Wednesday, February 21, 2018

Silicon Valley - Taking Shitty Jobs And Making Them Shittier

Is the dot-com boom of our era creating new jobs or just making old jobs shittier?  And at what point do people say "enough" and walk away from these shitty jobs?

There has been a lot of commentary on the far-Left from magazines such as Mother Jones and the like, that much of what people are calling "disrupting" the economy, through new apps and online services, really amounts to no more than exploitation of the working class for the enrichment of a few at the top.

Uber is the classic example.  As I've noted before, it's really nothing more than an unlicensed taxi cab service.  In the past, taxicabs were heavily regulated by the government in terms of the number of licenses granted, the standards they had to adhere to, and the prices they charged.  And these regulations came about because during the early days of the taxicab business - in the early days of the automobile business - competition was cutthroat and passengers were often exploited as well as drivers.  We put an end to that, or so we thought.

Driving a taxi cab has never been seen as glamorous job.  Taxi driving is a shitty job that is mostly filled by recent immigrants, who have little other options in terms of employment.  The system was ready for reform, of course. The taxi cab medallion owners were basically like landlords or plantation owners, owning the means of production, while the poor slob driving the cab merely made an hourly wage.  In some instances the cab driver had to pay the taxicab owner a fee for using the cab and then try to make more money than the fees he was charged - sometimes succeeding, sometimes not.

Uber has "disrupted" this business model by allowing anyone to drive an unlicensed cab - something we saw in the early part of the twentieth century and didn't like.  As a result the medallion owners are finding their investments are now pretty worthless, and traditional taxi cab drivers are finding it harder and harder to find fares.

But doesn't mean that life has gotten better for taxi cab drivers who are now Uber drivers - often it is worse.  Uber drivers don't make a lot of money and often have to take a lot of risk. They have to purchase or lease a vehicle and basically work as a contractor for Uber - which is how Uber avoids a lot of employment and labor laws - or at least tries to.  Instead of paying a medallion owner or a taxi company, drivers now have to pay Uber, and receive little in return other than leads to fares, and maybe umbrella insurance.  At least with the medallion owner, the driver got a cab to drive as part of the deal.  All Uber has done is taken the profits from medallion owners and cab companies and transferred them to their own coffers - and perhaps taken some of the driver's pay as well.  Some disruption.

Think about it, have you ever seen a smiling Uber driver?  Didn't think so.

And many foreign countries are not liking this.   What Uber is doing in country after country is taking away the profits from the local cab driving business and transferring them overseas to silicon valley.  Morocco is the latest country to see this and shut down Uber.   How long before others figure out the same thing?   You allow Uber or Lyft into your country, you are putting your own citizens out of business, so Silicon Valley billionaires can have more billions - making the US richer and your country a little poorer.

What's next?  We get a taste of all their retail sales as well?   Oh, right, Amazon.

What Uber has done is take the shitty job of driving a taxi and made it even shittier.  This really isn't progress except for the people who are running Uber and pulling in millions if not billions of dollars in the deal.  One might argue it's a better deal for the customer - the upper class people who can afford to take taxi rides, or finding it more convenient and cheaper to use Uber than  a taxi.   That is, until they get their "surge pricing" bill.   Right.  We used to have regulations about that, too.

Other companies are following the same pattern - trying to get a taste of every shitty job in America, from pizza delivery to retail.   Amazon, for example, has merely taken retailing and put it online.  As I've noted before they're just a mercantile business selling stuff.  And in the beginning, they didn't have to pay sales tax, which gave them a tremendous advantage over local businesses.  Again, money leaving your jurisdiction and being sucked like a Hoover vacuum cleaner to Silicon Valley.

And the way they sell stuff is by paying people very little money and working them very hard in warehouses stuffing things in the boxes.  Working at Amazon is not a dream job for anyone, unless you are in management or your last name is Bezos.  Again, what Amazon has succeeded doing is taking a shitty job - working in a warehouse - and making it even shittier.

And so on down the line.  This "new economy" amounts to little more than taking old working class jobs and making them even more lower paying with even fewer benefits, so that the people running the companies can make more profits.

Now granted, I am no fan of this leftist talk, Mother Jones magazine, or any of the unions.  However I think the time is now right for unions to strike back - given that unemployment is at an all-time low.  A new generation of young people is coming up and finding that their prospects are very limited, while the prospects for a few people of the generation before, are huge.  And this could be fodder for Union organization and recruitment.

What this means in the long-term is that these companies may end up being unprofitable - or may never earn a profit to begin with.   Uber apparently has yet to make dollar one, and Amazon has only recently become profitable.   They suck all the air out of the room and don't even make a profit.  Well, at least on paper, anyway.  The principals of the company are pulling in huge salaries in the interim. But I would think twice before investing in an Uber IPO.

As the labor market gets tighter and tighter, you'll see fewer and fewer people resorting to jobs like Uber.  During the recession, we saw adults taking jobs in malls and delivering pizzas - a whole generation of high school kids never had an after-school job, as their parents' took them.  Today, we are seeing kids stocking the shelves at Wal-Mart, clearly on a work permit, as they can't be over 16.  Help wanted signs are everywhere.

At the toll booth in Florida, a plea to apply for a job as a toll-taker.  Billboards by the highway, advertising jobs.  A lot has changed in our economy since 2009!  And this tight labor market is going to change things for these "dot com" companies that have relied upon a generation of desperate people who will take any job, no matter how low the pay, and put up with many levels of abuse. Higher wages means even smaller profit margins for these companies - companies that are often not making money as it is!

This could, in fact, "disrupt" the plans of a lot of these Silicon Valley billionaires.   Pardon me if I don't shed a tear!