission to operate” is as much a naturally occurring required step in the formation of a business as is “procure funding.”
Thus, “allow employment” becomes “provide employment” in their eyes.
[…] – Fraser Orr […]
These “advanced, wealthy societies” are being crushed by endless government spending and endless regulations.
It is taxes and regulations that strangle conventional economy – and push people into the “Gig Economy”, if you impose the taxes and regulations (“rights”) on the “Gig Economy” as well, you will get a MASS UNEMPLOYMNENT.
Anyone who denies this, who denies that imposing these taxes and regulations on the “Gig” economy as well as the conventional economy will create MASS UNEMPLOYMENT, speaks with a forked tongue.
As for the idea that high taxes, high government spending, lots of regulations and a Credit Bubble “low interest rate” monetary and financial system will create a more “egalitarian society”.
I see – so New York and California (centres of super high taxes, government spending, regulations and Credit Bubble banking) are centres of an “egalitarian society” are they?
The Irish adventurer Richard Cantillon 300 years ago understood who benefits from that sort of society, especially Credit Bubble banking, – and it most certainly is NOT the poor.
Tesco supermarkets are not pushing the paperback biography of the totalitarian K.Harris because they love poor people.
This sort of totalitarian politician benefits a handful of vast corporations (and the government bureaucracy) at the expense of everyone else – ESPECIALLY the poor.
Try living as a working man (on an ordinary earned income) in San Francisco (K. Harris central) or any of the major Credit Bubble banking cities.
Try that and you will discover for yourself what Richard Cantillon worked out 300 years ago.